AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1999
TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
MARATHON POWER TECHNOLOGIES COMPANY
(Exact name of each of the co-registrants as specified in its respective
charter)
DELAWARE 3728 13-3733378
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification
Code Number)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / /
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. / /
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NEW NOTES OFFERING PRICE(1) FEE(1)
10 3/8% Senior Subordinated Notes due 2008(2)..... $125,000,000 100% $125,000,000 $34,750
Guarantees of the 10 3/8 Senior Subordinated Notes
due 2008(3)..................................... N/A N/A N/A N/A
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(1) The registration fee has been calculated pursuant to Rule 457(a), Rule 457(f)(2) and Rule 457(n) under the Securities Act of 1933, as amended. The Proposed Maximum Aggregate Offering Price is estimated solely for the purpose of calculating the registration fee.
(2) The 10 3/8% Senior Subordinated Notes due 2008 will be the obligations of TransDigm Inc.
(3) Each of TransDigm Holding Company and Marathon Power Technologies Company
will guarantee on an unconditional basis the obligations of TransDigm Inc.
under the 10 3/8% Senior Subordinated Note due 2008. Pursuant to Rule
457(n), no additional registration fee is being paid in respect of the
guarantees. The guarantees are not traded separately.
THE CO-REGISTRANTS HEREBY AMEND 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES 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 WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 29, 1999
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
10 3/8% SENIOR SUBORDINATED NOTES DUE 2008
($125,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING)
FOR
10 3/8% SENIOR SUBORDINATED NOTES DUE 2008
OF
TRANSDIGM INC.
We are offering to exchange all of our outstanding 10 3/8% Senior Subordinated Notes due 2008 ("Old Notes") for our registered 10 3/8% Senior Subordinated Notes due 2008 ("New Notes"). The Old Notes and New Notes are collectively referred to as the "Notes." The Old Notes were issued on December 3, 1998. The terms of the New Notes are identical to the terms of the Old Notes except that the New Notes are registered under the Securities Act of 1933, as amended, and therefore are freely transferable.
*PLEASE CONSIDER THE FOLLOWING:
- You should carefully review the Risk Factors beginning on page 11 of this Prospectus.
- Our offer to exchange Old Notes for New Notes will be open until 5:00 p.m., New York City time, on , 1999, unless we extend the offer.
- You should also carefully review the procedures for tendering the Old Notes beginning on page 21 of this Prospectus.
- If you fail to tender your Old Notes, you will continue to hold unregistered securities and your ability to transfer them could be adversely affected.
- No public market currently exists for the Notes. We do not intend to list the New Notes on any securities exchange and, therefore, no active public market is anticipated.
INFORMATION ABOUT THE NOTES:
- The Notes will mature on December 1, 2008.
- We will pay interest on the Notes semi-annually on June 1 and April 1 of each year beginning June 1, 1999 at the rate of 10 3/8% per annum.
- We may redeem the Notes on or after December 1, 2003 at certain rates set forth on page 68 of this Prospectus.
- We also have the option until December 1, 2001, to redeem up to 35% of the original aggregate principal amount of the Notes with the net proceeds of certain equity offerings.
- The Notes are unsecured obligations and are subordinated to our existing and future senior debt.
- The Notes are fully and unconditionally guaranteed on an unsecured senior subordinated basis by our domestic subsidiary and our parent holding company.
- If we undergo a change of control or sell certain of our assets, we may be required to offer to purchase Notes from you.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999
TABLE OF CONTENTS
PAGE
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WHERE YOU CAN FIND MORE INFORMATION........................................................................ ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................................................. ii
PROSPECTUS SUMMARY......................................................................................... 1
RISK FACTORS............................................................................................... 11
TRANSACTIONS............................................................................................... 20
THE EXCHANGE OFFER......................................................................................... 21
USE OF PROCEEDS............................................................................................ 28
CAPITALIZATION............................................................................................. 29
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION..................................................... 30
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA.............................................. 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 39
BUSINESS................................................................................................... 46
MANAGEMENT................................................................................................. 56
PRINCIPAL STOCKHOLDERS..................................................................................... 61
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................................. 63
DESCRIPTION OF OTHER INDEBTEDNESS.......................................................................... 65
DESCRIPTION OF THE NEW NOTES............................................................................... 67
REGISTRATION RIGHTS........................................................................................ 105
BOOK-ENTRY; DELIVERY AND FORM.............................................................................. 108
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.................................................... 110
PLAN OF DISTRIBUTION....................................................................................... 111
EXPERTS.................................................................................................... 112
LEGAL MATTERS.............................................................................................. 112
INDEX TO FINANCIAL STATEMENTS.............................................................................. F-1
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WHERE YOU CAN FIND MORE INFORMATION
Upon effectiveness of the Registration Statement of which this Prospectus is a part, we will file annual and quarterly and other information with the Securities and Exchange Commission (the "Commission"). You may read and copy any reports, statements and other information we file at the Commission's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call 1-800-SEC-0330 for further information on the public reference rooms. Our filings will also be available to the public from commercial document retrieval services and at the web site maintained by the Commission at http://www.sec.gov.
We, together with our domestic subsidiary and our parent holding company (the "Guarantors"), have filed a Registration Statement on Form S-4 to register with the Commission the New Notes to be issued in exchange for the Old Notes. This Prospectus is part of that Registration Statement. As allowed by the Commission's rules, this Prospectus does not contain all of the information you can find in the Registration Statement or the exhibits to the Registration Statement.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS ABOUT THE TRANSACTIONS WE DISCUSS IN THIS PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN. IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS NOT DISCUSSED, YOU MUST NOT RELY ON THAT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. THE DELIVERY OF THIS PROSPECTUS OFFERED HEREBY DOES NOT, UNDER ANY CIRCUMSTANCES, MEAN THAT THERE HAS NOT BEEN A CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF. IT ALSO DOES NOT MEAN THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AFTER THIS DATE.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements about our financial condition, results of operations and business. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates," or similar expressions used in this Prospectus or incorporated herein.
This Prospectus includes "forward looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended, including, in particular, the statements about our plans,
strategies and prospects under the headings "Prospectus Summary," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." Although we believe that our plans, intentions and expectations
reflected in or suggested by such forward-looking statements are reasonable, we
can give no assurance that such plans, intentions or expectations will be
achieved. Important factors that could cause actual results to differ materially
from the forward looking statements we make in this Prospectus are set forth
below under the caption "Risk Factors" and elsewhere in this Prospectus. All
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by those cautionary statements.
You are cautioned not to place undue reliance on such statements, which speak only as of the date of this Prospectus or, in the case of documents incorporated by reference, the date of such document.
We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this Prospectus. Additionally, we don't undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained or incorporated by reference to this Prospectus.
PROSPECTUS SUMMARY
IN THIS PROSPECTUS, THE WORDS "TRANSDIGM" AND "COMPANY" REFER TO TRANSDIGM INC., THE ISSUER OF THE OLD NOTES AND THE NEW NOTES, AND ITS SUBSIDIARIES. THE TERM "HOLDINGS" REFERS TO THE PARENT HOLDING COMPANY OF TRANSDIGM, WHICH HAS NO ASSETS OTHER THAN THE TRANSDIGM CAPITAL STOCK. THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THE COMPANY AND THIS EXCHANGE OFFER. IT DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THIS EXCHANGE OFFER, WE ENCOURAGE YOU TO READ THIS ENTIRE DOCUMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO.
THE EXCHANGE OFFER
We completed on December 3, 1998 the private offering of $125 million of 10 3/8% Senior Subordinated Notes due 2008. We entered into a registration rights agreement with the initial purchasers in the private offering of such Old Notes in which we agreed, among other things, to deliver to you this Prospectus and to complete this exchange offer within 185 days of the original issuance of such Old Notes. You are entitled to exchange in this exchange offer Old Notes that you hold for registered New Notes with substantially identical terms. If this exchange offer is not completed within 185 days of the original issuance of the Old Notes, then the interest rates on such Old Notes will increase initially by 0.50%. You should read the discussion under the headings "-Summary Description of the New Notes," "Description of the New Notes" and "Registration Rights" for further information regarding the New Notes.
We believe that the New Notes that will be issued in this exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act, subject to certain conditions. You should read the discussion under the headings "-Summary of the Terms of Exchange Offer" and "The Exchange Offer" for further information regarding this exchange offer and resale of the New Notes.
THE COMPANY
TRANSDIGM INC.
8233 Imperial Drive
Waco, Texas 76712
(254) 776-0650
We are a leading supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft. We sell our products to commercial airlines (such as United Airlines and Continental Airlines), large commercial transport and regional and business aircraft original equipment manufacturers (such as Boeing, Bombardier and Cessna) and various agencies of the United States government. We compete in product specific markets that we estimate range in size from $10 million to $100 million in annual revenues. For fiscal 1998, the Company generated net sales, operating income and EBITDA, As Defined, of $110.9 million, $36.8 million and $43.5 million, respectively.
Our business is comprised of three business units: (1) AdelWiggins Group,
(2) AeroControlex Group, and (3) Marathon Power Technologies Company, each of
which has a long history in the aircraft components industry. AdelWiggins
manufactures an extensive line of fuel and hydraulic system connectors and
specialized clamps, heaters and refueling systems. AeroControlex manufactures
customized fuel pumps, compressors, valves, couplings and mechanical and
electromechanical controls. Marathon manufactures nickel cadmium batteries and
static inverters. TransDigm Inc. was formed in 1993 through a management-led
buyout of the Aerospace Components Group of IMO Industries Inc. In addition,
Marathon was acquired in August 1997 as a strategic complement to the
Adelwiggins and AeroControlex businesses.
BUSINESS STRATEGY
Key elements of our strategy are:
- PROVIDE VALUE ADDED PRODUCTS TO CUSTOMERS. We will continue to focus on marketing and manufacturing highly engineered products to customers that place a premium on our capabilities. We have effectively communicated to aircraft operators that our products will spare them future costs because our products are more reliable, perform better and require less maintenance. We can realize substantial gross margins on our aftermarket sales (i.e. sales to airlines as opposed to original equipment manufacturers) because of our reputation for quality and because we are the only supplier for many of the parts that we market. We intend to continue to develop and market aftermarket products that carry higher gross margins by emphasizing their benefits to customers.
- GENERATE NEW BUSINESS INITIATIVES. In the past, we have successfully identified and commercialized new business opportunities to drive revenue growth. We have been particularly effective in creating aftermarket opportunities by developing superior parts for aircraft already in service. New business has contributed significantly to our 14% compound annual net sales growth rate (excluding Marathon) since fiscal 1994. We believe that this growth rate is well above the industry average during the same period. We intend to continue to aggressively pursue growth opportunities through our new business initiatives.
- REALIZE PRODUCTIVITY SAVINGS. We will continue to focus on improving our operating margins through manufacturing improvements and increases in employee productivity. Management has achieved significant increases in productivity since fiscal 1994. We have redesigned our business practices and manufacturing processes in order to maximize efficiency. For example, we now employ performance incentives to encourage our employees to operate multiple manufacturing stations in order to minimize overall labor costs. Through this initiative and others like it, we have significantly increased sales without hiring new employees.
- PURSUE STRATEGIC ACQUISITIONS. We intend to aggressively pursue acquisitions that we believe will allow us to enhance value, reduce costs and develop new business. The aircraft component industry is highly fragmented, with small operators owning many of the companies. We believe that the industry is experiencing consolidation due to customer requirements, inherent economies of scale and technological advancements that favor more sophisticated companies. We completed the Marathon acquisition in August 1997. We regularly engage in discussions with respect to other acquisition and investment opportunities. See the section "Risk Factors--Risks Related to Potential Future Acquisitions."
RECENT DEVELOPMENTS
In connection with the offering of the Old Notes, Holdings consummated a recapitalization pursuant to an agreement and plan of merger. The former equity holders of Holdings received as consideration in the recapitalization $330.0 million of which $279.7 million was paid in cash, $20.0 million was paid in the form of Holdings' pay-in-kind notes and Holdings' common stock and approximately $30.3 million was retained by such equity holders in the form of equity interest in Holdings.
In connection with the recapitalization, Odyssey Investment Partners Fund, LLC and its co-investors invested $100.2 million of cash equity in Holdings. As a result of the recapitalization, Odyssey and its co-investors own approximately 73.7%, and certain continuing equity holders of Holdings own approximately 26.3%, in each case, of the outstanding shares of Holdings common stock on a fully diluted basis.
ODYSSEY INVESTMENT PARTNERS FUND, LLC
As a result of the recapitalization, TransDigm is controlled by Odyssey, a private equity fund engaged in making investments in established, middle market companies. Although Odyssey was formed in 1997, its principals collectively have over 70 years of private equity experience and have been responsible for a number of very successful transactions, including: Williams Scotsman, Inc., Monarch Marking Systems, Inc. and TriStar Aerospace Co. The principals' recent experience in the aerospace industry includes the September 1996 management buyout and concurrent merger of TriStar Aerospace Co. and Aviall Aerospace, a division of Aviall, Inc.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Securities to be Exchanged.......... On December 3, 1998, we issued $125.0 million
aggregate principal amount of Old Notes to the
initial purchasers (the "Original Offering") in a
transaction exempt from the registration requirements
of the Securities Act of 1933, as amended (the
"Securities Act"). The terms of the New Notes and the
Old Notes are substantially identical in all material
respects, except that the New Notes will be freely
transferable by the holders except as otherwise
provided in this Prospectus. See "Description of the
New Notes."
The Exchange Offer.................. $1,000 principal amount of New Notes in exchange for
each $1,000 principal amount of Old Notes. As of the
date hereof, Old Notes representing $125.0 million
aggregate principal amount are outstanding.
Based on interpretations by the staff of the
Commission, as set forth in no-action letters issued
to certain third parties unrelated to us, we,
together with Holdings and Marathon (together with
Holdings, the "Guarantors") believe that New Notes
issued pursuant to the exchange offer in exchange for
Old Notes may be offered for resale, resold or
otherwise transferred by holders thereof (other than
any holder which is an "affiliate" of the Company or
the Guarantors within the meaning of Rule 405 under
the Securities Act, or a broker-dealer who purchased
Old Notes directly from us to resell pursuant to Rule
144A or any other available exemption under the
Securities Act), without compliance with the
registration and prospectus delivery requirements of
the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders'
business and such holders have no arrangement with
any person to engage in a distribution of New Notes.
However, the Commission has not considered the
exchange offer in the context of a no-action letter
and we cannot be sure that the staff of the
Commission would make a similar determination with
respect to the exchange offer as in such other
circumstances. Furthermore, each holder, other than a
broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement
or understanding to participate in a distribution of
New Notes. Each broker-dealer that receives New Notes
for its own account pursuant to the exchange offer
must acknowledge that it will comply with the
prospectus delivery requirements of the Securities
Act in connection with any resale of such New Notes.
Broker-dealers who acquired Old Notes directly from
us and not as a result of market-making activities or
other trading activities may not rely on the staff's
interpretations discussed above or participate in the
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exchange offer and must comply with the prospectus
delivery requirements of the Securities Act in order
to resell the Old Notes.
Registration Rights Agreement....... We sold the Old Notes on December 3, 1998, in a
private placement in reliance on Section 4(2) of the
Securities Act. The Old Notes were immediately resold
by the initial purchasers in reliance on Rule 144A
and Regulation S under the Securities Act. In
connection with the sale, we, together with the
Guarantors, entered into a Registration Rights
Agreement with the initial purchasers (the
"Registration Rights Agreement") requiring us to make
the exchange offer. The Registration Rights Agreement
further provides that we, together with the
Guarantors, must (i) cause the Registration Statement
with respect to the exchange offer to be declared
effective within 150 days of the date on which we
issued the Old Notes and (ii) consummate the exchange
offer on or before the 185th business day following
the date on which we issued the Old Notes. See "The
Exchange Offer--Purpose and Effect."
Expiration Date..................... The exchange offer will expire at 5:00 p.m., New York
City time, , 1999 or a later date and time if
we extend it (the "Expiration Date").
Withdrawal.......................... The tender of the Old Notes pursuant to the exchange
offer may be withdrawn at any time prior to the
Expiration Date. Any Old Notes not accepted for
exchange for any reason will be returned without
expense as soon as practicable after the expiration
or termination of the exchange offer.
Interest on the New Notes and the
Old Notes......................... Interest on the New Notes will accrue from the date
of the original issuance of the Old Notes or from the
date of the last payment of interest on the Old
Notes, whichever is later. No additional interest
will be paid on Old Notes tendered and accepted for
exchange.
Conditions to the Exchange Offer.... The exchange offer is subject to certain customary
conditions, certain of which may be waived by us. See
"The Exchange Offer--Conditions to Exchange Offer."
Procedures for Tendering Old
Notes............................. Each holder of the Old Notes wishing to accept the
exchange offer must complete, sign and date the
letter of transmittal, or a copy thereof, in
accordance with the instructions contained herein and
therein, and mail or otherwise deliver the letter of
transmittal, or the copy, together with the Old Notes
and any other required documentation, to the exchange
agent at the address set forth herein. Persons
holding the Old Notes through the Depository Trust
Company ("DTC") and wishing to accept the exchange
offer must do so pursuant to DTC's Automated Tender
Offer Program, by which each tendering
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participant will agree to be bound by the letter of
transmittal. By executing or agreeing to be bound by
the letter of transmittal, each holder will represent
to us and the Guarantors that, among other things,
(i) the New Notes acquired pursuant to the exchange
offer are being obtained in the ordinary course of
business of the person receiving such New Notes, (ii)
the holder is not engaging in and does not intend to
engage in a distribution of such New Notes, (iii) the
holder does not have an arrangement or understanding
with any person to participate in the distribution of
such New Notes, and (iv) the holder is not an
"affiliate," as defined under Rule 405 promulgated
under the Securities Act, of the Company or the
Guarantors.
Under certain circumstances specified in the
Registration Rights Agreement, we may be required to
file a "shelf" registration statement for a
continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes. See
"Registration Rights."
We will accept for exchange any and all Old Notes
which are properly tendered (and not withdrawn) in
the exchange offer prior to the Expiration Date. The
New Notes issued pursuant to the exchange offer will
be delivered promptly following the Expiration Date.
See "The Exchange Offer-- Terms of the Exchange
Offer."
Exchange Agent...................... is serving as Exchange Agent (the "Exchange Agent")
in connection with the exchange offer.
Federal Income Tax Considerations... We believe the exchange of Old Notes for New Notes
pursuant to the exchange offer will not constitute a
sale or an exchange for federal income tax purposes.
See "Certain United States Federal Income Tax
Considerations."
Effect of Not Tendering............. Old Notes that are not tendered or that are tendered
but not accepted will, following the completion of
the exchange offer, continue to be subject to the
existing restrictions upon transfer thereof. We will
have no further obligation to provide for the
registration under the Securities Act of such Old
Notes.
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SUMMARY OF THE TERMS OF THE NEW NOTES
Issuer....................................... TransDigm Inc.
Securities Offered........................... $125,000,000 in aggregate principal amount of
10 3/8% senior subordinated notes due 2008.
Maturity..................................... December 1, 2008.
Interest Rate................................ 10 3/8% per year.
Interest Payment Dates....................... June 1 and December 1, beginning on June 1,
1999. Interest will accrue from December 3,
1998.
Guarantees................................... Holdings, the parent holding company of
TransDigm, will unconditionally guarantee the
New Notes. However, you should not rely upon
the guarantee by Holdings because Holdings
has no assets other than its equity interest
in TransDigm. In addition, our domestic
subsidiary will unconditionally guarantee the
New Notes.
If we create or acquire a new domestic
subsidiary, it will guarantee the New Notes
unless we designate the subsidiary as an
"unrestricted subsidiary" under the indenture
or the subsidiary does not have significant
assets.
Ranking...................................... The New Notes will be unsecured senior
subordinated obligations of the Company and
will rank junior to our existing and future
senior debt. The guarantees by Holdings and
our subsidiaries will be subordinated to
existing and future senior debt of Holdings
and our subsidiaries, respectively. As of
September 30, 1998, pro forma for the
transactions described under the heading "The
Transactions," we and our subsidiaries would
have had $93.1 million of senior debt,
excluding approximately $26.9 million that we
would have had available to borrow under our
New Credit Facility, and Holdings would have
had $113.1 million of senior debt at face
value.
Optional Redemption.......................... We cannot redeem the New Notes until December
1, 2003. Thereafter we may redeem some or all
of the New Notes at the redemption prices
listed in the "Description of the New Notes"
section under the heading "Optional
Redemption," plus accrued interest.
Optional Redemption after Public Equity At any time (which may be more than once)
Offerings.................................. before December 1, 2001, we can choose to buy
back up to 35% of the outstanding Notes
(including New Notes) with money that we
raise in certain equity offerings, as long
as:
- we pay 110.375% of the face amount of the
Notes, plus accrued interest;
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- we buy the Notes back within 120 days of
completing such equity offering; and
- at least 65% of the aggregate principal
amount of Notes issued remains outstanding
afterwards.
Change of Control Offer...................... If a change in control of the Company occurs,
we may be required to give holders of the New
Notes the opportunity to sell us their New
Notes at 101% of their face amount, plus
accrued interest.
We might not be able to pay you the required
price for New Notes you present to us at the
time of a change of control, because:
- we might not have enough funds at that
time; or
- the terms of our senior debt may prevent
us from paying.
Asset Sale Proceeds.......................... If we engage in asset sales, we generally
must either invest the net cash proceeds from
such sales in our business within a period of
time, repay senior debt or make an offer to
purchase a principal amount of the New Notes
equal to the excess net cash proceeds. The
purchase price of the New Notes will be 100%
of their principal amount, plus accrued
interest.
Certain Indenture Provisions................. The indenture governing the New Notes will
contain covenants limiting our (and most or
all of our subsidiaries') ability to:
- incur additional debt or enter into sale
and leaseback transactions;
- pay dividends or distributions on capital
stock or repurchase capital stock;
- issue stock of subsidiaries;
- make certain investments;
- create liens on our assets to secure debt;
- enter into transactions with affiliates;
- merge or consolidate with another company;
and
- transfer and sell assets.
These covenants are subject to a number of
important limitations and exceptions.
Risk Factors................................. See "Risk Factors" beginning on page 11 for a
description of certain of the risks you
should consider.
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth summary historical consolidated financial information of Holdings and the Company. The summary historical consolidated financial data for the fiscal years ended September 30, 1998, 1997, and 1996 have been derived from Holdings' consolidated financial statements, which have been audited by Deloitte & Touche LLP, independent auditors. The summary historical consolidated audited financial data for the fiscal years ended September 30, 1995 and 1994, which have also been derived from Holdings' consolidated financial statements, have been adjusted to give retroactive effect to the change in accounting for put warrants as described in Note 17 to the Consolidated Historical Financial Statements of Holdings included elsewhere in this Prospectus. Because Holdings has no operations of its own and, prior to the Recapitalization, had no assets or liabilities other than its equity interest in the Company, the historical consolidated financial information of Holdings for each of the years in the five-year period ended September 30, 1998 are identical to the historical consolidated financial information of the Company. The pro forma financial information set forth below gives effect to the Transactions as if they had occurred at the beginning of the period or as of the balance sheet date, as applicable. The pro forma financial information is not necessarily indicative of either future results of operations or the results that might have occurred if the foregoing transactions had been consummated on such date. There can be no assurance that assumptions used in the preparation of the pro forma financial data will prove to be correct. The Marathon Acquisition was completed on August 8, 1997.
You should read the following table together with the "Unaudited Pro Forma Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and the Consolidated Historical Financial Statements and the notes thereto included elsewhere in this Prospectus.
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------
UNAUDITED
PRO FORMA THE
COMPANY
-------------
1994 1995 1996 1997(1) 1998 1998
--------- --------- --------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net Sales.................................................. $ 52,028 $ 57,095 $ 62,897 $ 78,159 $ 110,868 $ 110,868
Gross Profit............................................... 9,151 17,029 21,023 28,856 51,473 51,473
Selling and administrative................................. 6,244 6,167 6,459 7,561 10,473 10,373
Amortization of intangibles................................ 4,062 4,002 3,838 2,089 2,438 2,438
Research and development................................... 784 1,058 836 1,116 1,724 1,724
--------- --------- --------- --------- --------- -------------
Operating income (loss) (2)................................ (1,939) 5,802 9,890 18,090 36,838 36,938
Interest expense, net...................................... 4,823 5,193 4,510 3,463 3,175 22,789
Warrant put value adjustment (3)........................... 868 736 2,160 4,800 6,540 --
--------- --------- --------- --------- --------- -------------
Pre-tax income (loss)...................................... (7,630) (127) 3,220 9,827 27,123 14,149
Provision (benefit) for income taxes....................... (2,307) 134 2,045 5,193 12,986 5,376
--------- --------- --------- --------- --------- -------------
Income (loss) before extraordinary item.................... (5,323) (261) 1,175 4,634 14,137 8,773
Extraordinary item (4)..................................... -- -- -- (1,462) -- --
--------- --------- --------- --------- --------- -------------
Net income (loss).......................................... $ (5,323) $ (261) $ 1,175 $ 3,172 $ 14,137 $ 8,773
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
OTHER FINANCIAL DATA:
Cash flows provided by (used in):
Operating activities..................................... $ 1,115 $ 3,972 $ 18,695 $ 17,468 $ 23,455 $ 12,734
Investing activities..................................... (3,595) 702 (2,494) (43,160) (4,295) (4,295)
Financing activities..................................... 1,851 (4,560) (13,475) 28,153 (5,071) (6,198)
EBITDA, As Defined (5)..................................... 9,875 13,168 17,213 24,522 43,547 43,647
EBITDA, As Defined, margin................................. 19.0% 23.1% 27.4% 31.4% 39.3% 39.4%
Depreciation and amortization.............................. $ 7,341 $ 7,366 $ 7,323 $ 5,766 $ 6,467 $ 6,467
Capital expenditures....................................... 1,941 1,702 2,494 2,285 5,061 5,061
Ratio of earnings to fixed charges (6)..................... -- -- 1.7x 3.7x 9.0x 1.6x
Ratio of EBITDA, As Defined, to interest expense........... 2.1x 2.5x 3.8x 7.1x 13.7x 1.9x
Ratio of EBITDA, As Defined, less capital expenditures to
interest expense......................................... 1.6x 2.2x 3.3x 6.4x 12.1x 1.7x
Ratio of total debt to EBITDA, As Defined.................. 3.7x 2.4x 1.1x 2.0x 1.0x 5.0x
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital............................................ $ 12,592 $ 17,730 $ 16,300 $ 16,520 $ 16,654 $ 12,977
Total assets............................................... 71,554 65,758 57,666 101,969 115,785 106,662
Long-term debt, including current portion.................. 36,399 32,074 19,124 50,000 45,000 218,114
Total stockholders' equity (deficit)....................... 19,745 19,285 19,670 22,613 36,427 (129,010)
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(1) The Company acquired Marathon on August 8, 1997. The acquisition was accounted for as a purchase. The results of operations of Marathon are included in Holdings' consolidated financial statements from the date of such acquisition. See Marathon's historical financial statements and the notes thereto included elsewhere in this Prospectus.
(2) Operating income (loss) includes the effect of a non-cash charge of $4,473 in fiscal 1994 due to a purchase accounting adjustment to inventory associated with the acquisition of the Aerospace Components Group of IMO and a non-cash charge of $666 in fiscal 1997 and $242 in fiscal 1998 due to, in each case, a purchase accounting adjustment to inventory associated with the acquisition of Marathon. The $100 adjustment to the Company's 1998 pro forma operating income represents the elimination of the advisory fee payable to an affiliate of one of the Company's stockholders.
(3) In connection with the formation of the Company on September 30, 1993, the Company issued subordinated notes which included detachable warrants to purchase approximately 16,000 shares of non-voting common stock of Holdings at a price of $0.10 per share, exercisable upon certain change of control events, including the Recapitalization. The warrant put value adjustment for each period indicated reflects the increase in the estimated put value of these warrants that occurred during that period.
(4) The extraordinary charge in fiscal 1997 relates to costs associated with the retirement of the subordinated notes referred to in footnote (3) above issued at the time of the Company's formation in 1993.
(5) EBITDA, As Defined, represents earnings before interest, taxes, depreciation and amortization and the warrant put value adjustments and prior to the impact of the purchase accounting adjustments to inventory referred to in footnote (2) above and the extraordinary item referred to in footnote (4) above as follows:
PRO FORMA THE
COMPANY
1994 1995 1996 1997 1998 1998
--------- --------- --------- --------- --------- -------------
Income (loss) before extraordinary item...................... $ (5,323) $ (261) $ 1,175 $ 4,634 $ 14,137 $ 8,773
Adjustments:
Income tax provision (benefit)............................. (2,307) 134 2,045 5,193 12,986 5,376
Interest expense........................................... 4,823 5,193 4,510 3,463 3,175 22,789
Depreciation and amortization.............................. 7,341 7,366 7,323 5,766 6,467 6,467
--------- --------- --------- --------- --------- -------------
4,534 12,432 15,053 19,056 36,765 43,405
Warrant put value adjustment............................... 868 736 2,160 4,800 6,540 --
Inventory purchase accounting adjustment................... 4,473 -- -- 666 242 242
--------- --------- --------- --------- --------- -------------
EBITDA, As Defined........................................... $ 9,875 $ 13,168 $ 17,213 $ 24,522 $ 43,547 $ 43,647
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
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Although EBITDA, As Defined, is not a measure of performance calculated in accordance with GAAP, the Company believes that EBITDA, As Defined, is accepted as a generally recognized measure of performance in the Company's industry. Nevertheless, this measure should not be considered in isolation or as a substitute for operating income, net income, net cash provided by operating activities or any other measure for determining the Company's operating performance or liquidity which is calculated in accordance with GAAP.
(6) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt expense and the portion (approximately 33%) of rental expense that management believes is representative of the interest component of rental expense. Earnings were insufficient to cover fixed charges by $7,630 and $127 for fiscal 1994 and 1995, respectively.
RISK FACTORS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT INCLUDING,
IN PARTICULAR, THE STATEMENTS ABOUT THE COMPANY'S PLANS, STRATEGIES, AND
PROSPECTS UNDER THE HEADINGS "PROSPECTUS SUMMARY," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," AND "BUSINESS."
ALTHOUGH WE BELIEVE THAT OUR PLANS, INTENTIONS AND EXPECTATIONS REFLECTED IN OR
SUGGESTED BY SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO
ASSURANCE THAT SUCH PLANS, INTENTIONS OR EXPECTATIONS WILL BE ACHIEVED.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS WE MAKE IN THIS PROSPECTUS ARE SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
COMPANY, HOLDINGS OR PERSONS ACTING ON OUR BEHALF ARE EXPRESSLY QUALIFIED IN
THEIR ENTIRETY BY THE FOLLOWING CAUTIONARY STATEMENTS.
FAILURE TO EXCHANGE OLD NOTES--IF YOU DO NOT PROPERLY TENDER YOUR OLD NOTES, YOU WILL CONTINUE TO HOLD UNREGISTERED OLD NOTES AND YOUR ABILITY TO TRANSFER OLD NOTES WILL BE ADVERSELY AFFECTED.
We will only issue New Notes in exchange for Old Notes that are timely received by the Exchange Agent together with all required documents, including a properly completed and signed letter of transmittal. Therefore, you should allow sufficient time to ensure timely delivery of the Old Notes and you should carefully follow the instructions on how to tender your Old Notes. Neither we nor the Exchange Agent are required to tell you of any defects or irregularities with respect to your tender of the Old Notes. If you do not tender your Old Notes or if we do not accept your Old Notes because you did not tender your Old Notes properly, then, after we consummate the exchange offer, you may continue to hold Old Notes that are subject to the existing transfer restrictions. In addition, if you tender your Old Notes for the purpose of participating in a distribution of the New Notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the New Notes. If you are a broker-dealer that receives New Notes for your own account in exchange for Old Notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of such New Notes. After the exchange offer is consummated, if you continue to hold any Old Notes, you may have difficulty selling them because there will be less Old Notes outstanding. In addition, if a large amount of Old Notes are not tendered or are tendered improperly, the limited amount of New Notes that would be issued and outstanding after we consummate the exchange offer could lower the market price of such New Notes.
SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT THE FINANCIAL HEALTH OF THE COMPANY AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NEW NOTES.
The Company has a significant amount of indebtedness. The following chart shows certain important Company credit statistics and is presented as at September 30, 1998 and for the year then ended, in each case, on a pro forma basis assuming we had completed the offering of the Old Notes and the other Transactions as of the date or at the beginning of the period specified below:
PRO FORMA
AT SEPTEMBER 30, 1998
---------------------
(DOLLARS IN MILLIONS)
Total indebtedness.......................................................................... $ 218.1
Stockholders' equity (deficit).............................................................. (129.0)
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PRO FORMA
FOR THE YEAR ENDED
SEPTEMBER 30, 1998
---------------------
Ratio of earnings to fixed charges............................................................ 1.6x
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In addition, Holdings has an additional $20.0 million of indebtedness represented by the face value of the Holdings PIK Notes (all of which will be senior to Holdings' guarantee of these New Notes) and, as at September 30, 1998, on a pro forma basis, Holdings would have had a stockholders' deficit of approximately $135.4 million. See "Unaudited Pro Forma Consolidated Financial Information."
Our substantial indebtedness could have important consequences to you. For example, it could:
- make it more difficult for us to satisfy our obligations with respect to the New Notes;
- increase our vulnerability to general adverse economic and industry conditions;
- limit our ability to fund future working capital, capital expenditures, research and development costs and other general corporate requirements;
- require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that have less debt; and
- limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds. And, failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on us.
See "Description of the New Notes" and "Description of Other Indebtedness."
ADDITIONAL BORROWINGS AVAILABLE--DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not fully prohibit us or our subsidiaries from doing so. As at September 30, 1998, on a pro forma basis, our New Credit Facility would have permitted additional borrowings of up to $26.9 million and all of those borrowings would be senior to the New Notes and the guarantees of the New Notes. If new debt is added to our and the guarantors' current debt levels, the related risks that we and they now face could intensify.
See "Capitalization," "Selected Historical Consolidated Financial Data" and "Description of the New Notes" and "Description of Other Indebtedness."
ABILITY TO SERVICE DEBT--TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, including the New Notes, and to fund planned capital expenditures and research and development efforts will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Based on our current level of operations and anticipated cost savings and revenue growth, we believe our cash flow from operations, available cash and available borrowings under our New Credit Facility, will be adequate to meet our future liquidity needs for at least the next several years.
We cannot assure you, however, that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and revenue growth will be realized on schedule or at all or that future borrowings will be available to us under our New Credit Facility in amounts sufficient
to enable us to pay our indebtedness, including the New Notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the New Notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our New Credit Facility and the New Notes, on commercially reasonable terms or at all.
SUBORDINATION--YOUR RIGHT TO RECEIVE PAYMENTS ON THE NEW NOTES IS JUNIOR TO OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER, THE GUARANTEES OF THE NEW NOTES WILL BE JUNIOR TO ALL THE GUARANTORS' EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS.
The New Notes and the guarantees rank behind all of our and the guarantors' existing indebtedness (other than trade payables) and all of our and all the guarantors' future borrowings (other than trade payables), except any future indebtedness that expressly provides that it ranks equal with, or junior in right of payment to, the New Notes and the guarantees. As a result, upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors or our or their property, the holders of senior debt of our Company and the guarantors will be entitled to be paid in full in cash before any payment may be made with respect to the New Notes or the guarantees.
In addition, all payments on the New Notes and the guarantees will be blocked in the event of a payment default on senior debt and may be blocked for up to 179 of 360 consecutive days in the event of certain non-payment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to our Company or the guarantors, holders of the New Notes will participate with trade creditors and all other holders of subordinated indebtedness of the Company and the guarantors in the assets remaining after we and the guarantors have paid all of the senior debt. However, because the indenture requires that amounts otherwise payable to holders of the New Notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead, holders of the New Notes may receive less, ratably than holders of trade payables in any such proceeding. In any of these cases, we and the guarantors may not have sufficient funds to pay all of our creditors and holders of New Notes may receive less, ratably than the holders of senior debt.
Assuming we had completed the exchange offer on September 30, 1998, on a pro-forma basis after giving effect to the Transactions, the Notes and the guarantees by our domestic subsidiary would have been subordinated to $93.1 million of senior debt under our New Credit Facility. In addition, the New Credit Facility would have provided for up to approximately $26.9 million of additional borrowings. Holdings' guarantee of the New Notes would have been subordinated to $113.1 million of senior debt consisting of the guarantee of the New Credit Facility and the face value of the Holdings PIK Notes. We are permitted to borrow substantial additional indebtedness, including senior debt, in the future under the terms of the indenture.
LIMITED VALUE OF HOLDINGS GUARANTEE--YOU SHOULD NOT RELY ON THE GUARANTEE BY
HOLDINGS IN THE EVENT WE CANNOT MAKE PAYMENTS UPON THE NEW NOTES.
The New Notes will be guaranteed by Holdings, our parent holding company, on a senior subordinated basis. You should not rely on this guarantee because Holdings has no assets other than our capital stock. If we cannot make payments under the New Notes, Holdings probably cannot make payments either. In addition, this guarantee will be subordinated to all senior debt of Holdings (on a pro forma basis after giving effect to the Transactions, consisting of Holdings' guarantee of the $93.1 million of borrowings under the New Credit Facility and the $20.0 million of borrowings consisting of the face value of the Holdings PIK Notes as of September 30, 1998), whose holders would be paid before you in the event of a liquidation.
DEPENDENCE ON MAJOR CUSTOMERS--OUR COMPANY RELIES HEAVILY ON CERTAIN
CUSTOMERS FOR MUCH OF OUR SALES.
Our three largest customers for the fiscal year ended September 30, 1998 were Aviall (a distributor of aftermarket parts to airlines throughout the world), Boeing (including McDonnell Douglas) and various agencies of the United States government. These customers accounted for approximately 20%, 14% and 9%, respectively, of our consolidated net sales in fiscal 1998.
Our top ten customers accounted for approximately 61% of our consolidated net sales for fiscal 1998.
The loss of any one or more of these key customers could have a material adverse effect on our business. See "Business--Customers" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
CUSTOMER CONTRACTS--WE GENERALLY DO NOT HAVE GUARANTEED FUTURE SALES OF OUR PRODUCTS. FURTHER, WE ARE OBLIGATED UNDER FIXED PRICE CONTRACTS WITH SOME OF OUR CUSTOMERS, SO WE TAKE THE RISK FOR COST OVERRUNS.
As is customary in our business, we do not have long-term contracts with most of our customers. In those cases where we do, for example with Boeing and the United States government, our customers may terminate these contracts on short notice.
We also have entered into fixed-price contracts with some of our customers, where we agree to perform the work for a fixed price and, accordingly, realize all the benefit or detriment resulting from any decreased or increased costs for making these products. Sometimes we accept a fixed-price contract for a product which we have not yet produced, which increases the risks of delays or cost overruns.
We also have some contracts with customers which establish prices for certain of our components based upon the volume the customer purchases. A number of these contracts do not permit the Company to recover for increases in input prices, taxes or labor costs, although some contracts provide for renegotiation to address certain material adverse changes. Any such increases are likely to have an adverse effect on our business.
AIRCRAFT COMPONENTS INDUSTRY RISKS--OUR BUSINESS IS SENSITIVE TO THE NUMBER OF FLIGHT HOURS THAT OUR CUSTOMERS' PLANES SPEND ALOFT AND TO OUR CUSTOMERS' PROFITABILITY. THESE ITEMS ARE, IN TURN, AFFECTED BY GENERAL ECONOMIC CONDITIONS. IN ADDITION, OUR SALES TO MANUFACTURERS OF NEW LARGE AIRCRAFT ARE CYCLICAL.
We compete in the aircraft component segment of the aerospace industry. This segment is sensitive to changes in the number of miles flown by paying customers of commercial airlines ("revenue passenger miles") and, to a lesser extent, to changes in the profitability of the commercial airline industry and the size and age of the worldwide aircraft fleet.
Revenue passenger miles and airline profitability have historically been correlated with the general economic environment, although international events can also play a key role. For example, in 1991 revenue passenger miles declined as a result of increased security concerns among airline customers following the Gulf War. Although 1991 was the only year in the last ten years in which revenue passenger miles declined, any future reduction would reduce the use of commercial aircraft and, consequently, the need for spare parts and new aircraft. During periods of reduced airline profitability, some airlines may elect to delay purchases of spare parts, preferring instead to deplete existing inventories.
If demand for new aircraft and spare parts decreases, there may be a decrease in demand for certain of our products. Therefore, any future decline in revenue passenger miles, airline profitability or
the size of the worldwide aircraft fleet, for any reason, could have a material adverse effect on our business. See "Business--Industry Overview."
In addition, sales to manufacturers of large commercial aircraft, which accounted for less than 20% of our annual net sales in fiscal 1998, have historically experienced periodic downturns. In the past, these sales have been affected by airline profitability, which is impacted by fuel and labor costs and price competition, and other things. Due in part to these factors, the number of large commercial aircraft delivered dropped from a peak of approximately 756 aircraft in 1991 to approximately 370 aircraft in 1995, according to a trade report.
We believe that by concentrating on products with strong aftermarket demand and on smaller regional planes, we have reduced our exposure to downturns in this sector. Prior downturns have adversely effected our net sales, gross margin and net income. These and certain other factors may cause a downturn in sales to manufacturers of large commercial aircraft in the future which may have a material adverse effect on our business.
REDUCTION IN DEFENSE SPENDING--A DECLINE IN THE U.S. DEFENSE BUDGET MAY
ADVERSELY AFFECT OUR SALES OF PARTS USED IN MILITARY AIRCRAFT.
In fiscal 1998, approximately 27.0% of our sales were related to products used in military aircraft, in each case, over half of which were spare parts provided to various governmental agencies.
In general, the United States' defense budget has been declining or stable in recent years, resulting in reduced or stable demand for new aircraft and, to a lessor extent, spare parts. The United States' defense budget may continue to decline and sales of defense related items to foreign governments may decrease. If there is a decline which reduces demand for our components, our business may be adversely affected.
GOVERNMENT REGULATION--OUR BUSINESS WOULD BE ADVERSELY AFFECTED IF WE LOST OUR GOVERNMENT PERMITS OR IF FUTURE, MORE ONEROUS GOVERNMENT REGULATIONS WERE ENACTED.
The aircraft component industry is highly regulated in the United States and in other countries. In order to sell our components, our Company and the components we manufacture must be certified by the FAA, the United States Department of Defense and similar agencies in foreign countries and by individual manufacturers.
If material authorizations or approvals were revoked or suspended, our business would be adversely affected. In the future, if new and more stringent government regulations are adopted or if industry oversight increases, our business may be adversely affected. See "Business--Governmental Regulation."
To the extent that we operate outside the United States, we are subject to the Foreign Corrupt Practices Act (the "FCPA"), which generally prohibits United States companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. In particular, we may be held liable for actions taken by our strategic or local partners even though such partners are foreign companies that are not subject to the FCPA. Any determination that we have violated the FCPA could result in sanctions that could have a material adverse effect on our business.
RISKS ASSOCIATED WITH OUR WORKFORCE--WE ARE DEPENDENT ON OUR HIGHLY TRAINED EMPLOYEES AND ANY WORK STOPPAGE OR DIFFICULTY HIRING SIMILAR EMPLOYEES WOULD ADVERSELY AFFECT OUR BUSINESS.
Because our products are complicated and very detailed, we are highly dependent on an educated and trained workforce. We could be adversely affected by a shortage of skilled employees.
At September 30, 1998, approximately 30% of our employees were unionized. Our collective bargaining agreements expire in April 1999 and November 2000. Although we believe that our relations
with our employees are good, we cannot assure you that we will be able to negotiate a satisfactory renewal of these collective bargaining agreements or that our employee relations will remain stable.
Because we maintain a relatively small inventory of finished goods and operate on relatively short lead times for our products, any work shortage could have a material adverse effect on our business. "See Business--Employees."
RISKS ASSOCIATED WITH SUPPLIERS--OUR BUSINESS IS DEPENDENT ON THE
AVAILABILITY OF CERTAIN COMPONENTS AND RAW MATERIALS THAT WE BUY FROM SUPPLIERS.
Our business is affected by the price and availability of the raw materials and component parts that we use to manufacture our components. Our business, therefore, could be adversely affected by factors affecting our suppliers, or by increased costs of such raw materials or components if we are unable to pass along such price increases to our customers. Because we maintain a relatively small inventory of raw materials and component parts, our business could be adversely affected if we are unable to obtain these raw materials and components from our suppliers on favorable terms. See "Business--Raw Materials and Patents."
POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES--WE MAY BE LIABLE FOR PENALTIES UNDER A VARIETY OF ENVIRONMENTAL LAWS, EVEN IF WE DID NOT CAUSE ANY ENVIRONMENTAL PROBLEMS. CHANGES IN ENVIRONMENTAL LAWS OR UNEXPECTED INVESTIGATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
Our business and our facilities are subject to a number of federal, state and local laws and regulations, which govern, among other things, the discharge of hazardous materials into the air and water as well as the handling, storage and disposal of such materials.
Pursuant to certain environmental laws, a current or previous owner or operator of land may be liable for the costs of investigation, removal or remediation of hazardous materials at such property. These laws typically impose liability whether or not the owner or operator knew of, or was responsible for, the presence of any hazardous materials. Persons who arrange (as defined under these statutes) for the disposal or treatment of hazardous materials also may be liable for the costs of investigation, removal or remediation of such substances at the disposal or treatment site, regardless of whether the affected site is owned or operated by them. See "Business--Environmental Matters."
Because we own and operate a number of facilities, and because we arrange for the disposal of hazardous materials at many disposal sites, we may incur costs for investigation, removal and remediation, as well as capital costs associated with compliance with these laws. Although such environmental costs have not been material in the past and are not expected to be material in the future, changes in environmental laws or unexpected investigations and clean-up costs could have a material adverse effect on our business.
DEPENDENCE ON KEY PERSONNEL--IF WE LOSE OUR SENIOR MANAGEMENT OR TECHNICAL
PERSONNEL, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
The success of our Company is dependent upon our senior management, as well as on our ability to attract and retain qualified personnel, including engineers. There is substantial competition for these kinds of personnel in the aircraft component industry. We may not be able to (1) retain our existing senior management or engineering staff, (2) fill new positions or vacancies created by expansion or turnover, or (3) attract additional qualified personnel. Although we have entered into employment agreements with certain executive officers, these agreements may not be renewed. See "Management-- Employment Agreements."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND ASIAN FINANCIAL MARKETS--OUR INTERNATIONAL BUSINESS EXPOSES US TO RISKS RELATING TO INCREASED REGULATION AND POLITICAL OR ECONOMIC INSTABILITY, GLOBALLY OR WITHIN CERTAIN FOREIGN COUNTRIES.
Approximately 16% of our fiscal 1998 sales were sold directly to foreign end-users. In addition, a portion of the products we sell to domestic distributors are resold to foreign end-users. These sales are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices.
Foreign governments could adopt regulations or take other actions that would have an adverse impact on our business or market opportunities abroad. Furthermore, the political, cultural and economic climate outside the United States may not be favorable to our business and growth strategy.
The Asian markets are important markets for airlines and the large commercial aircraft manufacturers. For example, Boeing has developed a large backlog of aircraft sales to customers in Asia, and the current crisis in the Asian financial markets has resulted in some deferrals and cancellations of deliveries. This may result in significant cancellation of orders or additional deferral of deliveries for new aircraft or negatively impact these manufacturers. The resulting decreased demand in the aftermarket could adversely affect our business.
RISKS RELATED TO POTENTIAL FUTURE ACQUISITIONS--WE INTEND TO PURSUE FUTURE ACQUISITIONS AND ARE CONSIDERING A SPECIFIC ACQUISITION WHICH, IF CONSUMMATED, WOULD SUBSTANTIALLY INCREASE THE LEVEL OF OUR INDEBTEDNESS AND MAY ADVERSELY AFFECT OUR BUSINESS IF WE CANNOT EFFECTIVELY INTEGRATE THESE NEW OPERATIONS.
We intend to pursue acquisitions that we believe will present opportunities to realize significant synergies, operating expense reductions or overhead cost savings and increase our market position. This acquisition strategy may require substantial capital, and we may not be able to raise the necessary funds on satisfactory terms or at all.
We regularly engage in discussions with respect to potential acquisition and investment opportunities. If we consummate any future acquisitions, our capitalization and results of operations may change significantly and you will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds.
Although we currently have no binding agreements with respect to any future acquisitions and we cannot assure you that we will be able to reach agreement with respect to any future acquisition, such acquisitions would likely result in the incurrence of debt and contingent liabilities and an increase in interest expense and amortization expenses related to goodwill and other intangible assets, which could have a material adverse effect upon our business.
Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies, services and products of the acquired companies and the diversion of management's attention from other business concerns. For all of these reasons, if any such acquisitions occur, our business could be adversely affected.
COMPETITION--WE MAY BE UNABLE TO REPAY THE NEW NOTES IF WE DO NOT
SUCCESSFULLY COMPETE WITHIN OUR INDUSTRY.
We operate in a highly competitive industry and compete against a number of companies, including divisions of larger companies, some of which have significantly greater financial, technological and marketing resources than us. We believe that our ability to compete depends on product performance, short lead-time and timely delivery, competitive pricing, superior customer service and support and continued certification under customer quality requirements and assurance programs. We may not be able to compete successfully with respect to these or other factors. See "Business-- Competition."
CONTROL BY ODYSSEY--WE ARE CONTROLLED BY ODYSSEY, WHOSE INTERESTS MAY NOT BE
ALIGNED WITH YOURS.
Odyssey and its co-investors indirectly own approximately 73.7% of the equity interests in our parent company, Holdings, on a fully diluted basis and, therefore, have the power, subject to certain exceptions, to control Holdings. They also control the appointment of management and the entering into of mergers, sales of substantially all assets and other extraordinary transactions. The interests of Odyssey may not in all cases be aligned with yours. See "The Transactions" and "Certain Relationships and Related Transactions."
IMPACT OF YEAR 2000 ISSUE--THE YEAR 2000 PROBLEM MAY RESULT IN DECREASED SALES FOR US IF CERTIFICATIONS WE RECEIVED FROM OUR VENDORS ARE INACCURATE OR IF OUR CUSTOMERS AND SUPPLIERS DO NOT ADEQUATELY ADDRESS THEIR YEAR 2000 CONCERNS.
We have completed a review of our computer systems and are completing a review of our embedded systems in order to assess our exposure to Year 2000 issues. We purchased all of our computer software from third party vendors and are relying on those vendors to make their software Year 2000 compliant. Except for the vendor of our e-mail system, such vendors have provided us with third party certifications that their systems are Year 2000 compliant.
We do not, however, currently have any information concerning the Year 2000 compliance status of our suppliers and customers, including various agencies of the United States government.
In the event that Year 2000 problems arise within our Company, or that our significant suppliers or customers, including various agencies of the United States government, do not successfully and timely achieve Year 2000 compliance, the result may be a delay in our receiving orders and collecting payments, leading to a temporary loss of revenue. We have incurred $180,000 in costs associated with Year 2000 compliance and anticipate incurring $150,000 of additional costs in the future. We may, however, have to bear further Year 2000 costs and expenses which could have a material adverse effect on our business. The Company has no formal contingency plan in the event Year 2000 problems arise.
PRODUCT LIABILITY; CLAIMS EXPOSURE--WE COULD BE ADVERSELY AFFECTED AS A RESULT OF A LAWSUIT IF ONE OF OUR COMPONENTS CAUSES AN AIRCRAFT TO CRASH AND WE ARE NOT COVERED BY OUR INSURANCE POLICIES.
Our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us. While management believes that our liability insurance is adequate to protect us from future products liability claims, if claims were to arise, such insurance coverage may not be adequate.
Additionally insurance coverage may not be able to be maintained in the future at an acceptable cost. Any such liability not covered by insurance or for which third party indemnification is not available could have a material adverse effect on our business.
FINANCING CHANGE OF CONTROL OFFER--WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE.
Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding New Notes. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of New Notes or that restrictions in our New Credit Facility will not allow such repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "Change of Control" under the indenture. See "Description of the New Notes-Change of Control."
FRAUDULENT CONVEYANCE MATTERS--FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID THE NEW NOTES AND THE GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM THE COMPANY OR THE GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, the New Notes and the guarantees could be voided, or claims in respect of the New Notes or the guarantees could be subordinated to all other debts of the Company or any guarantor if, among other things, the Company or such guarantor, at the time it incurred the indebtedness evidenced by the New Notes or its guarantee:
- received less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness; or
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which the Company's or such guarantor's remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.
In addition, any payment by the Company or such guarantor pursuant to the New Notes or a guarantee could be voided and required to be returned to the Company or such guarantor, or to a fund for the benefit of the creditors of the Company or such guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, the Company or a guarantor would be considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets,
- if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature, or
- it could not pay its debts as they become due.
Based upon information currently available to us, we believe that the New Notes and the guarantees are being incurred for proper purposes and in good faith and that we, and each of the Guarantors:
- are solvent and will continue to be solvent after giving effect to the issuance of the New Notes and the guarantees, as the case may be;
- will have enough capital for carrying on our business and the business of each of the Guarantors after the issuance of the New Notes and the guarantees, as the case may be; and
- will be able to pay our debts.
NO PRIOR MARKET FOR THE NEW NOTES--YOU CANNOT BE SURE THAT AN ACTIVE TRADING
MARKET WILL DEVELOP FOR THE NEW NOTES.
The New Notes are a new issue of securities with no established trading market and will not be listed on any securities exchange. The liquidity of the trading market in the New Notes, and the market price quoted for the New Notes, may be adversely affected by changes in the overall market for high yield securities and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, you cannot be sure that an active trading market will develop for the New Notes.
TRANSACTIONS
In connection with the completion of the offering of the Old Notes, Holdings consummated a recapitalization of Holdings (the "Recapitalization") pursuant to an agreement and plan of merger, dated August 3, 1998, as amended, between Phase II Acquisition Corp. and Holdings (the "Merger Agreement"). Concurrently with the offering of the Old Notes, the Company entered into a credit agreement providing for a six-year $30.0 million revolving credit facility (the "Revolving Credit Facility"), $2.6 million of which was funded to consummate the Recapitalization, and a 6-year $45.0 million Tranche A Term Loan Facility (the "Tranche A Facility") and a 7 1/2-year $45.0 million Tranche B Term Loan Facility (the "Tranche B Facility" and, together with the Revolving Credit Facility and the Tranche A Facility, the "New Credit Facility"), each of which was fully funded to consummate the Recapitalization. Additional borrowings under the Revolving Credit Facility are available for certain permitted acquisitions and for general corporate purposes, including working capital requirements. See "Description of Other Indebtedness--The Company--The New Credit Facility."
In connection with the Recapitalization, Odyssey and its co-investors invested approximately $100.2 million of cash equity in Holdings (the "Odyssey Investment"). The equity holders of Holdings received as consideration in the Recapitalization $330.0 million of which $279.7 million was paid in cash, $20.0 million was paid in the form of Holdings' pay-in-kind notes due 2009 of Holdings (the "Holdings PIK Notes") and Holdings' common stock and $30.3 million was paid in the form of common stock and options of Holdings that was retained by the shareholders of Holdings (the "Rollover Investment"). As a result of the consummation of the Transactions, Odyssey and its co-investors own approximately 73.7%, and certain continuing equity holders of Holdings own approximately 26.3%, in each case, of the outstanding shares of Holdings common stock on a fully diluted basis.
The offering of the Old Notes, the Recapitalization, the Odyssey Investment, the issuance of the Holdings PIK Notes and the related borrowings under the New Credit Facility are collectively referred to herein as the "Transactions."
THE EXCHANGE OFFER
PURPOSE AND EFFECT
In connection with the sale by the Company of the Old Notes on December 3, 1998, the Company and the Guarantors entered into a registration rights agreement (the "Registration Rights Agreement"), dated December 3, 1998, with the initial purchasers, which requires that the Company and the Guarantors file a registration statement under the Securities Act with respect to the New Notes (the "Registration Statement") and, upon the effectiveness of that Registration Statement, offer to the holders of the Old Notes the opportunity to exchange their Old Notes for a like principal amount of New Notes. The New Notes will be issued without a restrictive legend and generally may be reoffered and resold by the holder without registration under the Securities Act. The Registration Rights Agreement further provides that the Company must (i) cause the Registration Statement with respect to the exchange offer to be declared effective within 150 days of the date on which the Company issued the Old Notes and (ii) consummate the exchange offer on or before the 185th day following the date on which the Company issued the Old Notes. Except as provided below, upon the completion of the exchange offer, the Company's obligations with respect to the registration of the Old Notes and the New Notes will terminate. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement, of which this Prospectus is a part, and this summary of the material provisions of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the complete Registration Rights Agreement. As a result of the timely filing and the effectiveness of the Registration Statement, the Company will not have to pay certain additional interest on the Old Notes provided in the Registration Rights Agreement. Following the completion of the exchange offer (except as set forth in the paragraph immediately below), holders of Old Notes not tendered will not have any further registration rights and those Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for the Old Notes could be adversely affected upon consummation of the exchange offer.
In order to participate in the exchange offer, a holder must represent to the Company, among other things, that (i) the New Notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the holder, (ii) the holder is not engaging in and does not intend to engage in a distribution of the New Notes, (iii) the holder does not have an arrangement or understanding with any person to participate in the distribution of the New Notes and (iv) the holder is not an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of the Company or the Guarantors. Under certain circumstances specified in the Registration Rights Agreement, the Company may be required to file a "shelf" registration statement for a continuous offering pursuant to Rule 415 under the Securities Act in respect of the Old Notes. See "Registration Rights." For purposes of the foregoing, "Transfer Restricted Securities" means each Old Note until (i) the date on which such Note has been exchanged by a person other than a broker-dealer for an New Note in the exchange offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of an Old Note for an New Note, the date on which such New Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of this Prospectus, (iii) the date on which such Old Note has been effectively registered under the Securities Act and disposed of in accordance with such "shelf" registration statement or (iv) the date on which such Old Note is distributed to the public pursuant to Rule 144 under the Act or may be distributed to the public pursuant to Rule 144(k) under the Act. See "--Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action letters issued to third parties unrelated to the Company, the Company believes that, with the exceptions set forth below, New Notes issued pursuant to the exchange offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder which is an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act, or a broker-dealer who purchased Old Notes directly from the Company to resell pursuant to Rule 144A or any other
available exemption promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the New Notes are acquired in the ordinary course of business of the holder and the holder does not have an arrangement or understanding with any person to participate in the distribution of such New Notes. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the New Notes cannot rely on this interpretation by the Commission's staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." Broker-dealers who acquired Old Notes directly from us and not as a result of market-making activities or other trading activities may not rely on the staff's interpretations discussed above or participate in the exchange offer and must comply with the prospectus delivery requirements of the Securities Act in order to sell the Old Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the exchange offer (except as set forth in the second paragraph under "--Purpose and Effect" above), holders of Old Notes not tendered will not have any further registration rights and those Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for a holder's Old Notes could be adversely affected upon completion of the exchange offer if the holder does not participate in the exchange offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and in the letter of transmittal, the Company will accept any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on , 1999, or such date and time to which we extend the offer. The Company will issue $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of outstanding Old Notes accepted in the exchange offer. Holders may tender some or all of their Old Notes pursuant to the exchange offer. However, Old Notes may be tendered only in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form and terms of the Old Notes except that the New Notes have been registered under the Securities Act and will not bear legends restricting their transfer. The New Notes will evidence the same debt as the Old Notes and will be issued pursuant to, and entitled to the benefits of, the Indenture pursuant to which the Old Notes were issued.
As of the date hereof, Old Notes representing $125.0 million aggregate principal amount were outstanding and there was one registered holder, a nominee of DTC. This Prospectus, together with the letter of transmittal, is being sent to such registered holder and to others believed to have beneficial interests in the Old Notes. The Company intends to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes when, as, and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purpose of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after , 1999, unless the exchange offer is extended.
Holders who tender Old Notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the exchange offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall be 5:00 p.m., New York City time, on , 1999, unless the Company, in its sole discretion, extends the exchange offer, in which case the expiration date shall mean the latest date and time to which the exchange offer is extended. In order to extend the exchange offer, the Company will notify the Exchange Agent and each registered holder of any extension by oral or written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The Company reserves the right, in its sole discretion, (i) to delay accepting any Old Notes, to extend the exchange offer or, if any of the conditions set forth under "--Conditions to Exchange Offer" shall not have been satisfied, to terminate the exchange offer, by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (ii) to amend the terms of the exchange offer in any manner. In the event that the Company makes a material or fundamental change to the terms of the exchange offer, the Company will file a post-effective amendment to the Registration Statement.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the exchange offer. Except as set forth under "--Book Entry Transfer," to tender in the exchange offer a holder must complete, sign, and date the letter of transmittal, or a copy thereof, have the signatures thereon guaranteed if required by the letter of transmittal, and mail or otherwise deliver the letter of transmittal or copy to the Exchange Agent prior to the expiration date. In addition, (i) certificates for such Old Notes must be received by the Exchange Agent along with the letter of transmittal prior to the expiration date, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if that procedure is available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the expiration date or (iii) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the letter of transmittal and other required documents must be received by the Exchange Agent at the address set forth under "--Exchange Agent" prior to the expiration date.
The tender by a holder that is not withdrawn before the expiration date will constitute an agreement between that holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company, or other nominee and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner's behalf. If the beneficial owner wishes to tender on the owner's own behalf, the owner must, prior to completing and executing the letter of transmittal and delivering the owner's Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in the beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined) unless Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Registration Instruction" or "Special Delivery Instructions" on the letter of transmittal or (ii) for the account of an Eligible Institution. If signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantee must be by any eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the letter of transmittal is signed by a person other than the registered holder of any Old Notes listed therein, the Old Notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as that registered holder's name appears on the Old Notes.
If the letter of transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to the Company of their authority to so act must be submitted with the letter of transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of receipt), acceptance, and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent, nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the letter of transmittal, as soon as practicable following , 1999, unless the exchange offer is extended.
In addition, the Company reserves the right in its sole discretion to purchase or make offers for any Old Notes that remain outstanding after the expiration date or, as set forth under "--Conditions to the exchange offer," to terminate the exchange offer and, to the extent permitted by applicable law, purchase Old Notes in the open market, in privately negotiated transactions, or otherwise. The terms of any such purchases or offers could differ from the terms of the exchange offer.
By tendering, each holder will represent to the Company that, among other things, (i) the New Notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the registered holder, (ii) the holder is not engaging in and does not intend to engage in a distribution of such New Notes, (iii) the holder does not have an arrangement or understanding with any person to participate in the distribution of such New Notes and (iv) the holder is not an "affiliate," as defined under Rule 405 of the Securities Act, of the Company.
In all cases, issuance of New Notes for Old Notes that are accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed letter of transmittal (or, with respect to the DTC and its participants, electronic instructions in which the tendering holder acknowledges its receipt of and agreement to be bound by the letter of transmittal), and all other required documents. If any tendered Old Notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such nonexchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the exchange offer.
Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect to the Old Notes at the Book-Entry Transfer Facility for purposes of the exchange offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Old Notes being tendered by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Old Notes may be effected through book-entry transfer at the Book- Entry Transfer Facility, the letter of transmittal or copy thereof, with any required signature guarantees and any other required documents, must, in any case other than as set forth in the following paragraph, be transmitted to and received by the Exchange Agent at the address set forth under "--Exchange Agent" on or prior to the expiration date or the guaranteed delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of processing exchange offers through DTC. To accept the exchange offer through ATOP, participants in DTC must send electronic instructions to DTC through DTC's communication system in lieu of sending a signed, hard copy letter of transmittal. DTC is obligated to communicate those electronic instructions to the Exchange Agent. To tender Old Notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent must contain the character by which the participant acknowledges its receipt of and agrees to be bound by the letter of transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and the Old Notes are not immediately available, or time will not permit such holder's Old Notes or other required documents to reach the Exchange Agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the expiration date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed letter of transmittal (or a facsimile thereof) and notice of guaranteed delivery, substantially in the form provided by the Company (by telegram, telex, fax transmission, mail or hand delivery), setting forth the name and address of the holder of Old Notes
and the amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, will be deposited by the Eligible Institution with the Exchange Agent and (iii) the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, are received by the Exchange Agent within three NYSE trading days after the date of execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date.
For a withdrawal of a tender of Old Notes to be effective, a written or (for DTC participants) electronic ATOP transmission notice of withdrawal must be received by the Exchange Agent at its address set forth under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes), (iii) be signed by the holder in the same manner as the original signature on the letter of transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee register the transfer of such Old Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form, and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender, or termination of the exchange offer. Properly withdrawn Old Notes may be retendered by following one of the procedures under "--Procedures for Tendering" at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, the Company shall not be required to accept for exchange, or to issue New Notes in exchange for, any Old Notes and may terminate or amend the exchange offer if at any time before the acceptance of such Old Notes for exchange or the exchange of the New Notes for such Old Notes, the Company determines that the exchange offer violates applicable law, any applicable interpretation of the staff of the Commission or any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes tendered, and no New Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended. In any such event
the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed letters of transmittal should be directed to the Exchange Agent. has been appointed as Exchange Agent for the exchange offer. Questions, requests for assistance and requests for additional copies of this Prospectus or of the letter of transmittal should be directed to the Exchange Agent addressed as follows:
[ ]
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT DELIVERY:
[ ] ]
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BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
[ ]
FOR INFORMATION OR
CONFIRMATION BY TELEPHONE:
[ ]
Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand or by overnight delivery service.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. The principal solicitation is being made by mail; however, additional solicitations may be made in person or by telephone by officers and employees of the Company. The estimated cash expenses to be incurred in connection with the exchange offer will be paid by the Company and are estimated in the aggregate to be $ , which includes fees and expenses of the Exchange Agent, accounting, legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register New Notes in the name of, or request that Old Notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the New Notes. In consideration for issuing the New Notes as contemplated in this Prospectus, we will receive in exchange Old Notes in like principal amount, which will be canceled and as such will not result in any increase in our indebtedness.
The Company used the net proceeds of the offering of the Old Notes, together with borrowings under the New Credit Facility, (i) to finance, in part, the Recapitalization, (ii) to repay indebtedness, and (iii) to pay related fees and expenses. The following table sets forth the sources and uses of funds for the Transactions:
AMOUNT
-------------------
(DOLLARS IN
MILLIONS)
SOURCES:
Cash...................................................................... $ 20.0
New Credit Facility(1).................................................... 92.6
Old Notes................................................................. 125.0
Holdings PIK Notes and Common Stock(2).................................... 20.0
Odyssey Investment........................................................ 100.2
Rollover Investment(3).................................................... 30.3
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Total Sources......................................................... $ 388.1
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USES:
Payment of consideration in Recapitalization(4)........................... $ 299.7
Rollover Investment(3).................................................... 30.3
Repayment of indebtedness and accrued interest(5)......................... 45.1
Fees and expenses(6)...................................................... 13.0
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Total uses............................................................ $ 388.1
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(1) The New Credit Facility provides for aggregate borrowings of up to $120.0 million, consisting of a $45.0 million Tranche A Facility, a $45.0 million Tranche B Facility and a $30.0 million revolving credit facility, of which, as of December 3, 1998, approximately $27.4 million was undrawn and available for certain permitted acquisitions and for general corporate purposes, including working capital requirements. See "Description of Other Indebtedness--The Company--The New Credit Facility."
(2) Represents $20.0 million in the form of Holdings PIK Notes and common stock of Holdings that were issued to certain shareholders of Holdings in the Recapitalization.
(3) Represents approximately $30.3 million in the form of shares of common stock and options retained by certain continuing equity holders of Holdings.
(4) Includes (i) payments after expenses to certain equity holders of Holdings
of $283.3 million of which $263.3 million was paid in cash and $20.0 million
was paid in the form of Holdings PIK Notes and common stock of Holdings and
(ii) payment of certain management bonuses and certain of the Company's
expenses totalling approximately $16.4 million. See "Certain Relationships
and Related Transactions."
(5) Represents refinancing of long-term debt consisting of $45.0 million of borrowings with a maturity of 2003 and bearing an interest rate, as of December 3, 1998, of 6.9% under the Company's prior credit agreement and accrued interest thereon of $0.1 million.
(6) Includes a $3.5 million fee paid to Odyssey in connection with the Recapitalization. See "Certain Relationships and Related Transactions."
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company as of September 30, 1998, on a historical basis and of the Company and Holdings on a pro forma basis after giving effect to the Transactions as if they had occurred on September 30, 1998. This table should be read in conjunction with the information contained in "Use of Proceeds," "Unaudited Pro Forma Consolidated Financial Information" and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as the Consolidated Historical Financial Statements and the notes thereto included elsewhere in this Prospectus.
SEPTEMBER 30, 1998
---------------------------------
PRO FORMA
----------------------
THE
ACTUAL COMPANY HOLDINGS
--------- ---------- ----------
(DOLLARS IN THOUSANDS)
Cash and cash equivalents...................................................... $ 19,486 $ -- $ --
--------- ---------- ----------
--------- ---------- ----------
Total debt (including current maturities):
Term debt.................................................................... $ 45,000 $ -- $ --
New Credit Facility(1)....................................................... -- 93,114 93,114
Old Notes.................................................................... -- 125,000 125,000
Holdings PIK Notes (net of unamortized discount of $2.6 million)............. -- -- 17,400
--------- ---------- ----------
Total debt................................................................. 45,000 218,114 235,514
--------- ---------- ----------
Stockholders' equity (deficit):
Common stock $0.01 par value and paid-in capital............................... 24,281 24,281 109,081
Other stockholders' equity (deficit)........................................... 12,146 (153,291) (244,458)
--------- ---------- ----------
Total stockholders' equity (deficit)........................................... 36,427 (129,010) (135,377)
--------- ---------- ----------
Total capitalization........................................................... $ 81,427 $ 89,104 $ 100,891
--------- ---------- ----------
--------- ---------- ----------
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(1) The New Credit Facility consists of: (i) the Revolving Credit Facility which provides for borrowings of up to $30.0 million, of which approximately $2.6 million was drawn in connection with the Recapitalization with the remainder undrawn at closing and available for certain permitted acquisitions and for general corporate purposes, including working capital requirements; (ii) the Tranche A Facility, which provides for term debt of $45.0 million; and (iii) the Tranche B Facility which provides for term debt of $45.0 million. See "Description of Other Indebtedness--The Company--The New Credit Facility." For purposes of the September 30, 1998 pro forma presentation above, $3.1 million was assumed to have been drawn on the Revolving Credit Facility in connection with the Recapitalization because the Company had less cash and cash equivalents on that date.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following pro forma consolidated financial information of the Company and Holdings has been derived by the application of pro forma adjustments to Holdings' historical consolidated financial statements for the year ended September 30, 1998 The pro forma consolidated statements of operations give effect to the Recapitalization and related transactions as if such transactions had been consummated on October 1, 1997. The pro forma consolidated balance sheet gives effect to the Recapitalization and related transactions as if such transactions had occurred as of September 30, 1998. The adjustments necessary to fairly present this pro forma consolidated financial information have been made based on available information and in the opinion of management are reasonable and are described in the accompanying notes. The pro forma consolidated financial information should not be considered indicative of actual results that would have been achieved had the Recapitalization and related transactions been consummated on the respective dates indicated and do not purport to indicate balance sheet data or results of operations as of any future date or for any future period. You should read the pro forma consolidated financial statements together with the "Use of Proceeds," the "The Transactions" and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and the Consolidated Historical Financial Statements and the notes thereto, and other financial information included elsewhere in this Prospectus.
The pro forma adjustments were applied to the respective historical consolidated financial statements to reflect and account for the Transactions as a recapitalization. As a result, such adjustments will have no impact on the historical basis of either the Company's or Holdings' assets and liabilities. Accordingly, the Transactions have not impacted the historical basis of the Company's and Holding's assets and liabilities.
The unaudited consolidated pro forma statement of operations does not include pro forma adjustments for certain non-recurring costs and charges, consisting primarily of compensation costs for one-time management bonuses and stock options which were cancelled, in each case, in conjunction with the Recapitalization, the cost of terminating a financial advisory services agreement with an affiliate of the Company's largest stockholder, the write-off of deferred financing costs, and professional, advisory and financing fees. A one-time charge of approximately $39.6 million ($28.8 million after tax) was recorded in the first quarter of fiscal 1999. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview."
TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
HOLDINGS
COMPANY PRO FORMA COMPANY PRO PRO FORMA PRO
HISTORICAL ADJUSTMENTS(1) FORMA ADJUSTMENTS(2) FORMA
---------- -------------- ------------- -------------- -----------
Net sales.................................. $ 110,868 -- $ 110,868 -- $ 110,868
Cost of sales.............................. 59,395 -- 59,395 -- 59,395
---------- -------------- ------------- ------- -----------
Gross profit............................... 51,473 -- 51,473 -- 51,473
---------- -------------- ------------- ------- -----------
Operating expenses:
Selling and administrative............... 10,473 $ (100)(a) 10,373 -- 10,373
Amortization of intangibles.............. 2,438 -- 2,438 -- 2,438
Research and development................. 1,724 -- 1,724 -- 1,724
---------- -------------- ------------- ------- -----------
Total operating expenses............... 14,635 (100) 14,535 -- 14,535
---------- -------------- ------------- ------- -----------
Income from operations..................... 36,838 100 36,938 -- 36,938
Interest expense--net...................... 3,175 19,614(b) 22,789 $ 2,630(a) 25,419
Warrant put value adjustment............... 6,540 (6,540)(c) -- -- --
---------- -------------- ------------- ------- -----------
Income before income taxes................. 27,123 (12,974) 14,149 (2,630) 11,519
Income tax provision....................... 12,986 (7,610)(d) 5,376 (1,026)(b) 4,350
---------- -------------- ------------- ------- -----------
Net income................................. $ 14,137 $ (5,364) $ 8,773 $ (1,604) $ 7,169
---------- -------------- ------------- ------- -----------
---------- -------------- ------------- ------- -----------
EBITDA, As Defined (3)..................... $ 43,547 $ 100 $ 43,647 -- $ 43,647
Cash flow provided by (used in):
Operating activities..................... 23,455 (10,721) 12,734 -- 12,734
Investing activities..................... (4,295) -- (4,295) -- (4,295)
Financing activities..................... (5,071) (1,127) (6,198) -- (6,198)
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TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(1) The amounts in this column represent the adjustments necessary to determine the Company's pro forma results of operations as follows:
(a) This adjustment represents the elimination of the annual advisory fee payable to an affiliate of the Company's former largest stockholder.
(b) The adjustment to interest expense reflects the following:
(AMOUNTS IN THOUSANDS)
-----------------------
Interest expense on existing indebtedness to be retired in
connection with the Transactions.......................... $ (3,358)
Interest income on cash and cash equivalents................ 450
Amortization of debt issuance costs on existing
indebtedness.............................................. (267)
-------
Net interest expense........................................ (3,175)
Interest expense on New Credit Facility (at a weighted
average rate of 9.0%)..................................... 8,370
Interest expense on the Notes............................... 12,969
Amortization of debt issuance costs......................... 1,450
-------
Total adjustment............................................ $ 19,614
-------
-------
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(c) This adjustment represents the elimination of the warrant put value adjustment. The warrants were retired in connection with the Recapitalization.
(d) The tax effect of pro forma adjustments to income before income taxes is based on the estimated applicable statutory tax rates. No tax effect is recorded for the elimination of the warrant put value adjustment. The income tax adjustment also excludes the tax effect of non-recurring costs and charges described previously.
(2) The amounts in this column represent the adjustments necessary to determine Holdings' pro forma consolidated statement of operations as follows:
(a) This adjustment represents interest expense on the Holdings PIK Notes, including amortization of debt issuance costs and the debt discount.
(b) This adjustment represents the tax effect of pro forma adjustments to income before income taxes and is based on the estimated applicable statutory tax rates. The income tax adjustment also excludes the tax effect of non-recurring costs and charges described previously.
TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
(3) EBITDA, As Defined, represents earnings before interest, taxes, depreciation and amortization and the warrant put value adjustment and prior to the impact of the purchase accounting adjustments to inventory associated with the acquisition of Marathon as follows:
COMPANY COMPANY PRO HOLDINGS PRO
HISTORICAL FORMA FORMA
----------- ------------- ------------
(AMOUNTS IN THOUSANDS)
Net income..................................................... $ 14,137 $ 8,773 $ 7,169
Adjustments:
Income tax provision......................................... 12,986 5,376 4,350
Interest expense............................................. 3,175 22,789 25,419
Depreciation and amortization................................ 6,467 6,467 6,467
----------- ------------- ------------
36,765 43,405 43,405
Warrant put value adjustment................................. 6,540 -- --
Marathon inventory purchase accounting adjustment............ 242 242 242
----------- ------------- ------------
EBITDA, As Defined............................................. $ 43,547 $ 43,647 $ 43,647
----------- ------------- ------------
----------- ------------- ------------
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TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (1)
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
COMPANY PRO FORMA COMPANY PRO FORMA HOLDINGS
HISTORICAL ADJUSTMENTS(2) PRO FORMA ADJUSTMENTS (3) PRO FORMA
----------- -------------- ----------- --------------- -----------
ASSETS
Current assets:
Cash and cash equivalents...................... $ 19,486 $ (19,486)(a) $ -- $ -- $ --
Accounts receivable............................ 12,530 -- 12,530 -- 12,530
Inventories.................................... 18,280 -- 18,280 -- 18,280
10,780(a)
Other.......................................... 3,964 236(b) 4,200 (380)(b) 14,600
----------- -------------- ----------- --------------- -----------
Total current assets......................... 54,260 (19,250) 35,010 10,400 45,410
Property, plant and equipment--net............... 21,951 -- 21,951 -- 21,951
Intangibles & other--net......................... 39,574 10,127(c) 49,701 253(c) 49,954
----------- -------------- ----------- --------------- -----------
TOTAL............................................ $ 115,785 $ (9,123) $ 106,662 $ 10,653 $ 117,315
----------- -------------- ----------- --------------- -----------
----------- -------------- ----------- --------------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
$ (5,000)(d)
Current portion of long-term debt.............. $ 5,000 6,127(d) $ 6,127 $ -- $ 6,127
Accounts payable............................... 5,667 -- 5,667 -- 5,667
Accrued liabilities............................ 10,239 (100)(d) 10,139 (380)(b) 9,759
Put warrants (4)............................... 16,700 (16,700)(e) -- -- --
----------- -------------- ----------- --------------- -----------
Total current liabilities.................... 37,606 (15,673) 21,933 (380) 21,553
Long-term debt:
Secured bank financing......................... 40,000 (40,000)(d) -- -- --
New Credit Facility............................ -- 86,987(d) 86,987 -- 86,987
Old Notes...................................... -- 125,000(d) 125,000 -- 125,000
Holdings PIK Notes............................. -- -- -- 17,400(d) 17,400
Other Liabilities................................ 1,752 -- 1,752 -- 1,752
----------- -------------- ----------- --------------- -----------
Total liabilities............................ 79,358 156,314 235,672 17,020 252,692
----------- -------------- ----------- --------------- -----------
Stockholders' equity (deficit)
102,800(e)
Capital stock.................................. 24,281 -- 24,281 (18,000)(h) 109,081
(117,933)(f)
(2,014)(g)
10,780(a)
Retained earnings (deficit).................... 12,900 (165,437)(e) (152,537) 18,000(h) (243,704)
Minimum pension liability adjustment........... (754) -- (754) -- (754)
----------- -------------- ----------- --------------- -----------
Total stockholders' equity (deficit)........... 36,427 (165,437) (129,010) (6,367) (135,377)
----------- -------------- ----------- --------------- -----------
TOTAL.......................................... $ 115,785 $ (9,123) $ 106,662 $ 10,653 $ 117,315
----------- -------------- ----------- --------------- -----------
----------- -------------- ----------- --------------- -----------
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TRANSDIGM INC.
TRANSDIGM HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(1) Set forth below are the sources and uses of funds pertaining to the Transactions, categorized by their impact on the Company and Holdings, respectively and adjustments for intercompany fund flows. See "Use of Proceeds." The sources and uses below assume the Transactions were consummated on September 30, 1998.
COMPANY HOLDINGS INTERCOMPANY TOTAL
---------- ---------- ------------- ----------
(DOLLARS IN THOUSANDS)
SOURCES:
Existing cash................................................. $ 19,486 $ -- $ -- $ 19,486
New Credit Facility........................................... 93,114 -- -- 93,114
Old Notes..................................................... 125,000 -- -- 125,000
Holdings PIK Notes and Common Stock........................... -- 20,000 -- 20,000
Odyssey Investment............................................ -- 100,200 -- 100,200
Rollover Investment........................................... -- 30,300 -- 30,300
Dividend from the Company to Holdings......................... -- 181,767 (181,767) --
---------- ---------- ------------- ----------
Total....................................................... $ 237,600 $ 332,267 $ (181,767) $ 388,100
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
USES:
Payment of consideration in Recapitalization.................. $ -- $ 299,700 $ -- $ 299,700
Rollover Investment........................................... -- 30,300 -- 30,300
Repayment of existing indebtedness and accrued interest....... 45,100 -- -- 45,100
Fees and expenses............................................. 10,733 2,267 -- 13,000
Dividend from the Company to Holdings......................... 181,767 -- (181,767) --
---------- ---------- ------------- ----------
Total....................................................... $ 237,600 $ 332,267 $ (181,767) $ 388,100
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
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(2) The amounts in this column represent the adjustments necessary to determine the Company's pro forma consolidated balance sheet after giving effect to the Transactions.
(a) This adjustment reflects the use of cash of $19.5 million on the balance sheet as of September 30, 1998 to fund a portion of the Recapitalization. In management's opinion, the existing cash will not need to be used to meet ordinary working capital needs. The actual cash on hand upon consummation of the Recapitalization was more than this assumed amount. (See "Use of Proceeds").
(b) This adjustment represents the recognition of the estimated tax benefits attributable to the write-off of unamortized debt issuance costs relating to the Company's existing indebtedness (see (c) below).
(c) This adjustment represents the recognition of $10.7 million of debt issuance costs associated with the New Credit Facility and the Notes less the write-off of $0.6 million of unamortized debt issuance costs relating to the Company's existing indebtedness.
(d) This adjustment represents the recognition of the New Credit Facility of $93.1 million and the Notes of $125.0 million along with the repayment of $45.1 million of existing indebtedness (current and long-term portion) and accrued interest. The amount of the new indebtedness that is expected to be payable within one year is $6.1 million. The actual amount borrowed under the New Credit Facility was less than $93.1 million because the Company's cash balances utilized in the Transactions were more than the $19.5 million assumed under (1) above. (See "Use of Proceeds.")
(e) This adjustment includes the following:
- The recognition of a $181.8 million cash dividend to Holdings which is
comprised of the proceeds from the New Credit Facility and the Notes (see Note
(d) above) and the Company's cash balance as of September 30, 1998 (see Note
(a) above), less the repayment of existing indebtedness and fees and expenses
related to the Transactions.
- The elimination of the outstanding warrants of $16.7 million.
- A $0.4 million after-tax charge resulting from the write-off of unamortized deferred loan costs relating to the Company's existing indebtedness which was repaid.
(3) The amounts in this column represent the adjustments related to the Holdings PIK Notes and other adjustments necessary to determine Holdings' pro forma consolidated balance sheet after giving effect to the Transactions.
(a) This adjustment represents the recognition of the estimated income tax benefits resulting from the settlement of Holdings' stock options in connection with the Transactions and the estimated fees and expenses related to the Recapitalization.
(b) This adjustment represents the reclassification of the Company's accrued income tax liability against Holdings' income tax receivable associated with the settlement of stock options and the fees and expenses (see (a) above).
(c) This adjustment represents the recognition of deferred loan costs associated with the Holdings PIK Notes.
(d) This adjustment represents the recognition of the Holdings PIK Notes (including unamortized discount of $2.6 million).
(e) This adjustment represents the issuance of $100.2 million of additional capital stock to Odyssey and $2.6 million of capital stock in connection with the Holdings PIK Notes.
(f) This adjustment represents the payment of consideration for the Recapitalization along with the settlement of the stock options determined as follows:
(DOLLARS IN
THOUSANDS)
Value of common stock, options and warrants.......................................................... $ 330,000
Rollover Investment.................................................................................. (30,300)
-----------
Payment of consideration in the Recapitalization..................................................... 299,700
Dividend received from the Company................................................................... (181,767)
-----------
Total................................................................................................ $ 117,933
-----------
-----------
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(g) This adjustment represents the recognition of a $2.0 million expense for certain fees and expenses related to the Recapitalization.
(h) This adjustment recognizes the elimination of capital stock and paid-in capital associated with the shares of common stock that were repurchased in connection with the Recapitalization.
(4) In connection with the formation of the Company on September 30, 1993, the Company issued subordinated notes which included detachable warrants to purchase approximately 16,000 shares of non-voting common stock of Holdings at a price of $0.10 per share, exercisable upon certain change of control events. If no such event had occurred before July 31, 1999, warrant holders had the right to require the Company to repurchase the warrants at their then-appraised fair market value, which is known as the "put value." The carrying value of the put warrants represents the estimated put value of the warrants on September 30, 1998 based upon the provisions of the Transactions. The put warrants were retired in connection with the Recapitalization.
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial information of Holdings and the Company. The selected historical consolidated financial data for the fiscal years ended September 30, 1998, 1997, and 1996 have been derived from Holdings' consolidated financial statements, which have been audited by Deloitte & Touche LLP, independent auditors. The selected historical consolidated audited financial data for the fiscal years ended September 30, 1995 and 1994, which have also been derived from Holdings' consolidated financial statements, have been adjusted to give retroactive effect to the change in accounting for put warrants as described in Note 17 to the Consolidated Historical Financial Statements of Holdings included elsewhere in this Prospectus. Because Holdings has no operations of its own and, prior to the Recapitalization, had no assets or liabilities other than its equity interest in the Company, the historical consolidated financial information of Holdings for each of the years in the five-year period ended September 30, 1998 are identical to the historical consolidated financial information of the Company. The pro forma financial information set forth below gives effect to the Transactions as if they had occurred at the beginning of the period or as of the balance sheet date, as applicable. The pro forma financial information is not necessarily indicative of either future results of operations or the results that might have occurred if the foregoing transactions had been consummated on such date. There can be no assurance that assumptions used in the preparation of the pro forma financial data will prove to be correct. The Marathon Acquisition was completed on August 8, 1997.
You should read the following table together with the "Unaudited Pro Forma Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and the Consolidated Historical Financial Statements and the notes thereto included elsewhere in this Prospectus.
FISCAL YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
UNAUDITED
PRO FORMA THE
COMPANY
-------------
1994 1995 1996 1997(1) 1998 1998
--------- --------- --------- ----------- --------- -------------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net Sales.................................................. $ 52,028 $ 57,095 $ 62,897 $ 78,159 $ 110,868 $ 110,868
Gross Profit............................................... 9,151 17,029 21,023 28,856 51,473 51,473
Selling and administrative................................. 6,244 6,167 6,459 7,561 10,473 10,373
Amortization of intangibles................................ 4,062 4,002 3,838 2,089 2,438 2,438
Research and development................................... 784 1,058 836 1,116 1,724 1,724
--------- --------- --------- ----------- --------- -------------
Operating income (loss) (2)................................ (1,939) 5,802 9,890 18,090 36,838 36,938
Interest expense, net...................................... 4,823 5,193 4,510 3,463 3,175 22,789
Warrant put value adjustment (3)........................... 868 736 2,160 4,800 6,540 --
--------- --------- --------- ----------- --------- -------------
Pre-tax income (loss)...................................... (7,630) (127) 3,220 9,827 27,123 14,149
Provision (benefit) for income taxes....................... (2,307) 134 2,045 5,193 12,986 5,376
--------- --------- --------- ----------- --------- -------------
Income (loss) before extraordinary item.................... (5,323) (261) 1,175 4,634 14,137 8,773
Extraordinary item (4)..................................... -- -- -- (1,462) -- --
--------- --------- --------- ----------- --------- -------------
Net income (loss).......................................... $ (5,323) $ (261) $ 1,175 $ 3,172 $ 14,137 $ 8,773
--------- --------- --------- ----------- --------- -------------
--------- --------- --------- ----------- --------- -------------
OTHER FINANCIAL DATA:
Cash flows provided by (used in):
Operating activities..................................... $ 1,115 $ 3,972 $ 18,695 $ 17,468 $ 23,455 $ 12,734
Investing activities..................................... (3,595) 702 (2,494) (43,160) (4,295) (4,295)
Financing activities..................................... 1,851 (4,560) (13,475) 28,153 (5,071) (6,198)
EBITDA, As Defined (5)..................................... 9,875 13,168 17,213 24,522 43,547 43,647
EBITDA, As Defined, margin................................. 19.0% 23.1% 27.4% 31.4% 39.3% 39.4%
Depreciation and amortization.............................. $ 7,341 $ 7,366 $ 7,323 $ 5,766 $ 6,467 $ 6,467
Capital expenditures....................................... 1,941 1,702 2,494 2,285 5,061 5,061
Ratio of earnings to fixed charges(6)...................... -- -- 1.7x 3.7x 9.0x 1.6x
Ratio of EBITDA, As Defined, to interest expense........... 2.1x 2.5x 3.8x 7.1x 13.7x 1.9x
Ratio of EBITDA, As Defined, less capital expenditures to
interest expense......................................... 1.6x 2.2x 3.3x 6.4x 12.1x 1.7x
Ratio of total debt to EBITDA, As Defined.................. 3.7x 2.4x 1.1x 2.0x 1.0x 5.0x
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital............................................ $ 12,592 $ 17,730 $ 16,300 $ 16,520 $ 16,654 $ 12,977
Total assets............................................... 71,554 65,758 57,666 101,969 115,785 106,662
Long-term debt, including current portion.................. 36,399 32,074 19,124 50,000 45,000 218,114
Total stockholders' equity................................. 19,745 19,285 19,670 22,613 36,427 (129,010)
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(2) Operating income (loss) includes the effect of a non-cash charge of $4,473 in fiscal 1994 due to a purchase accounting adjustment to inventory associated with the acquisition of the Aerospace Components Group of IMO and a non-cash charge of $666 in fiscal 1997 and $242 in fiscal 1998 due to a purchase accounting adjustment to inventory associated with the acquisition of Marathon. The $100 adjustment to the Company's 1998 pro forma operating income represents the elimination of the advisory fee payable to an affiliate of one of the Company's stockholders.
(3) In connection with the formation of the Company on September 30, 1993, the Company issued subordinated notes which included detachable warrants to purchase approximately 16,000 shares of non-voting common stock of Holdings at a price of $0.10 per share, exercisable upon certain change of control events, including the Recapitalization. The warrant put value adjustment for each period indicated reflects the increase in the estimated put value of these warrants that occurred during that period.
(4) The extraordinary charge in fiscal 1997 relates to costs associated with the retirement of the subordinated notes referred to in footnote (3) above issued at the time of the Company's formation in 1993.
(5) EBITDA, As Defined, represents earnings before interest, taxes, depreciation and amortization and the warrant put value adjustments and prior to the impact of the purchase accounting adjustments to inventory referred to in footnote (2) above and the extraordinary item referred to in footnote (4) above as follows:
PRO FORMA
THE COMPANY
1994 1995 1996 1997 1998 1998
--------- --------- --------- --------- --------- -------------
Income (loss) before extraordinary
item................................ $ (5,323) $ (261) $ 1,175 $ 4,634 $ 14,137 $ 8,773
Adjustments:
Income tax provision (benefit)...... (2,307) 134 2,045 5,193 12,986 5,376
Interest expense.................... 4,823 5,193 4,510 3,463 3,175 22,789
Depreciation and amortization....... 7,341 7,366 7,323 5,766 6,467 6,467
--------- --------- --------- --------- --------- -------------
4,534 12,432 15,053 19,056 36,765 43,405
Warrant put value adjustment........ 868 736 2,160 4,800 6,540 --
Inventory purchase accounting
adjustment........................ 4,473 -- -- 666 242 242
--------- --------- --------- --------- --------- -------------
EBITDA, As Defined.................... $ 9,875 $ 13,168 $ 17,213 $ 24,522 $ 43,547 $ 43,647
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
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Although EBITDA, As Defined, is not a measure of performance calculated in accordance with GAAP, the Company believes that EBITDA, As Defined, is accepted as a generally recognized measure of performance in the Company's industry. Nevertheless, this measure should not be considered in isolation or as a substitute for operating income, net income, net cash provided by operating activities or any other measure for determining the Company's operating performance or liquidity which is calculated in accordance with GAAP.
(6) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt expense and the portion (approximately 33%) of rental expense that management believes is representative of the interest component of rental expense. Earnings were insufficient to cover fixed charges by $7,630 and $127 for fiscal 1994 and 1995, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE STATEMENTS IN THIS DISCUSSION REGARDING THE INDUSTRY OUTLOOK, THE COMPANY'S EXPECTATIONS REGARDING THE FUTURE PERFORMANCE OF ITS BUSINESSES, AND THE OTHER NONHISTORICAL STATEMENTS IN THIS DISCUSSION ARE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO THE RISKS AND UNCERTAINTIES DESCRIBED IN THE "RISK FACTORS" SECTION. YOU SHOULD READ THE FOLLOWING DISCUSSION OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE COMPANY TOGETHER WITH THE SECTIONS ENTITLED "RISK FACTORS" AND "SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA" AND WITH THE CONSOLIDATED HISTORICAL FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. THE COMPANY'S FISCAL YEAR ENDS ON SEPTEMBER 30 OF THE YEARS INDICATED.
OVERVIEW
TransDigm is a leading supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft. The Company sells its products to commercial airlines and aircraft maintenance facilities in the aftermarket, to most original equipment manufacturers ("OEMs") of aircraft and to various agencies of the United States government. Sales of the Company's products are made directly to these organizations as well as through U.S. and international distributors who maintain inventories throughout the world of products purchased from the Company and others. The Company generates most of its EBITDA, As Defined from sales of replacement parts in the aftermarket (i.e. to airlines). This is because most of the Company's OEM sales are on an exclusive sole source basis; therefore, in most cases, the Company is the only certified provider of these parts in the aftermarket. Because aftermarket parts sales are driven by the size of the worldwide aircraft fleet, they are relatively stable and generate recurring revenues over the life of an aircraft that are many times the size of the original OEM purchases.
The Company provides its products to commercial airlines (such as United Airlines and Continental Airlines), large commercial transport and regional and business aircraft OEMs (such as Boeing, Bombardier and Cessna) and various agencies of the United States government. While aftermarket and OEM sales have historically each accounted for approximately half of the Company's net sales, aftermarket sales typically carry a substantially higher gross margin than sales to OEMs.
Management believes that the aircraft components industry has historically been sensitive to changes in revenue passenger miles and, to a lesser extent, to airline profitability, each of which has historically been correlated with changes in general economic conditions, and the size and age of the worldwide aircraft fleet. On a worldwide basis, revenue passenger miles have increased from approximately 978 billion in 1985 to approximately 1,719 billion in 1996 at a compound annual growth rate of approximately 6%. See "Business--Industry." In addition, management believes less than 20% of the Company's annual net sales during fiscal 1998 were attributable to sales to manufacturers of large commercial transports such as Boeing and Airbus. As a result, increases and decreases in the manufacture of large commercial transports only affect a portion of the Company's net sales.
Management has, since 1993, implemented a number of programs that have had a positive impact on the profitability and strategic positioning of the Company. To ensure a competitive cost structure, the Company consolidated the Adel Fasteners and Wiggins Connectors divisions into AdelWiggins and the AeroProducts and Controlex divisions into AeroControlex and, in fiscal 1994, consolidated the Company's four manufacturing facilities into two locations. Beginning in fiscal 1994, management reorganized the business along 11 major product lines in order to streamline new business initiatives, increase accountability and facilitate greater responsiveness to customer needs.
The Company's historical financial results are also affected by the acquisition of Marathon on August 8, 1997. Marathon's operations were consolidated with those of the Company as of the acquisition date.
The Transactions were recorded as a recapitalization for accounting purposes. As a result of the Transactions, including the financing and the application of the proceeds thereof, the Company incurred certain nonrecurring costs and charges, consisting primarily of compensation costs for management bonuses and stock options which were canceled in conjunction with the Recapitalization, the cost of terminating a financial advisory services agreement with an affiliate of one of the Company's stockholders, the write-off of deferred financing costs, and professional, advisory and financing fees. A one-time charge of approximately $39.6 million ($28.8 million after tax) was recorded in the first quarter of fiscal 1999. Because the cash costs included in this charge were funded principally through the proceeds of the offering of the Old Notes and borrowings under the New Credit Facility, this cost did not materially impact the Company's liquidity, ongoing operations or market position. For a discussion of the consequences of the incurrence of indebtedness in connection with the Transactions, see the heading "--Liquidity and Capital Resources" in this section.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating data of the Company as a percentage of net sales.
FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------
1996 1997 1998
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Net sales................................................................................ 100.0% 100.0% 100.0%
Gross profit............................................................................. 33.4 36.9 46.4
Selling and administrative............................................................... 10.3 9.7 9.4
Amortization of intangibles.............................................................. 6.1 2.7 2.2
Research and development................................................................. 1.3 1.4 1.6
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Operating income......................................................................... 15.7 23.1 33.2
Interest expense, net.................................................................... 7.2 4.4 2.9
Warrant put value adjustment (1)......................................................... 3.4 6.1 5.9
Provision for income taxes............................................................... 3.2 6.6 11.7
Extraordinary item....................................................................... 0.0 1.9 0.0
--------- --------- ---------
Net income............................................................................... 1.9% 4.1% 12.7%
--------- --------- ---------
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(1) In connection with the formation of the Company on September 30, 1993, the Company issued subordinated notes which included detachable warrants to purchase approximately 16,000 shares of non-voting common stock of Holdings at a price of $0.10 per share, exercisable upon certain change of control events, including the Recapitalization. The warrant put value adjustment for each period indicated reflects the increase in the estimated put value of these warrants that occurred during that period.
CHANGES IN RESULTS OF OPERATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 1998 COMPARED WITH FISCAL YEAR ENDED SEPTEMBER
30, 1997
- NET SALES. Net sales increased by $32.7 million, or 42%, to $110.8 million for fiscal 1998 from $78.1 million for fiscal 1997. Approximately $19.5 million of this increase was attributable to the acquisition of Marathon on August 8, 1997. The remainder of the increase was attributable to an increase in sales volume resulting from new business initiatives, higher selling prices primarily related to aftermarket sales and an industry-wide increase in demand.
- GROSS PROFIT. Gross profit (net sales less cost of sales) increased by $22.6 million, or 78.8%, to $51.5 million for fiscal 1998 from $28.8 million for fiscal 1997. Approximately $8.7 million of this
increase was attributable to the acquisition of Marathon. The remainder of the increase was attributable to the higher selling prices and sales volumes and internal productivity initiatives. Gross profit increased as a percentage of net sales from 36.9% in the 1997 period to 46.4% in fiscal 1998. This increase was primarily attributable to higher selling prices and manufacturing efficiencies resulting from the internal productivity initiatives and the increase in sales volumes.
- SELLING AND ADMINISTRATIVE. Selling and administrative expense increased by $2.9 million, or 38.2%, to $10.5 million for fiscal 1998 from $7.6 million for fiscal 1997. This increase was primarily attributable to the Marathon acquisition. Selling and administrative expenses as a percentage of net sales remained relatively constant at 9.7% in fiscal 1997 and 9.4% in fiscal 1998.
- AMORTIZATION OF INTANGIBLES. Amortization of intangibles increased by $0.3 million, or 14.3%, to $2.4 million for fiscal 1998 from $2.1 million for fiscal 1997. Higher goodwill amortization relating to the acquisition of Marathon was partially offset by a reduction in amortization of other intangible assets which became fully amortized in fiscal 1997.
- RESEARCH AND DEVELOPMENT. Research and development expense increased by $0.6 million, or 54.5%, to $1.7 million for fiscal 1998 from $1.1 million for fiscal 1997. This increase was primarily attributable to the acquisition of Marathon. Research and development expense as a percentage of net sales remained relatively constant at 1.4% in fiscal 1997 and 1.6% in fiscal 1998.
- OPERATING INCOME. Operating income increased by $18.7 million, or 103.3%, to $36.8 million for fiscal 1998 from $18.1 million for fiscal 1997. Approximately $4.6 million of this increase was attributable to the acquisition of Marathon and the remainder to the other increases in gross profit discussed above. As a percentage of revenues, operating income increased to 33.2% in fiscal 1998 from 23.1% in fiscal 1997.
- INTEREST EXPENSE. Interest expense for fiscal 1998 approximated the amount for fiscal 1997 at $3.2 million and $3.5 million, respectively. An increase in borrowings related to the acquisition of Marathon was partially offset by lower borrowing costs resulting from refinancing of the Company's subordinated notes.
- INCOME TAXES. Income tax expense as a percentage of income before income taxes and the non-deductible warrant put value adjustment increased to 38.6% in fiscal 1998 from 35.5% in fiscal 1997. The increase in the effective rate resulted from higher non-deductible expenses, including the amortization of goodwill recognized in connection with the Marathon acquisition.
- NET INCOME. Net income increased by $10.9 million, or 340.6%, to $14.1 million for fiscal 1998 from $3.2 million for fiscal 1997 primarily as result of the factors referred to above and an extraordinary loss in 1997 partially offset by the warrant put value adjustment.
FISCAL YEAR ENDED SEPTEMBER 30, 1997 COMPARED WITH FISCAL YEAR ENDED SEPTEMBER
30, 1996
- NET SALES. Net sales increased by $15.3 million, or 24.3%, to $78.2 million for fiscal 1997 from $62.9 million for fiscal 1996. This increase was primarily attributable to an industry-wide increase in demand and increases in sales volume resulting from new business initiatives as well as higher selling prices primarily related to aftermarket sales. The remainder of the increase, or approximately $3.0 million, was attributable to the acquisition of Marathon.
- GROSS PROFIT. Gross profit increased by $7.9 million, or 37.6%, to $28.9 million for fiscal 1997 from $21.0 million for fiscal 1996. This increase was attributable to the higher selling prices and sales volumes and internal productivity initiatives, all of which was partially offset by higher cost of sales at Marathon resulting from the write-up of Marathon's inventory in place at the time of the Marathon acquisition. Gross profit also increased as a percentage of net sales from 33.4% in fiscal 1996 to 36.9% in fiscal 1997. This increase was primarily attributable to higher selling prices and
manufacturing efficiencies resulting from the internal productivity initiatives and the increase in sales volumes, as partially offset by the acquisition of Marathon.
- SELLING AND ADMINISTRATIVE. Selling and administrative expense increased by $1.1 million, or 16.9%, to $7.6 million for fiscal 1997 from $6.5 million for fiscal 1996. This increase was primarily attributable to the acquisition of Marathon, the increase in sales volume (which increased commission expense) and the relocation of the Company's corporate headquarters. Selling and administrative expenses declined as a percentage of net sales from 10.3% in fiscal 1996 to 9.7% in fiscal 1997 due to the increase in net sales referred to above coupled with an effort to control expenses.
- AMORTIZATION OF INTANGIBLES. Amortization of intangibles decreased by $1.7 million, or 44.7%, to $2.1 million for fiscal 1997 from $3.8 million for fiscal 1996. Amortization of intangibles decreased by $2.0 million as a result of the termination of an agreement not to compete at the end of fiscal 1996, partially offset by higher amortization of goodwill relating to the acquisition of Marathon.
- RESEARCH AND DEVELOPMENT. Research and development expense increased by $0.3 million, or 37.5%, to $1.1 million for fiscal 1997 from $0.8 million for fiscal 1996. This increase was primarily attributable to continued new product development. Research and development expense as a percentage of net sales remained relatively constant at 1.3% in fiscal 1996 and 1.4% in fiscal 1997.
- OPERATING INCOME. Operating income increased by $8.2 million, or 82.8%, to $18.1 million for fiscal 1997 from $9.9 million for fiscal 1996. As a percentage of revenues, operating income increased to 23.1% in fiscal 1997 from 15.7% in fiscal 1996. This increase was primarily attributable to the increase in sales volume and gross profits referred to above.
- INTEREST EXPENSE. Interest expense decreased by $1.0 million, or 22.2%, to $3.5 million for fiscal 1997 from $4.5 million for fiscal 1996 as a result of a decrease in the average level of outstanding borrowings during fiscal 1997.
- INCOME TAXES. Income tax expense as a percentage of income before income taxes and the non-deductible warrant put value adjustment decreased to 35.5% in fiscal 1997 from 38.0% in fiscal 1996. The decrease in the effective rate resulted from foreign sales corporation earnings in fiscal 1997, partially offset by higher non-deductible expenses, including the amortization of goodwill recognized in connection with the Marathon acquisition.
- NET INCOME. Net income increased by $2.0 million, or 166.7%, to $3.2 million for fiscal 1997 from $1.2 million for fiscal 1996 primarily as result of the factors noted above partially offset by the warrant put value adjustment and a $1.5 million extraordinary loss in fiscal 1997.
- EXTRAORDINARY LOSS. The extraordinary loss in fiscal 1997 of $1.5 million represents prepayment costs and the write-off of unamortized debt issuance costs, net of income tax benefits, related to the redemption of the subordinated notes which were refinanced with a new $70.0 million credit facility in September 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated $23.5 million of cash from operating activities in fiscal 1998 compared to $17.5 million in fiscal 1997 and $18.7 million in 1996. Such increase in operating cash flows is due to improved operating results partially offset by higher working capital.
Cash used in investing activities was approximately $4.3 million in fiscal 1998 compared with $43.2 million in fiscal 1997 and $2.5 million in fiscal 1996. Cash used in investing activities in fiscal 1997 includes $40.9 million related to the acquisition of Marathon (net of cash acquired of $0.7 million). The Company's expenditures for property, plant and equipment were $2.5 million in fiscal 1996, $2.3 million in fiscal 1997 and $5.1 million in fiscal 1998.
Cash used in financing activities for fiscal 1998 was $5.1 million compared to cash provided by financing activities of $28.2 million for fiscal 1997 and cash used in financing activities of $13.5 million for fiscal 1996. During fiscal 1997, the Company obtained a $70.0 million credit facility, the outstanding balance under which has been repaid in connection with the Transactions. Borrowings under this facility of $50.0 million in fiscal 1997 were used to help finance the Marathon acquisition and redeem the Company's outstanding subordinated notes.
In connection with the Recapitalization, the Company incurred substantial
indebtedness and refinanced certain other indebtedness including all borrowings
under the prior credit facility. See the "Capitalization" section. As of
September 30, 1998, on a pro forma basis, Holdings had indebtedness consisting
of $20.0 million in face value of the Holdings PIK Notes and the Company had
indebtedness consisting of (i) $125.0 million in principal amount of the Old
Notes and (ii) $93.1 million of borrowings under the New Credit Facility, which
consisted of an assumed initial draw of $3.1 million under a $30.0 million
Revolving Credit Facility, a $45.0 million term loan under the Tranche A
Facility and a $45.0 million term loan under the Tranche B Facility. The actual
amount borrowed under the Revolving Credit Facility as of the consummation of
the Transactions on December 3, 1998 was $2.6 million because the Company's cash
balances utilized in the Transactions were more than the amount assumed for the
purposes of presenting the pro forma financial information. See "Unaudited Pro
Forma Consolidated Financial Information" and the notes thereto. The interest
rate for the New Credit Facility is, at the Company's option, either (i) a
floating rate equal to the Base Rate (as defined) plus the Applicable Margin, or
(ii) the Eurodollar Rate (as defined) for fixed periods of one, two, three, or
six months, plus the Applicable Margin. The New Credit Facility is subject to
mandatory prepayment with a defined percentage of net proceeds from certain
asset sales, insurance proceeds or other awards (payable in connection with the
loss, destruction or condemnation of any assets), certain new debt and equity
offerings and 50% of excess cash flow (as defined in the New Credit Facility) in
excess of a predetermined amount under the New Credit Facility.
The Old Notes bear, and the New Notes will bear, interest at 10 3/8%. The New Notes and the Old Notes will not require principal payments prior to maturity. The Revolving Credit Facility and the Tranche A Facility will each mature on the six year anniversary of the initial borrowing date and the Tranche B Facility will mature on the seven and a half year anniversary of the initial borrowing date. The New Credit Facility requires the Company to amortize the outstanding indebtedness under each of the Tranche A Facility and the Tranche B Facility, commencing in year 1999, and contains restrictive covenants that will, among other things, limit the incurrence of additional indebtedness, the payment of dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of other indebtedness. See the "Description of the New Notes" and "Description of Other Indebtedness--The Company--The New Credit Facility" section.
The Company's primary cash needs will consist of capital expenditures and debt service. The Company incurs capital expenditures for the purpose of maintaining and replacing existing equipment and facilities and, from time to time, for facility expansion. Capital expenditures totaled approximately $2.5 million, $2.3 million and $5.1 million in fiscal 1996, fiscal 1997 and fiscal 1998, respectively. The Company estimates that capital expenditures will total approximately $5.6 million in fiscal 1999.
The Company intends to pursue additional acquisitions that present opportunities to realize significant synergies, operating expense economies or overhead cost savings or to increase the Company's market position. The Company regularly engages in discussions with respect to potential acquisitions and investments. However, there are no binding agreements with respect to any material acquisitions at this time, and we cannot assure you that we will be able to reach an agreement with respect to any future acquisition. The Company's acquisition strategy may require substantial capital, and no assurance can be given that the Company will be able to raise any necessary funds on terms acceptable to the Company or at all. If the Company incurs additional debt to finance acquisitions, its total interest expense will increase. See "Risk Factors--Risks Related to Potential Future Acquisitions."
The Company's ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, its indebtedness (including the New Notes and the Old Notes), or to fund planned capital expenditures and research and development will depend on their future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond their control. Based upon the current level of operations and anticipated cost savings and revenue growth, management believes that cash flow from operations and available cash, together with available borrowings under the New Credit Facility, will be adequate to meet the Company's future liquidity needs for at least the next few years. The Company may, however, need to refinance all or a portion of the principal of the New Notes and the Old Notes on or prior to maturity. There can be no assurance that the Company's business will generate sufficient cash flow from operations, that anticipated revenue growth and operating improvements will be realized or that future borrowings will be available under the New Credit Facility in an amount sufficient to enable the Company to service its indebtedness, including the New Notes and the Old Notes, or to fund its other liquidity needs. In addition, there can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. See the "Risk Factors" section.
BACKLOG
Management believes that sales order backlog (i.e. orders for products that have not yet been shipped) is a useful indicator of sales to OEMs. As of September 30, 1998, the Company estimated its sales order backlog at $43.2 million compared to an estimated $40.9 million as of September 30, 1997. The majority of the purchase orders outstanding as of September 30, 1998 are scheduled for delivery within the next twelve months. Purchase orders are generally subject to cancellation by the customer prior to shipment. The level of unfilled purchase orders at any given date during the year will be materially affected by the timing of the Company's receipt of purchase orders and the speed with which those orders are filled. Accordingly the Company's backlog as of September 30, 1998 is not necessarily indicative of actual shipments or sales for any future period, and period-to-period comparisons may not be meaningful.
FOREIGN OPERATIONS
The Company manufactures virtually all of its products in the United States. However, a significant portion of the Company's current sales are conducted abroad. These sales are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other action that would have a direct or indirect adverse impact on the business or market opportunities of the Company within such governments' countries. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to the Company's operations and growth strategy.
INFLATION
Many of the Company's raw materials and operating expenses are sensitive to the effects of inflation, which could result in higher operating costs. The effects of inflation on the Company's businesses during fiscal 1998, 1997 and 1996 were not significant.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income." The statement requires that an enterprise classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial position. The Company will adopt this standard during fiscal 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." The statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments such as a measure of segment profit or loss, certain specific revenue and expense items, and segment assets. The Company will adopt this standard during fiscal 1999.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132, "Employer's Disclosures about Pensions and Other Postretirement Benefits." The statement requires an enterprise to disclose certain information about its pension and postretirement benefits, including a reconciliation of beginning and ending balances of the benefit obligation, the funded status of the plans, and the amount of net periodic benefit cost recognized. The Company will adopt this standard in fiscal 1999.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, (b)
a hedge of the exposure to variable cash flows of a forecasted transaction, or
(c) a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The Company will adopt this
standard during fiscal 2000.
While management has not completed its analysis of these new accounting standards, the adoption of these standards is not expected to have a material effect on the Company's financial statements.
IMPACT OF YEAR 2000 ISSUE
We have completed a review of our computer systems and are completing a review of our embedded systems in order to assess our exposure to Year 2000 issues. We purchased all of our computer software from third party vendors and are relying on those vendors to make their software Year 2000 compliant. Except for the vendor of our e-mail system, such vendors have provided us with third party certifications that their systems are Year 2000 compliant.
We do not, however, currently have any information concerning the Year 2000 compliance status of our suppliers and customers, including various agencies of the United States government.
In the event that Year 2000 problems arise within our Company or that our significant suppliers or customers, including various agencies of the United States government, do not successfully and timely achieve Year 2000 compliance, the result may be a delay in our receiving orders and collecting payments, leading to a temporary loss of revenue. We have incurred $180,000 in costs associated with Year 2000 compliance and anticipate incurring $150,000 of additional costs in the future. We may, however, have to bear further Year 2000 costs and expenses which could have a material adverse effect on our business.
The Company has no formal contingency plan in the event Year 2000 problems arise; however, the Company's accounting and business information systems are not complex and manual procedures could be performed for a period of time to provide the information necessary to continue to operate the business.
BUSINESS
THE COMPANY
TransDigm is a leading supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft. The Company sells its products to commercial airlines, aircraft maintenance facilities, aircraft OEMs and to various agencies of the United States government. The Company generates most of its EBITDA, As Defined from sales of replacement parts in the aftermarket (i.e. airlines). This is because most of the Company's OEM sales are on an exclusive sole source basis; therefore, in most cases, the Company is the only certified provider of these parts in the aftermarket. Because aftermarket parts sales are driven by the size of the worldwide aircraft fleet, they are relatively stable and generate recurring revenues over the life of an aircraft that are many times the size of the original OEM purchases. In addition, because the Company has over 40 years of experience in most of its product lines, it benefits from a large and growing installed base of aircraft. For fiscal 1998, the Company generated net sales, operating income and EBITDA, As Defined, of $110.9 million, $36.8 million and $43.5 million, respectively.
TransDigm differentiates itself based on its engineering and manufacturing capabilities, and typically will not bid on non-proprietary "build to print" business. The Company has developed strong product brand names within the airline industry and a reputation for high quality, reliability and customer service. The Company focuses on developing highly customized products to solve specific problems of aircraft operators and manufacturers. Management estimates that over 80% of the Company's products are of proprietary design. The Company provides its products to commercial airlines (such as United Airlines and Continental Airlines), large commercial transport and regional and business aircraft OEMs (such as Boeing, Bombardier and Cessna) and various agencies of the United States government. While aftermarket and OEM sales each typically account for approximately half of the Company's revenues, aftermarket sales typically carry a substantially higher gross margin than sales to OEMs.
The Company is comprised of three business units: (i) AdelWiggins, (ii) AeroControlex, and (iii) Marathon, each of which has a long history in the aircraft components industry. AdelWiggins manufactures an extensive line of fuel and hydraulic system connectors and specialized clamps, heaters and refueling systems. AeroControlex manufactures customized fuel pumps, compressors, valves, couplings and mechanical and electromechanical controls. Marathon manufactures nickel cadmium batteries and static inverters. Marathon was acquired in August 1997 as a strategic complement to the AdelWiggins and AeroControlex businesses.
TransDigm was formed in 1993 through a management-led buyout of IMO. Since its formation, the Company has successfully established leadership positions in well-defined, profitable niches of the aircraft components market that it believes offer sustainable growth opportunities.
INDUSTRY OVERVIEW
The aircraft components industry is highly fragmented, consisting of a large number of small, specialized companies and a limited number of well-capitalized companies. The Company competes in product specific markets which it estimates range in size from $10 million to $100 million in annual revenues. The Company believes that the small size of its markets, combined with the industry's stringent regulatory approvals and the need to make significant investments in research and development reduces the risk of new entrants. Management believes its markets are too small to attract large aerospace companies. In addition, management believes the financial resources and technical expertise required to compete in these markets are beyond the reach of most small companies. Finally all potential competitors must meet the certification requirements and qualification approvals required by the FAA and aircraft OEMs.
AFTERMARKET
Aircraft components need to be serviced regularly to meet FAA standards and aircraft reliability requirements. Demand for aftermarket parts depends on revenue passenger miles and, to a lesser extent, on airline profitability, each of which has historically been correlated with changes in general economic conditions, and the size and age of the worldwide aircraft fleet. Since certain modern aircraft can have useful lives of 30 years or more, spare parts and repair and overhaul services can often generate more sales than the OEM program at significantly higher margins. Management further believes that aftermarket sales help to offset declines in OEM demand as historically airlines and air cargo operators have increased repair and overhaul spending to prolong the life of older aircraft when they delay purchasing new aircraft. Customers in the aftermarket segment include airlines, air cargo operators, aircraft leasing companies, corporate and individual owners of aircraft as well as maintenance, repair and overhaul facilities and various agencies of the United States government, including the military. Management believes that aftermarket sales will continue to be an attractive market as a result of the following factors:
- Air travel traffic continues to increase. In the United States, large commercial transport revenue passenger miles have increased from approximately 431 billion in 1987 to approximately 604 billion in 1997, with 1991 representing the only year in the last ten years in which annual revenue passenger miles decreased. On a worldwide basis, revenue passenger miles have increased from approximately 978 billion in 1985 to 1,719 billion in 1996.
- Total aircraft fleet size has continued to increase despite the volatility of orders and deliveries. At the end of 1997 the large commercial aircraft fleet consisted of approximately 11,900 aircraft, a 4.5% compound annual increase from approximately 7,700 aircraft in 1987. Similarly, the regional aircraft fleet (consisting of turbo-prop and jet aircraft) has increased from approximately 4,900 units in 1987 to approximately 7,500 units in 1997 and the business aircraft fleet has increased from approximately 6,100 units in 1987 to approximately 8,700 units in 1997.
- Aircraft capacity utilization remains at high levels. Passenger load factors (measured as the percentage of occupied seats per flight) for U.S. carriers have increased from 62% in 1987 to 68% in 1996, a record for the industry. During 1997, carriers achieved 69% load factors on a worldwide basis.
OEM
Demand for OEM components depends on new aircraft deliveries. Demand for new aircraft is a function of (i) demand for air travel, (ii) aircraft operator profitability, (iii) fleet age, (iii) regulatory mandates such as noise reduction, and (iv) the lag time between order and delivery, which causes airlines to order aircraft according to perceived future need.
- In the early 1990's, many airlines significantly reduced spending on new aircraft and extended the average age of their fleets due to weakened financial performance. With the return of airline profitability, commercial OEMs have experienced a surge in aircraft orders and deliveries which resulted in large commercial transport deliveries growing from a low of 370 aircraft in 1995 to estimated 774 aircraft by the end of 1998.
- The regional jet aircraft market has grown significantly in recent years as turbo-jet powered aircraft have made substantial inroads in a market traditionally served by the turboprop powered aircraft and some smaller commercial transports. Regional jets have greater range, faster speed and lower noise levels and are perceived as safer and more comfortable by passengers. U.S. regional revenue passenger miles have increased from approximately 4.0 billion miles in 1987 to approximately 7.7 billion miles in 1996. Regional aircraft deliveries have increased significantly to 115 in 1997 since
their introduction in 1988. Industry forecasts by the U.S. Regional Airline Association concluded that approximately 1,280 regional and commuter aircraft will be delivered between 1998 and 2008.
- The business jet market is driven by, among other factors, the increasing popularity of fractional ownership and the increasing demand for more expedient and convenient travel. Deliveries of executive jets have increased significantly since 1987.
- The FAA has mandated that aircraft flying in U.S. airspace comply with Stage 3 noise standards by December 31, 1999. Other countries, particularly in Western Europe, have instituted similar restrictions. As a result, it is expected that there will be an increased demand for aircraft during the next several years as the aircraft which are not retrofitted with "hush kits" are replaced.
- While military spending for new aircraft has significantly declined with the end of the cold war, military parts and repair spending has been relatively stable for the last several years as existing platforms require parts to remain operational.
COMPETITIVE STRENGTHS
The Company believes that its key competitive strengths are:
- LARGE INSTALLED PRODUCT BASE AND RECURRING REVENUE STREAM. Management believes that approximately 70% of the Company's sales are derived from parts for which it has achieved sole source designation and approximately 80% of the Company's products are of proprietary design. As a result, the Company has a large and growing installed base of products on large commercial transport and regional, business and military platforms. This installed base affords the Company the opportunity to capture a long-term stream of highly profitable aftermarket revenues. Over the life of an aircraft, sales of replacement parts can generate revenues many times the size of the original OEM purchases. Aftermarket sales generate most of the Company's EBITDA, As Defined because they typically carry gross margins that are significantly higher than those generated from OEM sales.
- PROVEN ABILITY TO DEVELOP NEW PRODUCTS. TransDigm has a successful record of introducing solutions-oriented products. The Company works closely with aircraft operators and OEMs to identify their unmet needs, such as a component that fails to meet performance expectations or that requires excessive maintenance. The Company then utilizes its engineering and design capabilities to develop a prototype for a component that increases the value of the product to the customer. After rigorous testing requirements have been fulfilled and the Company has obtained necessary regulatory approvals, the product is made available for sale in the aftermarket and to OEMs. Management believes that its ability to successfully develop new products has contributed to its significant growth.
- DIVERSIFIED BUSINESS MIX. The Company's business is fairly evenly distributed between sales in the aftermarket and sales to OEMs. Each of these segments are further distributed among the large commercial transport and regional, business and military aircraft markets. As a result, the Company is not overly dependent on any one segment, with the large commercial transport OEM market accounting for less than 20% of sales in fiscal 1998.
- LEADING POSITIONS IN NICHE MARKETS. With over 40 years of experience in most of its product lines, the Company has well-established and highly regarded products and trade names, such as "Adel," "Wiggins," "Controlex," "Marathon" and "SuperPower," and is a leader in many of its product lines. For example, the Company believes that it is the leading supplier of tube connectors for use in the flexible fluid systems found on most aircraft platforms.
- EXPERIENCED AND INCENTIVIZED MANAGEMENT TEAM. TransDigm's management team collectively has over 125 years of industry experience and brings a disciplined approach to the business. Management has a proven track record of consolidating operations, reducing overhead and rationalizing costs. Since the Company was created in 1993, management has successfully integrated four distinct operating
divisions and formed AdelWiggins and AeroControlex. Most recently management has successfully integrated Marathon into the Company. The management team has dramatically improved the operating performance and strategic position of TransDigm. EBITDA, As Defined margins have improved from 19.0% in fiscal 1994 to 39.3% in fiscal 1998. In addition, management owns approximately 12.5% of the capital stock of Holdings on a fully diluted basis, which amount is subject to an increase to approximately 21.3% if certain performance targets are met.
BUSINESS STRATEGY
Key elements of TransDigm's strategy are:
- PROVIDE VALUE ADDED PRODUCTS TO CUSTOMERS. The Company will continue to focus on marketing and manufacturing highly engineered products to customers that place a premium on the Company's capabilities. The Company has been effective in communicating to aircraft operators the value of the Company's products in terms of cost savings generated by their greater reliability and performance and reduced maintenance requirements. The Company's reputation for quality and sole supplier status for many parts has allowed it to achieve substantial gross margins on its aftermarket products. The Company intends to continue to develop and market high value added products that carry higher gross margins by emphasizing their benefits to the customer.
- GENERATE NEW BUSINESS INITIATIVES. TransDigm has been successful in identifying and commercializing new business opportunities to drive revenue growth. The Company has been particularly effective in creating aftermarket opportunities by developing superior products to retrofit aircraft already in service. New business has contributed significantly to the Company's 14% compound annual net sales growth rate (excluding Marathon) since fiscal 1994, which the Company believes is well in excess of the industry average growth rate during the same period. The Company intends to continue to aggressively pursue growth opportunities through its new business initiatives.
- REALIZE PRODUCTIVITY SAVINGS. Management will continue to focus on improving operating margins through manufacturing improvements and increases in employee productivity. Management has achieved significant increases in productivity since fiscal 1994. Manufacturing facilities have been rationalized and manufacturing and other business practices have been redesigned to maximize efficiency. For example, TransDigm encourages its employees through performance incentives to learn to operate multiple manufacturing stations in order to minimize overall labor costs. This initiative and others like it have enabled the Company to significantly increase sales without material increases in headcount.
- PURSUE STRATEGIC ACQUISITIONS. The Company intends to aggressively pursue acquisitions where it believes that it can enhance value, reduce costs and develop new business. The aircraft component industry is highly fragmented, with many of the companies in the industry being owned by small operators. The Company believes the industry is experiencing consolidation due to customer requirements, inherent economies of scale and technological advancements that favor more sophisticated competitors. The Company completed the Marathon acquisition in August 1997. The Company regularly engages in discussions with respect to other acquisition and investment opportunities. See the section "Risk Factors" under the heading "Risk Related to Potential Future Acquisitions."
OPERATING GROUPS
TransDigm was formed in 1993 through a management-led buyout of IMO. TransDigm operates three business units: Adelwiggins, AeroControlex and Marathon. AdelWiggins, which is located in Los Angeles, CA and had 177 full time employees at September 30, 1998, manufactures an extensive line of proprietary fuel and hydraulic system connectors and specialized clamps, heaters and refueling systems. AdelWiggins was formed in 1994 from the consolidation of the Adel Fasteners and Wiggins Connectors
divisions acquired from IMO. Founded in 1938 and 1925, respectively, both Adel Fasteners and Wiggins Connectors have had a long history in the aircraft components industry and enjoy strong brand name recognition.
AeroControlex, which is located in Cleveland, OH and had 183 full-time employees at September 30, 1998, manufactures proprietary pumps, compressors, valves, couplings and mechanical controls for commercial and military aircraft and marine applications. AeroControlex was formed in 1994 from the consolidation of the Aeroproducts and Controlex divisions acquired from IMO.
Marathon, which is located Waco, TX and had 178 full-time employees at September 30, 1998, was acquired by TransDigm in August 1997 as a strategic addition to its AdelWiggins and AeroControlex business lines. Marathon has been a leading manufacturer of nickel-cadmium batteries and static inverters to the aerospace industry since its founding in 1923. Management has successfully integrated the Marathon business unit into the TransDigm culture and believes that, over the next several years, Marathon offers upside potential similar to that achieved with the integration of AdelWiggins and AeroControlex.
PRODUCTS
TransDigm's products are found on virtually all types of aircraft, and the Company supplies components to all major domestic and international airlines. Management estimates that over 80% of the Company's products are of proprietary design and approximately 70% of the Company's sales are derived from parts for which it has achieved sole source designation. The Company's products are grouped into eleven major product lines, each of which is profitable and is operated as a semiautonomous business unit.
Much of the Company's recent success has been due to its identification and development of new products for sale in the commercial aftermarket. The Company works closely with customers to identify their unmet needs, such as a component that fails to meet performance expectations or that requires excessive maintenance. The Company then utilizes its engineering and design capabilities to develop a prototype for a component that increases value of the product to the customer. After rigorous testing requirements have been fulfilled and the Company has obtained necessary regulatory approvals, the product is made available for sale in the aftermarket and to OEMs.
ADELWIGGINS. Adelwiggins manufactures over 8,000 SKUs, representing 40% of the Company's sales for fiscal 1998, which constitute five of the Company's eleven major product lines: (i) flexible tube connectors, (ii) special connectors, (iii) Adel clamps, (iv) Wiggins service systems and (v) heaters and hoses. Tube connectors are fluid line connectors that provide leak tight joints and are found in flexible fluid systems on most aircraft platforms including fuel, water, waste and environmental systems. Special connectors are connectors designed to allow breaking and reconnecting of fluid lines under pressure and are found in quick disconnect applications including refueling and other fluid management systems for military, space and rocket launch applications and in frangible connectors for large commercial transports. Adel clamps include cushioned clamps, engineered elastomers, bare metal clamps, clampshells, block clamps and quick release clamps used to support fuel, hydraulic, fluid and electric lines and are found in a broad variety of clamps located throughout the airplane, including in engines to address high temperature and high vibration requirements. Wiggins service systems include proprietary refueling nozzles and systems, vents, receivers and quick disconnects and are found in mine refueling equipment and military applications such as tanks and armored vehicles that require high flow capabilities and universal compatibility. Heaters and hoses consists of specialized hoses and heaters, including blanket and ribbon heaters, heater cuffs, heated nipples and gaskets and heated tanks throughout the aircraft and are designed to prevent freezing of fluids such as potable water and waste and to provide heat for hot water service applications.
AdelWiggins designs its products specifically to meet the engineering requirements of its customers, focusing on aspects such as: reduced-profile or low-profile geometry, broad ranges of high-temperature service, ease of installation and, where possible, utilization of advanced materials to maximize the strength-to-weight ratios of its components. These factors are critical to both OEMs and commercial airlines given their emphasis on reducing both acquisition and operating costs. In addition, the Company believes AdelWiggins' products have a reputation for long service lives and extremely high reliability in stressful operating environments.
Approximately 60% of AdelWiggins' products are proprietary products designed to meet specific customer needs. The remaining 40% are industry standard designs. Roughly 55% of AdelWiggins' products are sole sourced, which is advantageous to the Company because it creates significant switching costs associated with the development and qualification of alternative engineered solutions. This sole sourced status has contributed to AdelWiggins achieving aftermarket sales of 30% of its net sales in fiscal 1998. See "Business--Customers."
AEROCONTROLEX. AeroControlex manufactures over 13,000 SKUs, representing
39% of the Company's sales for fiscal 1998, which constitute three of the
Company's eleven major product lines: (i) mechanical controls, (ii) pumps and
(iii) valves and quick disconnects. Mechanical controls include
electromechanical control systems, sliding and ball bearing control cables and
gearboxes which are found in the lavatory drain, throttle control, engine
feedback, landing gear release and in ejection seats and fuel and air systems.
Pumps primarily include gear pumps which are found in hydraulic and fuel systems
applications. Valves and quick disconnects include fuel and air system valves,
compressors and quick disconnects which are found in air conditioning packages
and fuel, radar and potable water systems.
AeroControlex designs, manufactures and sells pumps, compressors, valves, couplings and mechanical controls primarily for the commercial and military aircraft markets. AeroControlex has developed a reputation for providing high-quality, reliable products consistently delivered on time. AeroControlex works closely with customers to leverage its engineering expertise to create technical solutions to customer-specific problems. About 95% of AeroControlex products are proprietary and over 90% are sold on a sole-source basis, which is advantageous to the Company because its creates significant switching costs associated with the development and qualification of alternative engineered solutions. This sole sourced status has contributed to AeroControlex achieving aftermarket sales of 68% of its net sales in fiscal 1998. See "Business--Customers."
MARATHON. Marathon manufacturers over 5,000 SKUs, representing 21% of the Company's sales for fiscal 1998, which constitute three of the Company's eleven major product lines: (i) vented cell nickel-cadmium batteries, (ii) static inverters and (iii) sealed cell nickel-cadmium batteries. Vented cell nickel-cadmium batteries and sealed cell batteries are used for engine starting and emergency power aboard various aircraft while static inverters convert direct current to alternating current for use in applications such as flight instrumentation and communication. Marathon products are used for numerous military applications, such as the F-16, F-18, Blackhawk, Apache and Cobra programs. Approximately 50% of Marathon's products have achieved sole sourcing status with its customers.
Marathon is one of the worlds leading manufacturers of vented cell nickel-cadmium batteries, which require frequent maintenance, as individual cells within a battery are replaced throughout the life of the battery. Marathon, which manufactures and sells both entire batteries and individual cells, realizes replacement revenue in the aftermarket throughout the life of the battery as a result of its position as a sole source supplier of products that accounted for over 50% of its sales. Over 95% of Marathon's sales are proprietary, the status of which has contributed to Marathon achieving aftermarket sales of 69% of its net sales in fiscal 1998. Vented cell batteries are marketed under the Marathon-TM- and SuperPower-TM- brand names.
SALES AND MARKETING
Consistent with the Company's overall strategy, the Company's sales and marketing organization is structured to understand and anticipate the needs of customers in order to continually develop a stream of technical solutions that generate significant value. Particular focus is on the high-margin, repeatable aftermarket segment.
The Company has structured its sales efforts along its eleven major product lines, assigning a Product Line Manager to each line. The Product Line Managers are expected to grow the sales and profitability of their product line faster than the served market and to achieve the targeted annual level of booking, sales, new business and profitability for each product. Assisting the Product Line Managers are Account Managers and Sales Engineers who are responsible for covering both major OEM and airline accounts. They are expected to be familiar with the personnel, organization and needs of specific customers, for achieving total bookings and new business goals at each account, and, in conjunction with the Product Line Managers, for determining when additional resources are required at customer locations. All of the Company's sales personnel are compensated in part on their bookings and sales and ability to identify and convert new business opportunities.
Though the majority are employees, the Account Manager function may be performed by independent representatives depending on the specific customer, product and geographic location. TransDigm also uses a limited number of distributors to provide logistical support as well as primary customer contact with certain smaller accounts. The Company's largest distributor is Aviall, which provides logistic services to the commercial airlines.
MANUFACTURING AND ENGINEERING
TransDigm maintains three manufacturing facilities. Each facility serves its respective operating group, and comprises manufacturing, distribution and engineering as well as corporate functions, including management, sales and finance. The AdelWiggins, AeroControlex and Marathon facilities encompass approximately 105,000, 44,000 and 150,000 square feet of manufacturing space in Los Angeles, California, Cleveland, Ohio and Waco, Texas, respectively. In the last several years, management has taken a number of steps to improve productivity and reduce costs, including consolidating operations, developing improved control systems that allow for accurate product line profit and loss accounting, investing in equipment and tooling, installing modern information systems and implementing a broad-based employee training program. Management believes that the Company's manufacturing systems and equipment are critical competitive factors that permit it to meet the rigorous tolerances and cost sensitive price structure of aircraft customers. The Company concentrates in manufacturing by product line, alternating its equipment among designs as demand requires. TransDigm is in the process of applying its proven manufacturing strategy to the Marathon facility, where its expects to be able to substantially improve Marathon's performance.
Each of the Company's operating groups attempts to differentiate itself from its competitors by producing highly engineered products at a low cost. The Company's proprietary products are designed by its engineering staff and intended to serve an unmet need in the aircraft component industry, particularly through its new product initiatives. See "--Products." These proprietary designs must withstand the extraordinary conditions and stresses that will be endured by products during use and meet the rigorous demands of the Company's customers tolerance and quality requirements.
The Company uses sophisticated equipment and procedures to ensure the quality of its products and to comply with military specifications and FAA and OEM certification requirements. The Company performs a variety of testing procedures, including testing under different temperature, humidity and altitude levels, shock and vibration testing and X-ray fluorescent measurement. These procedures, together with other customer approved techniques for document, process and quality control, are used throughout the Company's manufacturing facilities.
CUSTOMERS
TransDigm's customers include (i) commercial airlines (including national and regional airlines), particularly for aftermarket MRO components, (ii) large commercial transport and regional and business aircraft OEMs, (iii) various agencies of the United States' government, including the United States military, and (iv) various other industrial customers. The Company's three largest customers for fiscal 1998, were Aviall (a distributor of aftermarket parts to airlines throughout the world), Boeing (including McDonnell Douglas) and various agencies of the United States' government, which accounted for approximately 20%, 14% and 9%, respectively, of the Company's net sales in fiscal 1998. The Company's top ten customers accounted for approximately 61% of the Company's net sales for fiscal 1998.
The Company has strong customer relationships with virtually all important large commercial transport, general aviation and military OEMs. The demand for the Company's aftermarket parts and services is related to the Company's extensive installed base and to revenue passenger miles and, to a lesser extent, to airline profitability and the size and age of the worldwide aircraft fleet. See "Business--Industry Overview." Some of the Company's business is executed under long-term agreements with customers which encompass many products under a common agreement. See "Risk Factors--Customer Contracts." The Company is also a leading supplier of components used on United States' designed military aircraft. The Company's products are used on a variety of fighter aircraft, and helicopters. Military aircraft using the Company's products include the Lockheed F-15 and F-16, the E2C (Hawkeye) and Blackhawk and Apache helicopters.
COMPETITION
The Company competes with a number of established companies, including divisions of larger companies, that have significantly greater financial, technological and marketing resources than the Company. The niche markets within the aerospace industry served by the Company are relatively fragmented with several competitors for each of the products and services provided by each of AdelWiggins, AeroControlex and Marathon. Due to the global nature of the commercial aircraft industry, competition in these categories comes from both U.S. and foreign companies. However, the Company knows of no single competitor that provides the same range of products and services as those provided by the Company. Competitors in the Company's product lines range in size from divisions of large corporations to small privately held entitles, with only one or two components in their entire product line. Certain of the Company's competitors have significantly greater financial, technological and marketing resources than the Company. The Company believes that its ability to compete depends on high product performance, short lead-time and timely delivery, competitive price, and superior customer service and support. There can be no assurance that the Company will be able to compete successfully with respect to these or other factors. See "Risk Factors--Competition."
GOVERNMENTAL REGULATION
The commercial aircraft component industry is highly regulated by both the FAA in the United States and by the Joint Aviation Authorities in Europe, while the military aircraft component industry is governed by military quality specifications. The Company, and the components it manufacturers, are required to be certified by one or more of these entities, and, in some cases, by individual OEMs in order to engineer and service parts and components used in specific aircraft models. If material authorizations or approvals were revoked or suspended, the operations of the Company would be adversely affected. In the future, new and more stringent government regulations may be adopted, or industry oversight may be heightened, which may have an adverse impact on the Company.
The Company must also satisfy the requirements of its customers, including OEMs and airlines, that are subject to FAA regulations, and provide these customers with products and services that
comply with the government regulations applicable to commercial flight operations. In addition, the FAA requires that various maintenance routines be performed on aircraft components, and the Company currently satisfies or exceeds these maintenance standards in its repair and overhaul services. Several of the Company's operating divisions include FAA-approved repair stations.
The Company's operations are also subject to a variety of worker and community safety laws. OSHA mandates general requirements for safe workplaces for all employees. In addition, OSHA provides special procedures and measures for the handling of certain hazardous and toxic substances. The Company believes that its operations are in material compliance with OSHA's health and safety requirement.
RAW MATERIALS AND PATENTS
The components that the Company manufactures require the use of various raw materials including titanium, aluminum, nickel powder, nickel screen, stainless steel and cadmium, the availability and prices of which may fluctuate. The price of raw materials and outside processing represents approximately 20% of the sales price of the Company's products for fiscal 1998. Price increases in these supplies may not be able to be recovered. The Company also purchases a variety of manufactured component parts from various suppliers although the Company is concentrating its orders among fewer suppliers to strengthen its supplier relationships. Raw materials and component parts are generally available from multiple suppliers at competitive prices. However, any delay in the Company's ability to obtain necessary raw materials and component parts may affect its ability to meet customer production needs.
The Company has various trade secrets, proprietary information, trademarks, trade names, patents, copyrights and other intellectual property rights which the Company believes, in the aggregate (but not individually), are important to its business.
ENVIRONMENTAL MATTERS
The Company's operations and current and/or former facilities are subject to federal, state and local environmental laws and to regulation by government agencies, including the Environmental Protection Agency. Among other matters, these regulatory authorities impose requirements that regulate the emission, discharge, generation, management, transportation and disposal of hazardous materials and pollutants, govern response actions to hazardous materials which may be or have been released to the environment, and require the Company to obtain and maintain permits in connection with its operations. The extensive regulatory framework imposes significant compliance burdens and risks on the Company. Although management believes that the Company's operations and its facilities are in compliance in all material respects with applicable environmental laws, there can be no assurance that future changes in such laws, regulations or interpretations thereof or the nature of the Company's operations will not require the Company to make significant additional expenditures to ensure compliance in the future. Pursuant to certain environmental laws, a current or previous owner or operator of real property may be liable for the costs of investigations, removal or remediation of hazardous materials at such property. Such laws typically impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous materials. Persons who arrange, or are deemed to have arranged, for disposal or treatment of hazardous materials also may be liable for the costs of investigation, removal or remediation of such substances at the disposal or treatment site, regardless of whether the affected site is owned or operated by such person. Because the Company owns and/or operates a number of facilities, and because the Company arranges for the disposal of hazardous materials at many disposal sites, the Company may incur costs for investigation, removal and remediation, as well as, capital costs associated with compliance. Although such environmental costs have not been material in the past and are not expected to be material in the future, there can be assurance that changes in environmental laws or unexpected investigations and
clean-up costs will not be material. See "Risk Factors--Potential Exposure to Environmental Liabilities." The Company does not currently contemplate material capital expenditures for environmental compliance remediation for fiscal 1999 or fiscal 2000.
The soil and groundwater beneath the Company's facility in Waco, Texas, have been impacted by releases of hazardous materials. Because the majority of the contaminants identified to date are presently below action levels prescribed by the Texas Natural Resources Conservation Commission ("TNRCC"), the Company does not believe the condition of the soil and groundwater at the Waco facility will require incurrence of material capital expenditures; however, there can be no assurance that additional contamination will not be discovered or that the remediation required by the TNRCC will not be material to the financial condition, results of operations or cash flows of the Company.
PROPERTIES AND FACILITIES
The Company owns and operates a 130,000 square foot facility in Los Angeles, California, a 63,000 square foot facility in Cleveland, Ohio and a 219,000 square foot facility in Waco, Texas which is also the Company's headquarters. The Company also leases certain of its other facilities. Management believes that its machinery, plants and offices are in satisfactory operating condition, and, upon completion of its planned 10,000-20,000 square foot expansion of the AeroControlex manufacturing facility, will have sufficient capacity to meet foreseeable future needs without incurring significant additional capital expenditures.
EMPLOYEES
As of September 30, 1998, the Company had approximately 540 full-time employees and 45 temporary employees. Approximately 11% of the Company's employees were represented by the United Steelworkers Union, and approximately 19% were represented by the United Automobile, Aerospace and Agricultural Implement Workers of America. Collective bargaining agreements between the Company and these labor unions expire on April 1999 and November 2000, respectively. The Company considers its relationship with its employees generally to be satisfactory and does not expect any difficulty in reaching new collective bargaining agreements.
LEGAL PROCEEDINGS
During the ordinary course of business, the Company is from time to time threatened with, or may become a party to, legal actions and other proceedings. While the Company is currently involved in certain legal proceedings, management believes the results of these proceedings will not have a material effect of the results of operations of the Company, in part due to certain indemnification arrangements. The Company believes that its potential exposure to such legal actions is adequately covered by its aviation product and general liability insurance.
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND OTHER KEY EMPLOYEES
The directors, executive officers, and other key employees of the Company and its subsidiaries are as follows:
NAME AGE POSITION
----------------------------------------------------- --- -----------------------------------------------------
Douglas W. Peacock................................... 60 Chairman of the Board of Directors and Chief
Executive Officer
W. Nicholas Howley................................... 46 President, Chief Operating Officer and Director
John D. Peterson, Sr. ............................... 54 President, AdelWiggins Group
Raymond F. Laubenthal................................ 37 President, AeroControlex Group
Robert S. Henderson.................................. 42 President, Marathon Power Technologies Company
Peter B. Radekevich.................................. 47 Chief Financial Officer
Stephen Berger....................................... 58 Director
Muzzafar Mirza....................................... 40 Director
William Hopkins...................................... 35 Director
Thomas R. Wall, IV................................... 40 Director
John W. Paxton....................................... 62 Director
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MR. PEACOCK has been Chairman of the Board and Chief Executive Officer of the Company since its inception in September 1993. He is also a director of Microporous Products, L.P. Prior to joining the Company, Mr. Peacock spent six years with IMO Industries Inc. as Executive Vice President of IMO's Instruments and Aerocomponents Group from 1991-1993, Executive Vice President of Power Systems from 1989-1991, and managed IMO's turbomachinery business from 1987-1989. Prior to joining IMO, Mr. Peacock spent 15 years in various managerial positions at Westinghouse Electric Corp. Mr. Peacock received a B.S. degree in chemical engineering from Washington State and a Ph.D. in physical chemistry from the University of Illinois. Mr. Peacock holds an Airline Transport Pilot Rating and routinely commands flights in TransDigm's corporate aircraft.
MR. HOWLEY has been President, Chief Operating Officer and Director of the Company since the consummation of the Recapitalization. Mr. Howley served as Executive Vice President of the Company and President of AeroControlex Group from the Company's inception in September 1993 to the date of the consummation of the Recapitalization. Prior to joining the Company, Mr. Howley served as General Manager of IMO Industries Inc. Aeroproducts division, and Director of Finance for the 15 divisions of IMO's Turbomachinery, Aerospace, and Power Transmission groups. Prior to joining IMO, he held various executive positions at Lansdowne Steel/Lansco Corp., a manufacturer of defense and oil drilling products, and the Engineering and Construction Group of Raytheon Co. Mr. Howley received his B.S. in engineering from Drexel University and an MBA from the Harvard University Graduate School of Business.
MR. PETERSON has been Vice President and President of AdelWiggins Group since June 1996. From 1990 to June 1996, Mr. Peterson was President of the Aerospace Fastener Division of Huck
International. Mr. Peterson received his B.S. in marketing from Western Illinois University and an MBA from Northwestern University, Kellogg Graduate School of Management.
MR. LAUBENTHAL has been President of AeroControlex Group since November 1998. From December 1996 until November 1998, Mr. Laubenthal served as Director of Manufacturing and Engineering for the AeroControlex Group. From October 1993 to December 1996, Mr. Laubenthal served as Director of Manufacturing for the AeroControlex group. Mr. Laubenthal received a B.S. degree in mechanical engineering from Case Western Reserve University and an MBA from Northern Illinois University.
MR. HENDERSON has been President of Marathon Power Technologies Company since April 1997. From November 1994 until April 1997, he served as Manager of Operations for the AdelWiggins Group. From 1991 until 1994 Mr. Henderson served as Operations Manager at RainBird Sprinkler. Mr. Henderson received his B.A. in mathematics from Brown University and attended the Harvard University Graduate School of Business.
MR. RADEKEVICH has been Chief Financial Officer of the Company since the Company's inception in September 1993. He served as Vice Chairman and Chief Financial Officer of RDK Capital from 1990 to 1993. Prior to joining RDK Capital, Mr. Radekevich spent 16 years with General Electric in various executive and managerial positions in the field of operations, distribution and finance. Mr. Radekevich holds a bachelor of administration degree from Case Western Reserve University.
MR. BERGER will serve as a Director of the Company following the consummation of the Transactions. He is currently chairman of Odyssey Investment Partners, LLC. Prior to joining Odyssey Investment Partners, LLC, Mr. Berger was a general partner of Odyssey Partners, LP. From 1990 to 1993, Mr. Berger served as Chairman and CEO of FGIC, a wholly-owned subsidiary of GE Capital Corp. and subsequently became Executive Vice President of GE Capital Corp. From 1985 to 1990, Mr. Berger was Executive Director of the Port Authority of New York and New Jersey Mr. Berger presently serves as a member of the Board of Trustees of Brandeis University.
MR. MIRZA will serve as a Director of the Company following the consummation of the Transactions. Mr. Mirza is a member of Odyssey Investment Partners, LLC and has been a principal in the private equity investing group of Odyssey Partners, LP since 1993. From 1988 to 1993, Mr. Mirza was employed by the merchant banking group of GE Capital Corp.
MR. HOPKINS will serve as a Director of the Company following the consummation of the Transactions. Mr. Hopkins is a member of Odyssey Investment Partners, LLC and has been a principal in the private equity investing group of Odyssey Partners, LP since 1994. Prior to joining Odyssey Mr. Hopkins was a member of the merchant banking group of GE Capital Corp.
MR. WALL joined Kelso & Company in 1983 and has served as a Managing Director of Kelso & Company since 1990. Mr. Wall presently serves as a member of the Board of Directors of AMF Bowling, Inc., Consolidated Vision Group, Inc., Cygnus Publishing, Inc., iXL Enterprises, Inc., Mitchell Supreme Fuel Company Mosler Inc., Peebles, Inc., and 21st Century Newspapers, Inc.
MR. PAXTON has been a member of the Board of Directors of Paxar Corporation ("Paxar") and President of Paxar's Printing Solutions Group since October 1997. He is expected to retire from these positions by the calendar year end 1998. Mr. Paxton served as Chairman of the Board, President and Chief Executive Officer of Monarch Marking Systems from October 1995 to October 1997. Prior to joining Monarch Marking Systems, Mr. Paxton joined Linton Industries ("Linton") as a Corporate Vice President in 1991 when Linton acquired Intermec Corporation. During his years at Litton, Mr. Paxton had responsibility for the Industrial Automation Group. He became Corporate Executive Vice President and Chief Operating Officer of the Industrial Automation Systems group of Western Atlas, Inc. when Western Atlas, Inc. was spun off by Litton in March 1994. Mr. Paxton presently serves
as a member of the Board of Directors of Paxar, AIM, National Association of Manufacturers and World Economic Forum.
BOARD COMMITTEES
The Company's Board of Directors has a Compensation Committee and an Audit Committee. The Compensation Committee, which is comprised of Messrs. Berger, Mirza and Hopkins, establishes salaries, incentives and other forms of compensation for executive officers and administers incentive compensation and benefit plans provided for employees. The Audit Committee, which is comprised of Messrs. Berger, Mirza and Hopkins, reviews the Company's audit policies and oversees the engagement of the Company's independent auditors.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or accrued by the Company for services rendered during fiscal 1998, 1997 and 1996 to the Chief Executive Officer of the Company and each of the five other most highly paid executive officers or employees of the Company (collectively the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------
AWARDS
---------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------------------- UNDERLYING
NAME AND FISCAL OTHER ANNUAL OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) SARS COMPENSATION
--------------------------------------- ----------- ---------- ------------ ---------------- --------------- -------------
Douglas W. Peacock..................... 1998 $ 305,000 $ 2,857,500 $ -- -- $ 23,518(3)
Chairman of the Board 1997 290,000 220,000 -- 3,097 20,400
and CEO 1996 275,000 140,000 -- -- 20,200
W. Nicholas Howley..................... 1998 185,000 2,080,000 -- -- 14,446(4)
President, Chief Operating 1997 175,000 125,000 -- 1,900 13,316
Officer and Director 1996 165,000 85,000 -- -- 12,360
John D. Peterson, Sr................... 1998 175,000 280,000 -- -- 12,392(5)
President of AdelWiggins 1997 166,400 80,000 -- 800 14,216
Group 1996 160,000 25,000 -- -- 4,315
Robert S. Henderson.................... 1998 125,000 450,000 -- -- 10,663(6)
President of Marathon Power 1997 109,000 45,900 -- 200 6,192
Technologies Company 1996 103,000 28,800 -- 800 5,942
Raymond F. Laubenthal.................. 1998 95,000 230,000 -- -- 8,889(7)
President of AeroControlex 1997 90,000 37,500 -- -- 6,150
Group 1996 80,000 29,600 -- -- 5,392
Albert J. Rodriguez.................... 1998 95,000 230,000 -- -- 8,889(7)
Director of Sales and 1997 90,000 37,500 -- -- 6,150
Marketing of AeroControlex 1996 80,000 29,600 -- -- 5,392
Group
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(1) Bonus for fiscal year 1998 includes a one-time bonus paid by Holdings in connection with the Recapitalization. See "Certain Relationships and Related Transactions-Management Bonus."
(2) Does not include perquisites and other personal benefits because the value of these items did not exceed the lesser of $50,000 or 10% of reported salary and bonus of any of the listed executives.
(3) Includes $17,200 in contribution by the Company, as projected to calendar year end 1998, to a plan established under Section 401(k) of the Internal Revenue Code (the "401(k) plan") and $6,318 in Company-paid life insurance.
(4) Includes $12,880 in contribution by the Company, as projected to calendar year end 1998, to the 401(k) plan and $1,566 in Company-paid life insurance.
(5) Includes $9,800 in contribution by the Company, as projected to calendar year end 1998, to the 401(k) plan and $2,592 in Company-paid life insurance.
(6) Includes $10,000 in contribution by the Company, as projected to calendar year end 1998, to the 401(k) plan and $663 in Company-paid life insurance.
(7) Includes $8,786 in contribution by the Company, as projected to calendar year end 1998, to the 401(k) plan and $103 in Company-paid life insurance.
MANAGEMENT STOCKHOLDERS AGREEMENT
In connection with the consummation of the Recapitalization, Holdings, Odyssey and the employee stockholders of Holdings, including the Named Executive Officers (the "Management Stockholders") entered into a Management Stockholders' Agreement (the "Management Stockholders' Agreement") which governs the shares of common stock of Holdings (the "Common Stock") and options to purchase Common Stock, in each case, held by such persons (including the Rollover Investment and new options and shares obtained in connection with the Recapitalization) and shares acquired upon exercise of options. See "--Stock Option Plan."
The Management Stockholders' Agreement provides that, except for certain transfers to family members and family trusts, no Management Stockholder may transfer Common Stock until the fifth anniversary of the Recapitalization, and thereafter, any proposed transfer will be subject to Holdings' right of first refusal.
The Management Stockholders' Agreement also provides that upon termination of the employment of a Management Stockholder, such Management Stockholder will have certain put rights and Holdings will have certain call rights regarding his or her Common Stock.
Upon Mr. Peacock's cessation of active service as Chief Executive Officer on or after the third anniversary of the Recapitalization (see "--Employment Agreements"), if the Company has achieved specified financial targets, he may require Holdings to repurchase up to 80% of his Common Stock during the period, if any, for which he is serving as non-executive Chairman of the Board. Mr. Peacock may thereafter require repurchase of the remaining 20% of his Common Stock on or after the fifth anniversary of the Recapitalization or his later termination of services to the Company. Holdings will be permitted to honor its obligation to Mr. Peacock by issuing notes under certain circumstances.
If the provisions of any law, the terms of credit and financing arrangements or Holdings' financial circumstances would prevent Holdings from making a repurchase of shares pursuant to the Management Stockholders' Agreement, Holdings will not make such purchase until all such prohibitions lapse, and will then also pay the Management Stockholder a specified rate of interest on the repurchase price.
The Management Stockholders' Agreement further provides that in the event of certain transfers of Common Stock by Odyssey the Management Stockholders may participate in such transfers and/or Odyssey may require the Management Stockholders to transfer their shares in such transactions, in each case on a pro rata basis.
Pursuant to the Management Stockholders' Agreement, certain Management Stockholders are entitled to participate on a pro rata basis with, and on the same terms as, Odyssey in any future offering of Common Stock. Such participation rights will lapse following a public offering of Common Stock.
EMPLOYMENT AGREEMENTS
In connection with the Recapitalization, Holdings will enter into an employment agreement with Mr. Peacock pursuant to which he will continue to serve as Chairman of the Board and Chief Executive Officer for a period of at least five years and with Mr. Howley pursuant to which he will continue to serve as President and Chief Operating Officer of the Company for a period of at least five years (together, the "Employment Agreements"). The Employment Agreements also will provide specified severance benefits in the event of termination of employment under certain circumstances.
Each of the Employment Agreements will provide that in the event the respective executive's employment terminates by reason of death, disability, termination without "cause" or resignation with "good reason" (all as defined in the Employment Agreements), Holdings will continue payment of base salary, bonus and other perquisites and benefits, in the case of Mr. Howley, for 15 months thereafter and, in the case of Mr. Peacock, for 18 months thereafter or, if terminated prior to the third anniversary of the Recapitalization, until such third anniversary, whichever is longer.
Pursuant to the Employment Agreements, Messrs. Peacock and Howley will receive annual base salaries no less than $330,000 and $225,000, respectively (in each case, subject to annual increases as determined by the Compensation Committee), and annual cash bonuses based on achievement of performance criteria established by the Board of Directors. After three years, Mr. Peacock may elect to continue his service either as Chief Executive Officer or as a non-executive Chairman and it is intended that Mr. Howley will be his successor.
STOCK OPTION PLAN
Holdings intends to adopt the 1998 Stock Option Plan (the "Option Plan"), pursuant to which stock options may be granted to Independent Directors (as defined in the Option Plan), employees and consultants of Holdings, the Company and any subsidiary of Holdings or the Company (the "Plan Participants"). In addition, the Option Plan will govern those options retained pursuant to the Rollover Investment (the "Rollover Options"). A total of 10% of the fully diluted shares of Common Stock of Holdings as of the Recapitalization was reserved for issuance under the Option Plan (exclusive of the Rollover Investment). The Chief Executive Officer will have discretion to select the Plan Participants and to specify the terms of such options, including the number of shares, the exercise price and the vesting and expiration of options, subject to approval by the Compensation Committee.
The Compensation Committee will have discretion under the Option Plan to adjust options to reflect certain specified events such as stock dividends, stock splits, recapitalizations, mergers or reorganizations of, or by Holdings. In addition, the Board of Directors will have the right to amend, suspend or terminate the Option Plan, subject to stockholder approval for certain amendments.
The Rollover Options are fully vested and nonforfeitable. In connection with the Recapitalization, Holdings will grant options to certain employees of the Company including the Named Executive Officers for the purchase of shares of Common Stock of Holdings (the "New Options"). Such New Options are intended to qualify as "incentive stock options" to the extent permitted under the Internal Revenue Code, and will have an exercise price equal to the price per share paid by Odyssey in connection with the Recapitalization. Twenty percent of each of Messrs. Peacock's and Howley's New Options will become vested as of the date of grant. Subject to the executive's continued employment with and, in the case of Mr. Peacock, continued service as non executive Chairman of the Board of, the Company, the remaining 80% of his New Options will become exercisable upon the earlier of (1) the Company's achievement of specified financial targets or (2) certain specified dates in the Option Agreement. Furthermore, in the event of a "change of control" (as defined in the Option Agreement), a specified percentage of the New Options may become exercisable based upon the terms of such transaction. The New Options generally will expire 10 years after grant and may expire earlier in the event of the executive's termination of employment.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial ownership of the Common Stock of Holdings with respect to each beneficial owner of more than 5.0% of the outstanding common stock of Holdings and beneficial ownership of the Common Stock of Holdings by each director and Named Executive Officer and all directors and executive officers as a group:
COMMON STOCK
BENEFICIALLY OWNED
------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE
------------------------------------------------------------------------------------------- --------- -------------
Stephen Berger (1)(7)...................................................................... 100,240 83.9%
--------- ---
Robert S. Henderson (2).................................................................... 783 *
--------- ---
William Hopkins (3)(7)..................................................................... 100,240 83.9
--------- ---
W. Nicholas Howley (4)..................................................................... 5,943 4.8
--------- ---
Kelso (as defined in footnote (5)) (5)..................................................... 19,234 16.0
Raymond F. Laubenthal (6).................................................................. 793 *
--------- ---
Muzzafar Mirza (7)(8)...................................................................... 100,240 83.9
--------- ---
Odyssey Investment Partners Fund, LLC (8).................................................. 100,240 83.9
--------- ---
Douglas W. Peacock (9)..................................................................... 6,304 5.0
--------- ---
John D. Peterson (10)...................................................................... 1,302 1.1
--------- ---
Albert J. Rodriguez (11)................................................................... 597 *
--------- ---
Thomas R. Wall, IV (5)..................................................................... 19,234 16.0
--------- ---
All officers and directors as a group (14 members)(12)..................................... 135,692 99.8
--------- ---
|
* Less than 1.0%
(1) Includes 100,240 shares and votes deemed to be beneficially owned by the General Partner of Odyssey (as defined), of which Mr. Berger is a senior managing member. As a result, Mr. Berger may be deemed to share voting and investment power with respect to such shares. Mr. Berger disclaims beneficial ownership of such shares.
(2) Includes 772 shares purchasable within 60 days upon the exercise of options held by Mr. Henderson.
(3) Includes 100,240 shares and votes deemed to be beneficially owned by the General Partner of Odyssey, of which Mr. Hopkins is a managing member. As a result, Mr. Hopkins may be deemed to share voting and investment power with respect to such shares. Mr. Hopkins disclaims beneficial ownership of such shares.
(4) Includes 5,790 shares purchasable within 60 days upon the exercise of options held by Mr. Howley.
(5) KIA IV-TD, LLC ("KIA IV-TD) and Kelso Equity Partners II, L.P. ("KEP II") have beneficial ownership of 18,284 and 950 shares, respectively. Due to their common control, KIA IV-TD, Kelso Partners IV, L.P., the managing member of KIA IV-TD ("KP IV" and, together with KIA IV-TD and KEP II, "Kelso"), and KEP II could be deemed to beneficially own each other's shares, but each disclaims such beneficial ownership. In addition, Mr. Wall, Joseph S. Schuchert, Frank T. Nickell, George E. Matelich, Michael B. Goldberg, David I. Wahrhaftig and Frank K. Bynum, Jr. may be deemed to share beneficial ownership of shares beneficially owned by KIA IV-TD, KP IV and KEP II by virtue of their status as general partners of KP IV, which is the managing member of KIA IV-TD, and as general partners of KEP II, but each disclaims such beneficial ownership.
The address of each of KIA IV-TD, KP IV, KEP II and Messrs. Wall, Schuchert, Nickell, Matelich, Goldberg, Wahrhaftig and Bynum is c/o Kelso & Company, 320 Park Avenue, 24th Floor, New York, New York 10022.
(6) Includes 780 shares purchasable within 60 days upon the exercise of options held by Mr. Laubenthal.
(7) Includes 100,240 shares and votes deemed to be beneficially owned by the General Partner of Odyssey, of which Mr. Mirza is a managing member. As a result, Mr. Mirza may be deemed to share voting and investment power with respect to such shares. Mr. Mirza disclaims beneficial ownership of such shares.
(8) The principal business address for Odyssey Investment Partners Fund, LLC is 280 Park Avenue, West Tower, 38th Floor, New York, NY 10017. The general partner of Odyssey Investment Partners Fund LLC, is Odyssey Capital Partners, LLC, a Delaware limited liability company (the "General Partner of Odyssey"). In addition to Messrs. Berger, Hopkins and Mirza, Paul D. Barnett, Brian Kwait and Brian F. Wruble are managing members of the General Partner of Odyssey and, therefore, may each be deemed to share voting and investment power with respect to 100,240 share and votes deemed to be owned by the General Partner of Odyssey. Each of Messrs. Barnett, Kwait and Wruble disclaims beneficial ownership of such shares.
(9) Includes 6,089 shares purchasable within 60 days upon the exercise of options held by Mr. Peacock.
(10) Includes 1,270 shares purchasable within 60 days upon the exercise of options held by Mr. Peterson.
(11) Includes 583 shares purchasable within 60 days upon the exercise of options held by Mr. Rodriguez.
(12) As described in footnotes (1), (3), (5), (6) and (7), Messrs. Berger, Hopkins and Mirza may each be deemed to share investment and voting power with respect to 100,240 shares deemed to be beneficially owned by the General Partner of Odyssey and Mr. Wall may be deemed to share investment and voting power with respect to 19,234 shares owned by Kelso. Each of Messrs. Berger, Hopkins, Mirza and Wall disclaims ownership of such shares. Excluding such shares, all officers and directors as a group beneficially own 17,030 shares or 12.5%.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TAX ALLOCATION AGREEMENT
The Company and Holdings entered into a Tax Allocation Agreement concurrently with the consummation of the Recapitalization. Pursuant to such Tax Allocation Agreement, the Company is obligated to make payments to Holdings equal to the amount of income taxes that the Company would have owed in respect of federal and state income taxes on behalf of the Company and its subsidiaries if the Company and its subsidiaries were, for tax purposes, a separate consolidated group.
ONE-TIME MANAGEMENT BONUSES
Following the consummation of the Recapitalization, the Company paid certain members of senior management the following one-time bonus:
NAME AND POSITION AMOUNT -------------------------------------------------------------------------------- ------------ Douglas Peacock................................................................. $ 2,632,500 Chairman of the Board and Chief Executive Officer W. Nicholas Howley.............................................................. 1,950,000 President, Chief Operating Officer and Director John D. Peterson, Sr............................................................ 195,000 President of AdelWiggins Group Robert S. Henderson............................................................. 390,000 President of Marathon Power Technologies Group Peter B. Radekevich............................................................. 146,250 Chief Financial Officer Raymond F. Laubenthal........................................................... 195,000 President of AeroControlex Group Bernt G. Iversen, II............................................................ 97,500 Director of Sales and Marketing of AdelWiggins Group Albert J. Rodriguez............................................................. 195,000 Director of Sales and Marketing of AeroControlex Group |
TERMINATION OF FINANCIAL ADVISORY SERVICES AGREEMENT
The Company paid $6.0 million to Kelso & Company, an affiliate of Kelso, in consideration for the termination of a Financial Advisory Services Agreement. This payment was made upon consummation of the Recapitalization.
Kelso may be deemed, collectively, to beneficially own 15.4% of the Common Stock of Holdings on a fully diluted basis. In addition, Mr. Wall, a director of Holdings and the Company, is a general partner of each of the Kelso entities.
KELSO STOCKHOLDERS AGREEMENT
Pursuant to the Merger Agreement, Holdings, Odyssey and KIA IV-TD and KEP II entered into a stockholders agreement (the "Stockholders Agreement") concurrently with consummation of the Recapitalization. The Stockholders Agreement provides for customary transfer restrictions, tag-along
and drag-along rights, registration rights and an agreement among the parties to vote their shares of Common Stock, including the agreement of Odyssey to designate a representative of Kelso to the Board of Directors of the Company. See also "Management" for a description of certain agreements that have been entered into with certain members of management in connection with the Recapitalization. See "-Termination of Financial Advisory Services Agreement."
ODYSSEY FINANCIAL SERVICES
In connection with the Recapitalization, the Company paid Odyssey a fee of approximately $3.5 million. Odyssey is the majority stockholder of Holdings. In addition, Messrs. Berger, Hopkins and Mirza, each a director of Holdings and the Company, are managing members of the General Partner of Odyssey.
RECAPITALIZATION
In connection with the Recapitalization and pursuant to the Merger Agreement, Phase II Acquisition Corp., a wholly-owned subsidiary of Odyssey, merged with and into Holdings.
Also, in connection with the Recapitalization and as part of the consideration for the Merger, Holdings (i) issued $20.0 million in Holdings PIK Notes and common stock of Holdings and (ii) paid $215.4 million in cash, in each case, to Kelso. See "Transactions," "--Odyssey Financial Services" and "--Termination of Financial Advisory Services Agreement."
DESCRIPTION OF OTHER INDEBTEDNESS
THE COMPANY
THE NEW CREDIT FACILITY
The New Credit Facility consists of (i) a $30.0 million Revolving Credit Facility maturing six years from the date of the execution of the New Credit Facility (the "Execution Date") and (ii) a term loan facility in an aggregate principal amount of $90.0 million, consisting of the $45.0 million Tranche A Facility maturing six years from the Execution Date and the $45.0 million Tranche B Facility maturing seven and a half years from the Execution Date.
The New Credit Facility provides that the Company shall repay, to the extent
then outstanding, (i) with respect to the Tranche A Facility, the specified
amount set forth in the New Credit Facility for each quarter beginning on August
15, 1999 and (ii) with respect to the Tranche B Facility, (A) $225,000 each of
the first two quarters beginning on August 15, 1999, (B) $112,500 each of the
remaining quarters during the first six years after the Execution Date and (C)
$7,050,000 each of the following six quarters. In addition, subject to certain
limited exceptions, the New Credit Facility requires mandatory repayment of the
outstanding indebtedness thereunder (and reduction to the commitments
thereunder) with the proceeds from (i) assets sales, (ii) issuance of debt,
(iii) issuance of equity interests and capital contributions, (iv) insurance and
condemnation claims and (v) 50% of annual excess cash flow (as defined in the
New Credit Facility) from operations in excess of a predetermined amount, in
each case, by or of Holdings, the Company or their subsidiaries. The Company
will have the option at any time and from time to time to prepay the outstanding
indebtedness under the New Credit Facility without penalty or premium.
Indebtedness under the New Credit Facility bears interest at the sum of the
(i) Applicable Margin and (ii) at the option of the Company either the Base Rate
or the Eurodollar Rate (as defined in the New Credit Facility). The "Base Rate"
means the higher of (i) the rate that Bankers Trust Company ("BTCo") announces
from time to time as its prime lending rate, as in effect from time to time, and
(ii) 1/2 of 1% in excess of the overnight federal funds rate. The "Applicable
Margin" means the percentage per annum equal to (i) in the case of Tranche A
Facility and Revolving Credit Facility, subject to quarterly step-downs to be
determined based on certain levels of financial performance, (A) bearing an
interest rate determined by the Base Rate, 2.50% and (B) bearing an interest
rate determined by the Eurodollar Rate, 3.50% and (ii) in the case of Tranche B
Facility (A) bearing an interest rate determined by the Base Rate, 3.00% and (B)
bearing an interest rate determined by the Eurodollar Rate, 4.00%.
The New Credit Facility contains various covenants, customary for similar credit facilities or otherwise appropriate under the circumstances, that (i) restrict Holdings, the Company and their subsidiaries from various actions, including, among others, mergers and sales of assets, use of proceeds, granting of liens, incurrence of indebtedness, voluntary prepayment of indebtedness, including the Old Notes and the New Notes, capital expenditures, paying dividends, business activities, investments and acquisitions, transactions with affiliates, certain restrictions affecting subsidiaries, voluntary prepayment of other Indebtedness and amendments or modifications to instruments governing such other Indebtedness and (ii) require the Company to achieve and maintain certain financial covenants.
The New Credit Facility includes events of default provisions that are typical for senior credit facilities or otherwise appropriate under the circumstances. All obligations under the New Credit Facility are guaranteed by Holdings and each of the subsidiaries, direct and indirect, of the Company. The indebtedness under the New Credit Facility are secured by a pledge of the stock of the Company and all of its domestic subsidiaries and a perfected lien and security interest in assets other than real estate (tangible and intangible) of the Company, its direct and indirect subsidiaries and Holdings.
HOLDINGS
HOLDINGS PIK NOTES
Concurrently with the issuance of the Old Notes by the Company, Holdings issued $20.0 million in aggregate face value of its pay-in-kind notes due 2009 (the "Holdings PIK Notes") to KIA IV-TD and KEP II in connection with the Recapitalization. The Holdings PIK Notes were issued to KIA IV-TD and KEP II together with shares of Common Stock of Holdings. The Holdings PIK Notes are unsecured obligations of Holdings, subordinated to the guarantee of the New Credit Facility by Holdings, but senior to the guarantee of each of the Old Notes and the New Notes by Holdings.
Interest on the Holdings PIK Notes accrues at an annual fixed rate of 12% and is payable semiannually in the form of additional Holdings PIK Notes for five years after their issuance. Thereafter, cash interest is payable semi-annually commencing 2004. The Holdings PIK Notes are redeemable at the option of Holdings, in whole or in part, at a price equal to 100% of the principal amount thereof for five years after their issuance and thereafter at the prices set forth in the indenture pursuant to which the Holdings PIK Notes were issued (the "Holdings Indenture"). If Holdings experiences specific kinds of changes in control, it must offer to repurchase the Holdings PIK Notes at a price equal to 101% of the principal amount thereof.
The Holdings PIK Notes contain certain covenants on a consolidated basis,
including covenants that limit (i) indebtedness, (ii) restricted payments, (iii)
distributions by subsidiaries, (iv) transactions with affiliates, (v) sales of
assets and subsidiary stock, (vi) dividend and other payment restrictions, and
(vii) mergers or consolidations. The Holdings PIK Notes contain customary events
of default and the holders of the Holdings PIK Notes have customary registration
rights commencing on the third anniversary of the closing date. The covenants
and default provisions in the Holdings Indenture are substantially similar to
those contained in the Indenture governing the Old Notes and the New Notes, but
are less restrictive in certain respects.
DESCRIPTION OF THE NEW NOTES
The Company will issue the New Notes under an indenture (the "Indenture") among itself, the Guarantors and State Street Bank and Trust Company, as Trustee (the "Trustee"). The following is a summary of the material provisions of the Indenture. It does not include all of the provisions of the Indenture. We urge you to read the Indenture because it defines your rights. The form and terms of the New Notes will be the same as the form and terms of the Old Notes except that the New Notes will be freely transferable by you except as otherwise provided in this Prospectus. See "The Exchange Offer--Purpose and Effect". The terms of the New Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture. A copy of the Indenture may be obtained from the Company. You can find definitions of certain capitalized terms used in the following summary under "--Certain Definitions." For purposes of this section, references to (i) the "Company" mean TransDigm Inc. and not its Subsidiaries or Holdings and (ii) the "Notes" mean the New Notes and the Old Notes, in each case, outstanding at any given time and issued under the Indenture.
These New Notes will be unsecured obligations of the Company, ranking subordinate in right of payment to all Senior Debt of the Company.
The Company will issue the New Notes in fully registered form in denominations of $1,000 and integral multiples of $1,000. The Trustee will initially act as Paying Agent and Registrar. The New Notes may be presented for registration of transfer and exchange at the offices of the Registrar. The Company may change any Paying Agent and Registrar without notice to holders of the New Notes (the "Holders"). The Company will pay principal (and premium, if any) on the New Notes at the Trustee's corporate office in New York, New York. At the Company's option, interest also may be paid by mailing a check to the Holders registered address. Any Old Notes that remain outstanding after the completion of the Exchange Offer, together with the New Notes issued in connection with the Exchange Offer, will be treated as a single class of securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $200.0 million, of which up to $125.0 million in aggregate principal amount of the Notes will be outstanding immediately following the Exchange Offer. The Notes will mature on December 1, 2008. Additional Notes may be issued from time to time, subject to the limitations set forth under "--Certain Covenants--Limitation on Incurrence of Additional Indebtedness." Interest on the Notes will accrue at the rate of 10 3/8% per annum and will be payable semiannually in cash on each June 1 and December 1, commencing on June 1, 1999. The Company will make interest payments to the persons who are registered Holders at the close of business on the May 15 and November 15 immediately preceding the applicable interest payment date. Interest on the New Notes will accrue from December 3, 1998 or from the date of the last payment of interest on the Old Notes, whichever is later. No additional interest will be paid on Old Notes tendered and accepted for exchange..
The Notes do not contain any mandatory sinking fund.
REDEMPTION
OPTIONAL REDEMPTION. Except as described below, these New Notes are not redeemable before December 1, 2003. Thereafter, the Company may redeem the New Notes at its option, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during the twelve month period commencing on December 1 of the year set forth below.
YEAR PERCENTAGE ---------------------------------------------------------------------------------- ----------- 2003.............................................................................. 105.188% 2004.............................................................................. 103.458% 2005.............................................................................. 101.729% 2006 and thereafter............................................................... 100.000% |
In addition, the Company must pay all accrued and unpaid interest on the Notes redeemed.
OPTIONAL REDEMPTION UPON EQUITY OFFERINGS. On one or more occasions prior to December 1, 2001, the Company may use the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the principal amount of the Notes (including the New Notes) issued under the Indenture at a redemption price of 110.375% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of redemption; PROVIDED that:
(1) at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding immediately after any such redemption; and
(2) the Company makes such redemption not more than 120 days after the consummation of such Equity Offering.
SELECTION AND NOTICE OF REDEMPTION
In the event that the Company chooses to redeem less than all of the Notes, selection of the Notes for redemption will be made by the Trustee either:
(1) in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed; or
(2) on a PRO RATA basis, by lot or by such method as the Trustee shall deem fair and appropriate. No Notes of a principal amount of $1,000 or less shall be redeemed in part.
If a partial redemption is made with the proceeds of an Equity Offering, the Trustee will select the Notes only on a PRO RATA basis or on as nearly a PRO RATA basis as is practicable. Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt of the Company including its obligations under the New Credit Facility.
The holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of Senior Debt (including interest after the commencement of any bankruptcy or other like proceeding at the rate specified in the applicable Senior Debt whether or not such interest is an allowed claim in any such proceeding) before the Holders of Notes will be entitled to receive any payment with respect to the Notes in the event of any distribution to creditors of the Company:
(1) in a liquidation or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshalling of the Company's assets and liabilities.
The Company also may not make any payment in respect of the Notes if:
(1) a payment default on Designated Senior Debt occurs and is continuing; or
(2) any other default occurs and is continuing on Designated Senior Debt that permits holders of the Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Representative of any Designated Senior Debt.
Payments on the Notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived (so long as no other event of default exists) or 180 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice.
No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days.
The Company must promptly notify holders of Senior Debt if payment of the Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Company, Holders of these Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. See "Risk Factors--Subordination."
At September 30, 1998, on a pro forma basis after giving effect to the Transactions, the aggregate principal amount of Senior Debt outstanding of the Company and Holdings would have been $93.1 million and $113.1 million, respectively.
GUARANTEE
The obligations of the Company under the Notes and the Indenture will be guaranteed (the "Guarantees") on a senior subordinated basis by Holdings and the Domestic Restricted Subsidiaries. The Guarantees will be subordinated in right of payment to all Senior Debt of Holdings and the Domestic Restricted Subsidiaries, respectively, to the same extent that the Notes are subordinated to Senior Debt of the Company. Since Holdings is a holding company with no significant operations, the Guarantee by Holdings provides little, if any, additional credit support for the Notes, and investors should not rely on the Guarantee by Holdings in evaluating an investment in the Notes.
CHANGE OF CONTROL
If a Change of Control occurs, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued interest to the date of purchase. Within 30 days following the date upon which the Change of Control occurred, the Company must send, by first class mail, a notice to each Holder, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice
is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date.
Prior to the mailing of the notice referred to above, but in any event within 30 days following any Change of Control, the Company covenants to:
(1) repay in full all Indebtedness under the New Credit Facility and all other Senior Debt the terms of which require repayment upon a Change of Control; or
(2) obtain the requisite consents under the New Credit Facility and all such other Senior Debt to permit the repurchase of the Notes as provided below. The Company's failure to comply with the covenant described in the immediately preceding sentence shall constitute an Event of Default described in clause (3) and not in clause (2) under "Events of Default" below.
The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner in compliance with the Indenture.
If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing.
You should note that this provision will not protect you from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the Company complies with the provisions of any such securities laws or regulations, the Company shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indenture.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively "incur") any Indebtedness (other than Permitted Indebtedness); PROVIDED, HOWEVER, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company and the Guarantors may incur Indebtedness (including, without limitation, Acquired Indebtedness) and Restricted Subsidiaries of the Company that are not Guarantors may incur Acquired Indebtedness, in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company would have been greater than 2.0 to 1.0.
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company's Capital Stock to holders of such Capital Stock;
(2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any direct or indirect parent of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock;
(3) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes; or
(4) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a "Restricted Payment");
if at the time of such Restricted Payment or immediately after giving effect thereto:
(i) a Default or an Event of Default shall have occurred and be continuing; or
(ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant; or
(iii) the aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent to the Issue Date (other than
Restricted Payments made pursuant to clauses (2)(i), (3), (4), (5), (6),
(7), (8), (9) and (10) of the following paragraph) shall exceed the sum,
without duplication, of:
(w) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to the beginning of the first fiscal quarter commencing after the Issue Date and on or prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period); plus
(x) 100% of the aggregate net cash proceeds (including the fair market value of property other than cash that would constitute Marketable Securities or a Permitted Business) received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company; plus
(y) without duplication of any amounts included in clause (iii)(x) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (y), any net cash proceeds from an Equity Offering to the extent used to redeem the Notes in compliance with the provisions set forth under "--Redemption--Optional Redemption Upon Equity Offerings"); plus
(z) 100% of the aggregate net proceeds (including the fair market value of property other than cash that would constitute Marketable Securities or a Permitted Business) of any (A) sale or other disposition of any Investment (other than a Permitted Investment) made by the Company and its Restricted Subsidiaries or (B) dividend from, or the sale of the stock of, an Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit:
(1) the payment of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration of such dividend or notice of such redemption if the dividend or payment of the redemption price, as the case may be, would have been permitted on the date of declaration or notice;
(2) if no Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof, the acquisition of any shares of Capital Stock of the Company (the "Retired Capital Stock") either (i) solely in exchange for shares of Qualified Capital Stock of the Company (the "Refunding Capital Stock") or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company and, in the case of subclause (i) of this clause (2), if immediately prior to the retirement of the Retired Capital Stock the declaration and payment of dividends thereon was permitted under clause (5) of this paragraph, the declaration and payment of dividends on the Refunding Capital Stock in an aggregate amount per year no greater than the aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such retirement; PROVIDED that at the time of the declaration of any such dividends on the Refunding Capital Stock, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;
(3) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of (A) shares of Qualified Capital Stock of the Company or (B) Refinancing Indebtedness;
(4) if no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof, the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Capital Stock) issued after the Issue Date (including, without limitation, the declaration and payment of dividends on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this paragraph); PROVIDED that, at the time of such issuance, the Company, after giving effect to such issuance on a pro forma basis, would have had a Consolidated Fixed Charge Coverage Ratio of at least 2.0 to 1.0;
(5) payments to Holdings for the purpose of permitting, and in an amount equal to the amount required to permit, Holdings to redeem or repurchase Holdings' common equity or options in respect thereof, in each case in connection with the repurchase provisions of employee stock option or stock purchase agreements or other agreements to compensate management employees; PROVIDED that all such redemptions or repurchases pursuant to this clause (5) shall not exceed $2.0 million in any fiscal year (which amount shall be increased by the amount of any net cash proceeds received from the sale since the Issue Date of Capital Stock (other than Disqualified Capital Stock) to members of the Company's management team that have not otherwise been applied to the payment of Restricted Payments pursuant to the terms of clause (iii) of the immediately preceding paragraph and by the cash proceeds of any "key-man" life insurance policies which are used to make such redemptions or repurchases) since the Issue Date; PROVIDED, FURTHER, that the cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with any repurchase of Capital Stock of Holdings (or warrants or options or rights to acquire such Capital Stock) will not be deemed to constitute a Restricted Payment under the Indenture;
(6) the making of distributions, loans or advances to Holdings in an amount not to exceed $1.0 million PER ANNUM in order to permit Holdings to pay the ordinary operating expenses of Holdings (including, without limitation, directors' fees, indemnification obligations, professional fees and expenses);
(7) payments to Holdings in respect of taxes pursuant to the terms of the Tax Allocation Agreement as in effect on the Issue Date and as amended from time to time pursuant to amendments that do not increase the amounts payable by the Company or any of its Restricted Subsidiaries thereunder;
(8) repurchases of Capital Stock deemed to occur upon the exercise of stock options if such Capital Stock represents a portion of the exercise price thereof;
(9) other Restricted Payments in an aggregate amount not to exceed $7.5 million; and
(10) distributions to Holdings to fund the Transactions (as described under "Use of Proceeds") subsequent to the issuance of the Notes.
In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, (a) amounts expended pursuant to clauses (1) and (2)(ii) shall be included in such calculation, PROVIDED such expenditures pursuant to clause (5) shall not be included to the extent of the cash proceeds received by the Company from any "key-man" life insurance policies and (b) amounts expended pursuant to clauses (2)(i), (3), (4), (5), (6), (7), (8), (9) and (10) shall be excluded from such calculation.
LIMITATION ON ASSET SALES. The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors);
(2) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; PROVIDED that the amount of:
(a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets;
(b) any notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days of the receipt thereof (to the extent of the cash received); and
(c) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed 5% of Total Assets at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value), shall be deemed to be cash for the purposes of this provision or for purposes of the second paragraph of this covenant; and
(3) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 365 days of receipt thereof either (A) to prepay any Senior Debt, or Indebtedness of a Restricted Subsidiary that is not a Guarantor and, in the case of any such Indebtedness under any revolving credit facility, effect a corresponding reduction in the availability under such revolving credit facility (or effect a
permanent reduction in the availability under such revolving credit facility regardless of the fact that no prepayment is required in order to do so (in which case no prepayment should be required)), (B) to reinvest in Productive Assets, or (C) a combination of prepayment and investment permitted by the foregoing clauses (3)(A) and (3)(B). Pending the final application of any such Net Cash Proceeds, the Company or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Cash Proceeds in Cash Equivalents. On the 366th day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(A), (3)(B) and (3)(C) of the preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (3)(A), (3)(B) and (3)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a PRO RATA basis, the maximum amount of Notes that may be purchased with the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; PROVIDED, HOWEVER, that if at any time any non-cash consideration (including any Designated Noncash Consideration) received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than $10.0 million, the application of the Net Cash Proceeds constituting such Net Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating to such initial Net Proceeds Offer Amount from all Asset Sales by the Company and its Restricted Subsidiaries aggregates at least $10.0 million, at which time the Company or such Restricted Subsidiary shall apply all Net Cash Proceeds constituting all Net Proceeds Offer Amounts that have been so deferred to make a Net Proceeds Offer (the first date the aggregate of all such deferred Net Proceeds Offer Amounts is equal to $10.0 million or more shall be deemed to be a Net Proceeds Offer Trigger Date).
Notwithstanding the immediately preceding paragraph, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to the extent that:
(1) at least 75% of the consideration for such Asset Sale constitutes Productive Assets, cash, Cash Equivalents and/or Marketable Securities; and
(2) such Asset Sale is for fair market value; PROVIDED that any consideration consisting of cash, Cash Equivalents and/or Marketable Securities received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the preceding paragraph.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a PRO RATA basis (based on
amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law. To the extent that the aggregate amount of Notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use any remaining Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by the Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indenture by virtue thereof.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary of the Company to:
(1) pay dividends or make any other distributions on or in respect of its Capital Stock;
(2) make loans or advances or pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or
(3) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of:
(a) applicable law;
(b) the Indenture;
(c) non-assignment provisions of any contract or any lease of any Restricted Subsidiary of the Company entered into in the ordinary course of business;
(d) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;
(e) the New Credit Facility;
(f) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date;
(g) restrictions on the transfer of assets subject to any Lien permitted under the Indenture imposed by the holder of such Lien;
(h) restrictions imposed by any agreement to sell assets or Capital Stock permitted under the Indenture to any Person pending the closing of such sale;
(i) any agreement or instrument governing Capital Stock of any Person that is acquired;
(j) any Purchase Money Note or other Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity;
(k) other Indebtedness or Permitted Subsidiary Preferred Stock outstanding on the Issue Date or permitted to be issued or incurred under the Indenture; PROVIDED that any such restrictions are
ordinary and customary with respect to the type of Indebtedness being incurred or Preferred Stock being issued (under the relevant circumstances);
(l) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; and
(m) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above; PROVIDED that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors (evidenced by a Board Resolution) whose judgment shall be conclusively binding, not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES. The Company will not permit any of its Restricted Subsidiaries to issue any Preferred Stock (other than to the Company or to a Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company, other than Permitted Subsidiary Preferred Stock. The provisions of this covenant will not apply to any of the Guarantors.
LIMITATION ON LIENS. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets or any proceeds therefrom, of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, in each case to secure Indebtedness or trade payables, unless:
(1) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; and
(2) in all other cases, the Notes are equally and ratably secured, except for:
(a) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date;
(b) Liens securing Senior Debt;
(c) Liens securing the Notes;
(d) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company;
(e) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness that was secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture; PROVIDED, HOWEVER, that such Liens do not extend to or cover any categories of property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced; and
(f) Permitted Liens.
PROHIBITION ON INCURRENCE OF SENIOR SUBORDINATED DEBT. The Company will not, and will not permit any Restricted Subsidiary that is a Guarantor to, incur or suffer to exist Indebtedness that is senior in right of payment to the Notes or such Guarantor's Guarantee, as the case may be, and subordinate in right of payment to any other Indebtedness of the Company or such Guarantor, as the case may be.
MERGER CONSOLIDATION AND SALE OF ASSETS. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:
(1) either:
(a) the Company shall be the surviving or continuing corporation; or
(b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity"):
(x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and
(y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed;
(2) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company and except in the case of a merger entered into solely for the purpose of reincorporating the Company in another jurisdiction, immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness pursuant to the "Limitation on Incurrence of Additional Indebtedness" covenant;
(3) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company and except in the case of a merger entered into solely for the purpose of reincorporating the Company in another jurisdiction, immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and
(4) the Company or the Surviving Entity shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. However, transfer of assets between or among the Company and its Restricted Subsidiaries will not be subject to the foregoing covenant.
The Indenture provides that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such and that, in the event of a conveyance, lease or transfer, the conveyor, lessor or transferor will be released from the provisions of the Indenture.
LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to occur any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (an "Affiliate Transaction"), other than Affiliate Transactions on terms that are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company; PROVIDED, HOWEVER, that for a transaction or series of related transactions with an aggregate value of $2.5 million or more, at the Company's option, either:
(1) a majority of the disinterested members of the Board of Directors of the Company shall determine in good faith that such Affiliate Transaction is on terms that are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or
(2) the Board of Directors of the Company or any such Restricted Subsidiary party to such Affiliate Transaction shall have received an opinion from a nationally recognized investment banking, appraisal or accounting firm that such Affiliate Transaction is on terms not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company;
and PROVIDED, FURTHER, that for an Affiliate Transaction with an aggregate value of $10.0 million or more the Board of Directors of the Company or any such Restricted Subsidiary party to such Affiliate Transaction shall have received an opinion from a nationally recognized investment banking, appraisal or accounting firm that such Affiliate Transaction is on terms not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company.
The restrictions set forth in the first paragraph of this covenant shall not apply to:
(1) reasonable fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management;
(2) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by the Indenture;
(3) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date;
(4) Restricted Payments or Permitted Investments permitted by the Indenture;
(5) transactions effected as part of a Qualified Securitization Transaction;
(6) the payment of customary annual management, consulting and advisory fees and related expenses to the Permitted Holders and their Affiliates made pursuant to any financial advisory, financing, underwriting or placement agreement or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which are approved by the Board of Directors of the Company or such Restricted Subsidiary in good faith;
(7) payments or loans to employees or consultants that are approved by the Board of Directors of the Company in good faith;
(8) sales of Qualified Capital Stock;
(9) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (9) to the extent that the terms of any such amendment or new agreement are not disadvantageous to the Holders of the Notes in any material respect; and
(10) transactions permitted by and complying with, the provisions of the "Merger, Consolidation and Sale of Assets" covenant.
FUTURE GUARANTEES BY RESTRICTED SUBSIDIARIES. The Company will not create or acquire another Domestic Restricted Subsidiary unless such Domestic Restricted Subsidiary executes and delivers a supplemental indenture to the Indenture, providing for a senior subordinated guarantee of payment of the Notes by such Restricted Subsidiary (the "Guarantee").
Notwithstanding the foregoing, any such Guarantee by a Domestic Restricted Subsidiary of the Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company of all of the Company's Capital Stock in, or all or substantially all of the assets of, such Domestic Restricted Subsidiary; PROVIDED that such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of the Indenture. A form of such Guarantee will be attached as an exhibit to the Indenture.
CONDUCT OF BUSINESS. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any businesses a majority of whose revenues are not derived from businesses that are the same or reasonably similar, ancillary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
REPORTS TO HOLDERS. The Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Notes are outstanding, the Company will furnish to the Holders of Notes:
(1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and
(2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the Commission's rules and regulations. For so long as Holdings is a guarantor of the Notes, the Indenture permits the Company to satisfy its obligations under this covenant by furnishing financial information relating to Holdings; PROVIDED that the same is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to Holdings, on the one hand, and the information relating to the Company and its Restricted Subsidiaries on a stand-alone basis, on the other hand.
In addition, following the consummation of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company has agreed that, for so long as any Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d) (4) under the Securities Act.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(1) the failure to pay interest on any Notes when the same becomes due and payable and the default continues for a period of 30 days (whether or not such payment shall be prohibited by the subordination provisions of the Indenture);
(2) the failure to pay the principal on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer on the date specified for such payment in the applicable offer to purchase) (whether or not such payment shall be prohibited by the subordination provisions of the Indenture);
(3) a default in the observance or performance of any other covenant or agreement contained in the Indenture which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to the "Merger, Consolidation and Sale of Assets" covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);
(4) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company (other than a Securitization Entity) which failure continues for at least 20 days, or the acceleration of the final stated maturity of any such Indebtedness, which acceleration remains uncured or unrescinded for at least 20 days, if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has passed), aggregates $5.0 million or more at any time;
(5) one or more judgments in an aggregate amount in excess of $5.0 million shall have been rendered against the Company or any of its Significant Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; or
(6) certain events of bankruptcy affecting the Company or any of its Significant Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause
(6) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the principal of and accrued interest on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same:
(1) shall become immediately due and payable or
(2) if there are any amounts outstanding under the New Credit Facility, shall become immediately due and payable upon the first to occur of an acceleration under the New Credit Facility or 5 business days after receipt by the Company and the Representative under the New Credit Facility of such Acceleration Notice but only if such Event of Default is then continuing. If an Event of Default specified in clause (6) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
The Indenture provides that, at any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences:
(1) if the rescission would not conflict with any judgment or decree;
(2) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration;
(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid;
(4) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances; and
(5) in the event of the cure or waiver of an Event of Default of the type described in clause (6) of the description above of Events of Default, the Trustee shall have received an officers' certificate and an opinion of counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or interest on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers' certificate to the Trustee promptly upon any such officer obtaining knowledge of any Default or Event of Default (provided that such officers shall provide such certification at least annually whether or not they know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its obligations discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, except for:
(1) the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due;
(2) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments;
(3) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;
(2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that
(a) the Company has received from, or there has been published by the Internal Revenue Service a ruling or
(b) since the date of the Indenture, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the
Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an officers' certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;
(7) the Company shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with;
(8) the Company shall have delivered to the Trustee an opinion of counsel to the effect that:
(a) the trust funds will not be subject to any rights of holders of Senior Debt, including, without limitation, those arising under the Indenture; and
(b) after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; and
(9) certain other customary conditions precedent are satisfied.
Notwithstanding the foregoing, the opinion of counsel required by clause (2) above with respect to a Legal Defeasance need not be delivered if all Notes not therefore delivered to the Trustee for cancellation (1) have become due and payable, or (2) will become due and payable on the maturity date within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when
(1) either:
(a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or
(b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, pursuant to an optional redemption notice or otherwise, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; and
(2) the Company has paid all other sums payable under the Indenture by the Company,
The Trustee will acknowledge the satisfaction and discharge of the Indenture if the Company has delivered to the Trustee an officers' certificate and an opinion of counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company and the Trustee, without the consent of the Holders, may amend the Indenture for certain specified purposes, including curing ambiguities, defects or inconsistencies, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the Holders in any material respect. In formulating its opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an opinion of counsel. Other modifications and amendments of the Indenture may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may:
(1) reduce the amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or reduce the redemption price therefor;
(4) make any Notes payable in money other than that stated in the Notes;
(5) make any change in the provisions of the Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default;
(6) after the Company's obligation to purchase Notes arises thereunder, amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or modify any of the provisions or definitions with respect thereto after a Change of Control has occurred; or
(7) modify or change any provision of the Indenture or the related definitions affecting the subordination or ranking of the Notes in a manner which adversely affects the Holders.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Subsidiaries or that is assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation.
"AFFILIATE" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Securitization Entity makes an Investment in connection with a Qualified Securitization Transaction shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such Investment.
"ASSET ACQUISITION" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of:
(1) any Capital Stock of any Restricted Subsidiary of the Company, or
(2) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; PROVIDED, HOWEVER, that Asset Sales or other dispositions shall not include:
(a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $1.0 million;
(b) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under "--Certain Covenants--Merger, Consolidation and Sale of Assets" or any disposition that constitutes a Change of Control;
(c) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof;
(d) disposals or replacements of obsolete equipment in the ordinary course of business;
(e) the sale, lease, conveyance, disposition or other transfer by the Company or any Restricted Subsidiary of assets or property to one or more Restricted Subsidiaries in connection with Investments permitted under the "Limitation on Restricted Payments" covenant or pursuant to any Permitted Investment; and
(f) sales of accounts receivable, equipment and related assets (including contract rights) of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the fair market value thereof, including cash in an amount at least equal to 75% of the fair market value thereof as determined in accordance with GAAP. For the purposes of this clause (f), Purchase Money Notes shall be deemed to be cash.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"CAPITAL STOCK" means:
(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock, of such Person and
(2) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means:
(1) 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 thereof;
(2) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's;
(3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250.0 million;
(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and
(6) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above.
"CHANGE OF CONTROL" means the occurrence of one or more of the following events:
(1) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or Holdings to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), other than to the Permitted Holders or their Related Parties or any Permitted Group;
(2) the approval by the holders of Capital Stock of the Company or Holdings, as the case may be, of any plan or proposal for the liquidation or dissolution of the Company or Holdings, as the case may be (whether or not otherwise in compliance with the provisions of the Indenture);
(3) any Person or Group (other than the Permitted Holders or their Related Parties or any Permitted Group) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Company or Holdings at a time where the Permitted Holders and their Related Parties in the aggregate own a lesser percentage of the aggregate ordinary voting power represented by such issued and outstanding Capital Stock; or
(4) the first day on which a majority of the members of the Board of Directors of the Company or Holdings are not Continuing Directors.
"COMMON STOCK" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of such Person's:
(1) Consolidated Net Income; and
(2) to the extent Consolidated Net Income has been reduced thereby:
(a) all income taxes and foreign withholding taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period;
(b) Consolidated Interest Expense;
(c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period (other than normal accruals in the ordinary course of business), all as
determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP; and
(d) any cash charges resulting from the Transactions that are incurred prior to the six month anniversary of the Issue Date.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the "Four-Quarter Period") ending prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the "Transaction Date") to Consolidated Fixed Charges of such Person and, in the case of the Company and the Guarantors, for the Four-Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to:
(1) the incurrence or repayment of any Indebtedness or the issuance of any Designated Preferred Stock of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness or the issuance or redemption of other Preferred Stock (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to revolving credit facilities, occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment or issuance or redemption, as the case may be (and the application of the proceeds thereof), had occurred on the first day of the Four-Quarter Period; and
(2) any Asset Sales or other dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions and other operating improvements that have occurred or are reasonably expected to occur, all as determined in accordance with Regulation S-X promulgated under the Securities Act) attributable to the assets which are the subject of the Asset Acquisition or Asset Sale or other disposition and without regard to clause (4) of the definition of Consolidated Net Income) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or other disposition or Asset Acquisition (including the incurrence or assumption of any such Acquired Indebtedness) occurred on the first day of the Four-Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such other Indebtedness that was so guaranteed.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio":
(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and
(2) notwithstanding clause (1) of this paragraph, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any period, the sum, without duplication, of:
(1) Consolidated Interest Expense; PLUS
(2) the product of (x) the amount of all cash dividend payments on any series of Preferred Stock of such Person times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal; PLUS
(3) the product of (x) the amount of all dividend payments on any series of Permitted Subsidiary Preferred Stock times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal; PROVIDED that with respect to any series of Preferred Stock that was not paid cash dividends during such period but that is eligible to be paid cash dividends during any period prior to the maturity date of the Notes, cash dividends shall be deemed to have been paid with respect to such series of Preferred Stock during such period for purposes of this clause (3).
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum of, without duplication:
(1) the aggregate of all cash and non-cash interest expense with respect to all outstanding Indebtedness of such Person and its Restricted Subsidiaries, including the net costs associated with Interest Swap Obligations, for such period determined on a consolidated basis in conformity with GAAP, but excluding amortization or write-off of debt issuance costs;
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; and
(3) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP and without any deduction in respect of Preferred Stock dividends; PROVIDED that there shall be excluded therefrom:
(1) gains and losses from Assets Sales (without regard to the $1.0 million limitation set forth in the definition thereof) and the related tax effects according to GAAP;
(2) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP;
(3) all extraordinary, unusual or nonrecurring charges, gains and losses (including, without limitation, all restructuring costs and any expense or charge related to the repurchase of Capital Stock or warrants or options to purchase Capital Stock), and the related tax effects according to GAAP;
(4) the net income (or loss) of any Person acquired in a pooling of interests transaction accrued prior to the date it becomes a Restricted Subsidiary of the Company or is merged or consolidated with or into the Company or any Restricted Subsidiary of the Company;
(5) the net income (but not loss) of any Restricted Subsidiary of the Company to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of the Company of that income is prohibited by contract, operation of law or otherwise;
(6) the net loss of any Person, other than a Restricted Subsidiary of the Company;
(7) the net income of any Person, other than a Restricted Subsidiary of the Company, except to the extent of cash dividends or distributions paid to the Company or a Restricted Subsidiary of the Company by such Person;
(8) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets; and
(9) any non-cash compensation charges, including any arising from existing stock options resulting from any merger or recapitalization transaction.
For purposes of clause (iii)(w) of the first paragraph of the "Limitation on Restricted Payments" covenant, Consolidated Net Income shall be reduced by any cash dividends paid with respect to any series of Designated Preferred Stock.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash charges and expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges that require an accrual of or a reserve for cash payments for any future period other than accruals or reserves associated with mandatory repurchases of equity securities).
"CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Company or Holdings who:
(1) was a member of such Board of Directors on the Issue Date; or
(2) was nominated for election or elected to such Board of Directors by any of the Permitted Holders or with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.
"CREDIT FACILITIES" means one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) and/or letters of credit or banker's acceptances.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values.
"DEFAULT" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Noncash Consideration will cease to be considered to be outstanding once it has been sold for cash or Cash Equivalents. At the time of receipt of any Designated Noncash Consideration, the Company shall deliver an Officers' Certificate to the Trustee
which shall state the fair market value of such Designated Noncash Consideration and shall state the basis of such valuation, which shall be a report of a nationally recognized investment banking, appraisal or accounting firm with respect to the receipt in one or a series of related transactions of Designated Noncash Consideration with a fair market value in excess of $10.0 million.
"DESIGNATED PREFERRED STOCK" means Preferred Stock that is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (iii)(x) of the first paragraph of the "Limitation on Restricted Payments" covenant.
"DESIGNATED SENIOR DEBT" means
(1) Indebtedness under or in respect of the New Credit Facility and
(2) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control), matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the final maturity date of the Notes.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of the Company that is incorporated under the laws of the United States or any state thereof or the District of Columbia.
"EQUITY OFFERING" means any offering of Qualified Capital Stock of Holdings or the Company; provided that:
(1) in the event of an offering by Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such offering necessary to pay the aggregate redemption price (plus accrued interest to the redemption date) of the Notes to be redeemed pursuant to the provisions described under "--Redemption--Optional Redemption upon Equity Offerings" and,
(2) in the event such equity offering is not in the form of a public offering registered under the Securities Act, the proceeds received by the Company directly or indirectly from such offering are not less than $10.0 million.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect from time to time.
"GUARANTEE" means:
(1) the guarantee of the Notes by Holdings and the Domestic Restricted Subsidiaries of the Company; and
(2) the guarantee of the Notes by any Restricted Subsidiary required under the terms of the "Future Guarantees by Restricted Subsidiaries" covenant.
"GUARANTOR" means any Restricted Subsidiary that incurs a Guarantee; provided that upon the release and discharge of such Restricted Subsidiary from its Guarantee in accordance with the Indenture, such Restricted Subsidiary shall cease to be a Guarantor.
"HEDGING AGREEMENT" means any agreement with respect to the hedging of price risk associated with the purchase of commodities used in the business of the Company and its Restricted Subsidiaries, so long as any such agreement has been entered into in the ordinary course of business and not for purposes of speculation.
"INDEBTEDNESS" means with respect to any Person, without duplication:
(1) all Obligations of such Person for borrowed money;
(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business);
(5) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction;
(6) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;
(7) all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any Lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured;
(8) all Obligations under currency agreements and interest swap agreements of such Person; and
(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock. For the purposes of calculating the amount of Indebtedness of a Securitization Entity outstanding as of any date, the face or notional amount of any interest in receivables or equipment that is outstanding as of such date shall be deemed to be Indebtedness but any such interests held by Affiliates of such Securitization Entity shall be excluded for purposes of such calculation.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person pursuant to any arrangement with any other Person, whereby directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Restricted Subsidiary is no longer a Restricted Subsidiary of the Company (or, in the case of a Restricted Subsidiary that is not Wholly Owned Restricted Subsidiary of the Company, such Restricted Subsidiary has a minority interest that is held by an Affiliate of the Company that is not a Restricted Subsidiary of the Company), the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of.
"ISSUE DATE" means December 3, 1998, the date of original issuance of the Old Notes.
"LIEN" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).
"MARKETABLE SECURITIES" means publicly traded debt or equity securities that are listed for trading on a national securities exchange and that were issued by a corporation whose debt securities are rated in one of the three highest rating categories by either S&P or Moody's.
"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:
(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);
(2) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements; and
(3) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.
"NEW CREDIT FACILITY" means the Credit Agreement dated as of the Issue Date among the Company, the lenders party thereto in their capacities as lenders thereunder and Bankers Trust Company, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
"OBLIGATIONS" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
"PERMITTED BUSINESS" means any business (including stock or assets) that derives a majority of its revenues from the business engaged in by the Company and its Restricted Subsidiaries on the Issue Date and/or activities that are reasonably similar, ancillary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
"PERMITTED GROUP" means any group of investors that is deemed to be a "person" (as such term is used in Section 13(d)(3) of the Exchange Act) by virtue of the Stockholders Agreements, as the same may be amended, modified or supplemented from time to time, provided that no single Person (together with its Affiliates), other than the Permitted Holders and their Related Parties, is the "beneficial owner" (as such term is used in Section 13(d) of the Exchange Act), directly or indirectly, of more than 50% of the voting power of the issued and outstanding Capital Stock of the Company or Holdings (as applicable) that is "beneficially owned" (as defined above) by such group of investors.
"PERMITTED HOLDERS" means Odyssey Investment Partners Fund, LP, its Affiliates and any general or limited partners of Odyssey Investment Partners Fund, L.P.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the following:
(1) Indebtedness under the Notes in an aggregate principal amount not to exceed $125.0 million;
(2) Indebtedness of the Company or any of its Restricted Subsidiaries incurred pursuant to one or more Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $155.0 million, less:
(A) the aggregate amount of Indebtedness of Securitization Entities at the time outstanding, less
(B) the amount of all mandatory principal payments actually made by the Company or any such Restricted Subsidiary since the Issue Date with the Net Proceeds of an Asset Sale in respect of term loans under a Credit Facility (excluding any such payments to the extent refinanced at the time of payment), and
(C) further reduced by any repayments of revolving credit borrowings under a Credit Facility with the Net Cash Proceeds of an Asset Sale that are accompanied by a corresponding commitment reduction thereunder; PROVIDED that the amount of Indebtedness permitted to be incurred pursuant to the Credit Facilities in accordance with this clause (2) shall be in addition to any Indebtedness permitted to be incurred pursuant to the Credit Facilities in reliance on, and in accordance with, clauses (7), (13) and (14) below;
(3) other indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon;
(4) Interest Swap Obligations of the Company or any of its Restricted Subsidiaries covering Indebtedness of the Company or any of its Restricted Subsidiaries; PROVIDED that any Indebtedness to which any such Interest Swap Obligations correspond is otherwise permitted to be incurred under the Indenture; and PROVIDED, FURTHER, that such Interest Swap Obligations are entered into, in the judgment of the Company, to protect the Company or any of its Restricted Subsidiaries from fluctuation in interest rates on its outstanding Indebtedness;
(5) Indebtedness of the Company or any Restricted Subsidiary under Hedging Agreements and Currency Agreements;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any such Restricted Subsidiaries; PROVIDED, HOWEVER, that:
(a) if the Company is the obligor on such Indebtedness and the payee is a Restricted Subsidiary that is not a Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and
(b) (1) any subsequent issuance or transfer of Capital Stock that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and
(2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof (other than by way of granting a Lien permitted under the Indenture or in connection with the exercise of remedies by a secured creditor) shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
(7) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any person owning such assets) in an aggregate principal amount outstanding not to exceed $5.0 million;
(8) Refinancing Indebtedness;
(9) guarantees by the Company and its Restricted Subsidiaries of each other's Indebtedness; PROVIDED that such Indebtedness is permitted to be incurred under the Indenture and PROVIDED, FURTHER, that in the event such Indebtedness (other than Acquired Indebtedness) is incurred pursuant to the Consolidated Fixed Charge Coverage Ratio, such guarantees are by the Company or a Guarantor only;
(10) Indebtedness arising from agreements of the Company or a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price, earn out or other similar
obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Restricted Subsidiary of the Company, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; PROVIDEDthat the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(11) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business;
(12) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Subsidiary of the Company (except for Standard Securitization Undertakings);
(13) Indebtedness incurred by the Company or any of the Guarantors in connection with the acquisition of a Permitted Business which Indebtedness is incurred on or prior to September 30, 1999; PROVIDED that on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof and the use of proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio of the Company would be greater than the greater of (x) the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to the incurrence of such Indebtedness and (y) the Consolidated Fixed Charge Coverage Ratio of the Company on the Issue Date;
(14) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount does not exceed $10.0 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under a Credit Facility);
(15) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such indebtedness is extinguished within five business days of incurrence; and
(16) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, issued in the ordinary course of business of the Company or such Restricted Subsidiary, including, without limitation, in order to provide security for workers' compensation claims or payment obligations in connection with self-insurance or similar requirements in the ordinary course of business and other Indebtedness with respect to workers' compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business.
For purposes of determining compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (16) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with such covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of the "Limitations on Incurrence of Additional Indebtedness" covenant.
"PERMITTED INVESTMENTS" means:
(1) Investments by the Company or any Restricted Subsidiary of the Company in any Restricted Subsidiary of the Company (other than a Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) (whether existing on the Issue Date or created thereafter) or any Person (including by means of any transfer of cash or other property) if as a result of such Investment such Person shall become a Restricted Subsidiary of the Company (other than Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) or that will merge with or consolidate into the Company or a Restricted Subsidiary of the Company and Investments in the Company by any Restricted Subsidiary of the Company;
(2) investments in cash and Cash Equivalents;
(3) loans and advances to employees and officers of the Company and its Restricted Subsidiaries for bona fide business purposes in an aggregate principal amount not to exceed $5.0 million at any one time outstanding;
(4) Currency Agreements, Hedging Agreements and Interest Swap Obligations entered into in the ordinary course of business and otherwise in compliance with the Indenture;
(5) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in good faith settlement of delinquent obligations of such trade creditors or customers;
(6) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with the "Limitation on Asset Sales" covenant;
(7) Investments existing on the Issue Date;
(8) accounts receivable created or acquired in the ordinary course of business;
(9) guarantees by the Company or a Restricted Subsidiary of the Company permitted to be incurred under the Indenture;
(10) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (10) that are at that time outstanding, not to exceed $10.0 million (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(11) any Investment by the Company or a Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; provided that any Investment in a Securitization Entity is in the form of a Purchase Money Note or an equity interest; and
(12) Investments the payment for which consists exclusively of Qualified Capital Stock of the Company.
"PERMITTED LIENS" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims either:
(a) not delinquent; or
(b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;
(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of Default;
(5) easements, rights-of-way zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(6) any interest or title of a lessor under any Capitalized Lease Obligation;
(7) purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary of the Company acquired, constructed or improved in the ordinary course of business; PROVIDED, HOWEVER, that
(a) the related purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired and
(b) the Lien securing such Indebtedness shall be created within 90 days of such acquisition;
(8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;
(11) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under the Indenture;
(12) Liens securing Indebtedness under Currency Agreements and Hedging Agreements;
(13) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary with respect to obligations that do not in the aggregate exceed $5.0 million at any one time outstanding;
(14) Liens on assets transferred to a Securitization Entity or an assets of a Securitization Entity, in either case incurred in connection with a Qualified Securitization Transaction;
(15) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;
(16) Liens arising from filing Uniform Commercial Code financing statements regarding leases;
(17) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods;
(18) Liens securing Acquired Indebtedness incurred in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant;
(19) Liens placed upon assets of a Restricted Subsidiary of the Company that is not a Guarantor to secure Indebtedness of such Restricted Subsidiary that is otherwise permitted under the Indenture; and
(20) Liens existing on the Issue Date, together with any Liens securing Indebtedness incurred in reliance on clause (8) of the definition of Permitted Indebtedness in order to refinance the Indebtedness secured by Liens existing on the Issue Date; PROVIDED that the Liens securing the refinancing Indebtedness shall not extend to property other than that pledged under the Liens securing the Indebtedness being refinanced.
"PERMITTED SUBSIDIARY PREFERRED STOCK" means any series of Preferred Stock of a Restricted Subsidiary of the Company that constitutes Qualified Capital Stock and has a fixed dividend rate, the liquidation value of all series of which, when combined with the aggregate amount of Indebtedness of the Company and its Restricted Subsidiaries incurred pursuant to clause (14) of the definition of Permitted Indebtedness, does not exceed $5.0 million.
"PERSON" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.
"PRODUCTIVE ASSETS" means assets (including Capital Stock) that are used or usable by the Company and its Restricted Subsidiaries in Permitted Businesses.
"PURCHASE MONEY NOTE" means a promissory note of a Securitization Entity evidencing a line of credit, which may be irrevocable, from the Company or any Subsidiary of the Company in connection with a Qualified Securitization Transaction to a Securitization Entity, which note shall be repaid from cash available to the Securitization Entity other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest and principal and amounts paid in connection with the purchase of newly generated receivables or newly acquired equipment.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified Capital Stock.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to:
(1) a Securitization Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries); and
(2) any other Person (in the case of a transfer by a Securitization Entity), or may grant a security interest in any accounts receivable or equipment (whether now existing or arising or
acquired in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable and equipment, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable and equipment, proceeds of such accounts receivable and equipment and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with assets securitization transactions involving accounts receivable and equipment.
"RECAPITALIZATION" means the recapitalization of Holdings consummated on the Issue Date.
"REFINANCE" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Refinancing, modification, replacement, restatement, refunding, deferral, extension, substitution, supplement, reissuance or resale of existing or future Indebtedness (other than intercompany Indebtedness), including any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such existing or future Indebtedness as in effect at the time of issuance thereof ("Required Premiums") and fees in connection therewith; PROVIDED that any such event shall not:
(1) directly or indirectly result in an increase in the aggregate principal amount of Permitted Indebtedness, except to the extent such increase is a result of a simultaneous incurrence of additional Indebtedness:
(a) to pay Required Premiums and related fees; or
(b) otherwise permitted to be incurred under the Indenture; and
(2) create Indebtedness with a Weighted Average Life to Maturity at the time such Indebtedness is incurred that is less than the Weighted Average Life to Maturity at such time of the Indebtedness being refinanced, modified, replaced, renewed, restated, refunded, deferred, extended, substituted, supplemented, reissued or resold.
"RELATED PARTY" with respect to any Permitted Holder means:
(a) (1) any spouse, sibling, parent or child of such Permitted Holder; or
(2) the estate of any Permitted Holder during any period in which such estate holds Capital Stock of the Company for the benefit of any Person referred to in clause (a)(1); or
(b) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning an interest of more than 50% of which consist of, or the sole managing partner or managing member of which is, one or more Permitted Holders and/or such other Persons referred to in the immediately preceding clause (a).
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; PROVIDED that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property.
"SECURITIZATION ENTITY" means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable or equipment and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity:
(1) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which:
(a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings;
(b) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings; or
(c) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;
(2) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity; and
(3) to which neither the Company nor any Restricted Subsidiary of the Company has any obligations to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with foregoing conditions.
"SENIOR DEBT" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company or any Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of:
(x) all monetary obligations of every nature of the Company or any Guarantor under the New Credit Facility, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities;
(y) all Interest Swap Obligations (and guarantees thereof); and
(z) all obligations (and guarantees thereof) under Currency Agreements and Hedging Agreements, in each case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, "Senior Debt" shall not include:
(i) any Indebtedness of the Company or a Guarantor to the Company or to a Subsidiary of the Company;
(ii) other than the Holdings PIK Notes, any Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Facilities (including the New Credit Facility);
(iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services;
(iv) Indebtedness represented by Disqualified Capital Stock;
(v) any liability for federal, state, local or other taxes owed or owing by the Company;
(vi) that portion of any Indebtedness incurred in violation of the Indenture provisions set forth under "Limitation on Incurrence of Additional Indebtedness" (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (vi) if the holder(s) of such obligation or their representative and the Trustee shall have received an Officer's Certificate of the Company to the effect that the incurrence of such Indebtedness does not (or in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made) would not violate such provisions of the Indenture;
(vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company; and
(viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company.
"SIGNIFICANT SUBSIDIARY," with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a "significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the Securities Act.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties, covenants and indemnities entered into by the Company or any subsidiary of the Company which are reasonably customary in an accounts receivable or equipment transaction.
"STOCKHOLDERS AGREEMENTS" means those certain stockholders agreements entered into in connection with the Recapitalization.
"SUBSIDIARY," with respect to any Person, means:
(i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly by such Person; or
(ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.
"TAX ALLOCATION AGREEMENT" means the tax allocation agreement dated as of the Issue Date between Holdings and the Company.
"TOTAL ASSETS" means the total consolidated assets of the Company and its Restricted Subsidiaries, as set forth on the Company's most recent consolidated balance sheet.
"U.S. SUBSIDIARY" means any Subsidiary of the Company that is incorporated under the laws of the United States or any State thereof or the District of Columbia.
"UNRESTRICTED SUBSIDIARY" of any Person means:
(1) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED that:
(1) the Company certifies to the Trustee that such designation complies with the "Limitation on Restricted Payments" covenant; and
(2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.
The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
(1) the then outstanding aggregate principal amount of such Indebtedness; into
(2) the sum of the total of the products obtained by multiplying;
(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof; by
(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any Wholly Owned Subsidiary of such Person which at the time of determination is a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Restricted Subsidiary that is incorporated in a jurisdiction other than a State in the United States or the District of Columbia, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person.
REGISTRATION RIGHTS
THE SUMMARY SET FORTH BELOW OF CERTAIN PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY BY, ALL THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, A COPY OF WHICH HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT.
The Company, the Guarantors and the Initial Purchasers entered into the Registration Rights Agreement on December 3, 1998 (the "Issue Date") pursuant to which each of the Company and the Guarantors agreed that they will, at their expense, for the benefit of holders of the Old Notes (the "Holders"), (i) within 60 days after the Issue Date (the "Filing Date"), file a registration statement on an appropriate registration form (the "Exchange Offer Registration Statement") with respect to a registered offer (the "Exchange Offer") to exchange the Old Notes for these New Notes, guaranteed on a senior subordinated basis by the Guarantors, which New Notes will have terms substantially identical in all material respects to the Old Notes (except that the New Notes will not contain terms with respect to transfer restrictions) and (ii) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared effective, the Company will offer these New Notes (and related securities) in exchange for surrender of the Old Notes. The Company will keep the Exchange Offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders. For each of the Old Notes surrendered to the Company pursuant to the Exchange Offer, the Holder who surrendered such Old Note will receive an New Note having a principal amount equal to that of the surrendered Old Note. Interest on each New Note will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Old Note surrendered in exchange therefor, or (ii) if the Old Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on such Old Note, from the Issue Date.
Based on an interpretation by the Commission's staff set forth in no-action letters issued to third parties unrelated to the Company, the Company believes that, with the exceptions set forth below, New Notes issued pursuant to the exchange offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder which is an "affiliate" of the Company within the meaning of Rule 405 promulgated under the Securities Act, or a broker-dealer who purchased Old Notes directly from the Company to resell pursuant to Rule 144A or any other available exemption promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the New Notes are acquired in the ordinary course of business of the holder and the holder does not have an arrangement or understanding with any person to participate in the distribution of such New Notes. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the New Notes cannot rely on this interpretation by the Commission's staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." Broker-dealers who acquired Old Notes directly from us and not as a result of market-making activities or other trading activities may not rely on the staff's interpretations discussed above or participate in the exchange offer and must comply with the prospectus delivery requirements of the Securities Act in order to sell the Old Notes.
If, (i) because of any change in law or in currently prevailing interpretations of the Staff of the Commission, the Company is not permitted to effect an exchange offer, (ii) the exchange offer is not consummated within 185 days of the Issue Date or (iii) in certain circumstances, certain holders of unregistered Old Notes so request, or (iv) in the case of any Holder that participates in the exchange
offer, such Holder does not receive New Notes on the date of the exchange that
may be sold without restriction under state and federal securities laws (other
than due solely to the status of such Holder as an affiliate of the Company
within the meaning of the Securities Act), then in each case, the Company will
(x) promptly deliver to the Holders and the Trustee written notice thereof and
(y) at its sole expense, (a) as promptly as practicable, file a shelf
registration statement covering resales of the Old Notes (the "Shelf
Registration Statement"); and (b) use their best efforts to keep effective the
Shelf Registration Statement until the earlier of two years after its effective
date or such time as all of the applicable Old Notes have been sold thereunder.
The Company will, in the event that a Shelf Registration Statement is filed,
provide to each Holder copies of the prospectus that is a part of the Shelf
Registration Statement, notify each such Holder when the Shelf Registration
Statement for the Old Notes has become effective and take certain other actions
as are required to permit unrestricted resales of the Old Notes. A Holder that
sells Old Notes pursuant to the Shelf Registration Statement will be required to
be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such a Holder (including certain indemnification rights and obligations).
If the Company fails to comply with the above provisions or if the Exchange Offer Registration Statement or the Shelf Registration Statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable in respect of the Old Notes as follows:
(i) if (A) neither the Exchange Offer Registration Statement or Shelf Registration Statement is filed with the Commission on or prior to the applicable filing date or (B) notwithstanding that the Company has consummated or will consummate an exchange offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not filed on or prior to the date required by the Registration Rights Agreement, then commencing on the day after either such required filing date, Additional Interest shall accrue on the principal amount of the Old Notes at a rate of 0.50% per annum for the first 90 days immediately following each such filing date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement is declared effective by the Commission on or prior to 90 days after the applicable filing deadline set for such filing in the Registration Rights Agreement or (B) notwithstanding that the Company has consummated or will consummate an exchange offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not declared effective by the Commission on or prior to the 90th day following the filing date deadline set for such filing in the Registration Rights Agreement, then, commencing on the day after such 90th day following the filing deadline set for such filing in the Registration Rights Agreement, Additional Interest shall accrue on the principal amount of the Old Notes at a rate of 0.50% per annum for the first 90 days immediately following such date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
(iii) if (A) the Company has not exchanged New Notes for all Old Notes validly tendered in accordance with the terms of the exchange offer on or prior to the 185th day after the Issue Date or (B) if applicable, the Shelf Registration Statement ceases to be effective at any time prior to the second anniversary of the Issue Date (other than after such time as all Old Notes have been disposed of thereunder), then Additional Interest shall accrue on the principal amount of the Old Notes at a rate of 0.50% per annum for the first 90 days commencing on (x) the 185th day after the Issue Date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases
to be effective in the case of (B) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Old Notes may not accrue under more than one of the foregoing clauses (i)-(iii) at any one time and at no time shall the aggregate amount of Additional Interest accruing exceed in the aggregate 1.0% per annum; PROVIDED, FURTHER, HOWEVER, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of New Notes for all Old Notes tendered (in the case of clause (iii)(A) above), or upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii)(B) above), Additional Interest on the Old Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) above will be payable in cash on the original interest payment dates for the Old Notes.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully registered form without interest coupons.
Except as described herein under the heading "-Certificated Securities," New Notes will initially be represented by a permanent global New Note in fully registered form without interest coupons (the "Global Note") and will be deposited with the Trustee as custodian for The Depositary Trust Company ("DTC") and registered in the name of a nominee of such depositary.
THE GLOBAL NOTE
The Company expects that pursuant to procedures established by DTC (i) upon the issuance of the Global Note, DTC or its custodian will credit, on its internal system, the principal amount of the individual beneficial interests represented by the Global Note to the respective accounts of persons who have accounts with such depositary and (ii) ownership of beneficial interests in the Global Note will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). Ownership of beneficial interests in the Global Notes will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants.
So long as DTC, or its nominee, is the registered owner or holder of the New Notes, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the New Notes represented by the Global Note for all purposes under the Indenture. No beneficial owner of an interest in the Global Note will be able to transfer that interest except in accordance with DTC's procedures, in addition to those provided for under the Indenture.
Payments of the principal of, premium (if any), and interest on, the Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of the Company, the Trustee or any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of principal, premium, if any, or interest on the Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Note as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in the Global Note held through such participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way through DTC's same-day funds system in accordance with DTC rules and will be settled in same-day funds. If a holder requires physical delivery of a Certificated Security for any reason, including to sell New Notes to persons in states that require physical delivery of the New Notes, or to pledge such securities, such holder must transfer its interest in the Global Note, in accordance with the normal procedures of DTC and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be taken by a holder of New Notes (including the presentation of New Notes for exchange as described below) only at the direction of one or more participants to whose accounts the DTC interests in the Global Note are credited and only in respect of such portion of the aggregate principal amount of New Notes as to which such participant or participants has or have given such direction. However, if there is an Event
of Default under the Indenture applicable to the Global Note, DTC will exchange the Global Note for Certificated Securities, which it will distribute to its participants.
Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Note among participants of DTC, it is under no obligation to perform such procedures and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
CERTIFICATED SECURITIES
Certificated securities shall be issued in exchange for the Old Notes in the exchange offer or for beneficial interest in the Global Note, in each case, if requested by a holder of such Old Note or such beneficial interests, respectively. In addition, certificated securities shall be issued in exchange for beneficial interests in the Global Note if DTC is at any time unwilling or unable to continue as a depositary for the Global Note and a successor depositary is not appointed by the Company within 90 days.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes certain of the material U.S. federal income tax aspects of the exchange offer to holders of the Old Notes. This discussion is summary for general information only and does not consider all aspects of the Old Notes in light of such holder's personal circumstances. This discussion also does not address the U.S. federal income tax consequences to holders subject to special treatment under the U.S. federal income tax laws, such as dealers in securities, or foreign currency, tax-exempt entities, banks, thrifts, insurance companies, persons that hold the Old Notes as part of a "straddle", a "hedge" against currency risk or a "conversion transaction"; persons that have a "functional currency" other than the U.S. dollar, and investors in pass-through entities. In addition, this discussion does not prescribe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing and presupposed regulations thereunder, Internal Revenue Service ("IRS") rulings and pronouncements and judicial decision now in effect, all of which are subject to change (possibly on a retroactive basis). The Company has not and will not seek any rulings or opinions from the IRS or counsel with respect to the matters discussed below. There can be no assurance that the IRS will not take positions concerning the tax consequences of the exchange offer which are difference from those discussed herein.
HOLDERS OF THE OLD NOTES SHOULD CONSULT THEIR OWN ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION, TO THE EXCHANGE OFFER IN LIGHT OF THEIR PARTICULAR SITUATIONS.
The exchange of Old Notes for New Notes pursuant to the exchange offer should not constitute a taxable exchange. As a result, a holder (i) should not recognize taxable gains of loss as a result of exchanging Old Notes for New Notes pursuant to the exchange offer, (ii) the holding period of the New Notes should include the holding period of the Old Notes exchanged therefor and (iii) the adjusted tax basis of the New Notes should be the same as the adjusted tax basis of the Old Notes exchange therefore immediately before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with the resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that for a period of up to 180 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer that requests such document in the letter of transmittal for use in connection with any such resale.
The Company and the Guarantors will not receive any proceeds from any sale of New Notes by broker-dealers or any other persons. New Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Company's performance of, or compliance with, the Registration Rights Agreement and will indemnify the holders of Old Notes (including any broker-dealers), and certain parties related to such holders, against certain liabilities, including liabilities under the Securities Act.
EXPERTS
The consolidated financial statements of TransDigm Holding Company as of September 30, 1998 and 1997, and for each of the three years in the period ended September 30, 1998, included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Marathon Power Technologies Company as of December 31, 1996 and 1995 and for each of the two years in the period ended December 31, 1996 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the Company by Latham & Watkins, New York, New York.
INDEX TO FINANCIAL STATEMENTS
TRANSDIGM HOLDING COMPANY Report of Deloitte & Touche LLP, Independent Auditors................................ F-2 Consolidated Balance Sheets as of September 30, 1998 and 1997........................ F-3 Consolidated Statements of Income and Retained Earnings (Deficit) for each of the three years in the period ended September 30, 1998................................. F-4 Consolidated Statements of Cash Flows for each of the three years in the period ended September 30, 1998................................................................. F-5 Notes to Consolidated Financial Statements for each of the three years in the period ended September 30, 1998........................................................... F-6 MARATHON POWER TECHNOLOGIES COMPANY Report of PricewaterhouseCoopers LLP, Independent Accountants........................ F-19 Consolidated Balance Sheets as of December 31, 1996 and 1995......................... F-20 Consolidated Statements of Operations and Retained Earnings for each of the two years in the period ended December 31, 1996.............................................. F-21 Consolidated Statements of Cash Flows for each of the two years in the period ended December 31, 1996.................................................................. F-22 Notes to the Consolidated Financial Statements for each of the two years in the period ended December 31, 1996..................................................... F-23 |
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of TransDigm Holding Company
We have audited the accompanying consolidated balance sheets of TransDigm Holding Company and its subsidiaries (the "Company") as of September 30, 1998 and 1997, and the related consolidated statements of income and retained earnings (deficit) and of cash flows for each of the three years in the period ended September 30, 1998. 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 in accordance with generally accepted auditing standards. 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of TransDigm Holding Company and its subsidiaries as of September 30, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1998 in conformity with generally accepted accounting principles.
As discussed in Note 17 to the consolidated financial statements, in 1998, the Company retroactively changed its method of accounting for put warrants.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
November 9, 1998 (except for Note 18 for which the date is December 3, 1998)
TRANSDIGM HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
SEPTEMBER 30,
----------------------
1998 1997
---------- ----------
ASSETS (NOTE 9)
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 19,486 $ 5,397
Accounts receivable--Net (Note 4)....................................................... 12,530 12,475
Inventories (Note 5).................................................................... 18,280 17,410
Deferred income taxes (Note 11)......................................................... 3,799 3,902
Prepaid expenses and other.............................................................. 165 313
---------- ----------
Total current assets................................................................ 54,260 39,497
PROPERTY, PLANT AND EQUIPMENT--Net (Note 6)............................................... 21,951 21,022
INTANGIBLE ASSETS--Net (Note 7)........................................................... 35,294 37,508
DEBT ISSUE COSTS--Net..................................................................... 606 873
DEFERRED INCOME TAXES (Note 11)........................................................... 3,674 3,069
---------- ----------
TOTAL..................................................................................... $ 115,785 $ 101,969
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 9).............................................. $ 5,000 $ 5,000
Accounts payable........................................................................ 5,667 5,275
Accrued liabilities (Note 8)............................................................ 10,239 12,702
Put warrants (Notes 9 and 17)........................................................... 16,700 --
---------- ----------
Total current liabilities........................................................... 37,606 22,977
LONG-TERM DEBT--Less current portion (Note 9)............................................. 40,000 45,000
PUT WARRANTS (Notes 9 and 17)............................................................. -- 10,160
NON-CURRENT PORTION OF ACCRUED PENSION COSTS (Note 10).................................... 1,752 1,219
---------- ----------
Total liabilities................................................................... 79,358 79,356
---------- ----------
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY:
Capital stock (Note 12)................................................................. 24,281 24,352
Retained earnings (deficit)............................................................. 12,900 (1,237)
Minimum pension liability adjustment (Note 10).......................................... (754) (502)
---------- ----------
Total stockholders' equity.......................................................... 36,427 22,613
---------- ----------
TOTAL..................................................................................... $ 115,785 $ 101,969
---------- ----------
---------- ----------
|
See notes to consolidated financial statements.
TRANSDIGM HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)
(DOLLARS IN THOUSANDS)
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997 1996
---------- --------- ---------
NET SALES (Note 4).............................................................. $ 110,868 $ 78,159 $ 62,897
COST OF SALES (Including charge of $242 in 1998 and $666 in 1997 due to
inventory purchase accounting adjustment) (Note 2)............................ 59,395 49,303 41,874
---------- --------- ---------
GROSS PROFIT.................................................................... 51,473 28,856 21,023
---------- --------- ---------
OPERATING EXPENSES:
Selling and administrative.................................................... 10,473 7,561 6,459
Amortization of intangibles................................................... 2,438 2,089 3,838
Research and development...................................................... 1,724 1,116 836
---------- --------- ---------
Total operating expenses.................................................. 14,635 10,766 11,133
---------- --------- ---------
INCOME FROM OPERATIONS.......................................................... 36,838 18,090 9,890
INTEREST EXPENSE--NET........................................................... 3,175 3,463 4,510
WARRANT PUT VALUE ADJUSTMENT (Note 17).......................................... 6,540 4,800 2,160
---------- --------- ---------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS............................... 27,123 9,827 3,220
INCOME TAX PROVISION (Note 11).................................................. 12,986 5,193 2,045
---------- --------- ---------
INCOME BEFORE EXTRAORDINARY LOSS................................................ 14,137 4,634 1,175
EXTRAORDINARY LOSS FROM EXTINGUISHMENT OF DEBT, NET OF INCOME TAXES OF $975
(Note 9)...................................................................... -- 1,462 --
---------- --------- ---------
NET INCOME...................................................................... 14,137 3,172 1,175
---------- --------- ---------
RETAINED EARNINGS (DEFICIT) BEGINNING OF YEAR:
As previously reported........................................................ -- (1,985) (4,537)
Accounting change (Note 17)................................................... -- (2,424) (1,047)
---------- --------- ---------
As restated................................................................... (1,237) (4,409) (5,584)
---------- --------- ---------
RETAINED EARNINGS (DEFICIT), END OF YEAR........................................ $ 12,900 $ (1,237) $ (4,409)
---------- --------- ---------
---------- --------- ---------
|
See notes to consolidated financial statements.
TRANSDIGM HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEAR ENDED SEPTEMBER 30,
----------------------------------
1998 1997 1996
---------- ---------- ----------
OPERATING ACTIVITIES:
Net income.................................................................. $ 14,137 $ 3,172 $ 1,175
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation.............................................................. 4,029 3,677 3,485
Amortization of intangibles............................................... 2,438 2,089 3,838
Amortization of debt discount and debt issue costs........................ 267 757 1,267
Warrant put value adjustment.............................................. 6,540 4,800 2,160
Deferred income taxes..................................................... (341) (1,733) 839
Extraordinary charge for early extinguishment of debt (Note 9)............ -- 1,462 --
Changes in assets and liabilities, net of effects from acquisition of
business (Note 2):
Accounts receivable..................................................... (821) (1,343) 2,790
Inventories............................................................. (870) 337 1,794
Prepaid expenses and other assets....................................... 148 787 (361)
Accounts payable........................................................ 392 1,233 1,224
Accrued and other liabilities........................................... (2,464) 2,230 484
---------- ---------- ----------
Net cash provided by operating activities................................. 23,455 17,468 18,695
---------- ---------- ----------
INVESTING ACTIVITIES:
Capital expenditures........................................................ (5,061) (2,285) (2,494)
Acquisition of Marathon Power Technologies Company, net of cash acquired of
$748 (Note 2)............................................................. 766 (40,875) --
---------- ---------- ----------
Net cash used in investing activities....................................... (4,295) (43,160) (2,494)
---------- ---------- ----------
FINANCING ACTIVITIES:
Proceeds from term loan net of fees of $873................................. -- 49,127 --
Net repayments under revolving credit loans................................. -- -- (6,690)
Repayment of term and subordinated notes including prepayment charge of $867
in 1997 (Note 9).......................................................... (5,000) (20,867) (6,500)
Proceeds from issuance of capital stock..................................... -- 67 115
Purchase of capital stock................................................... (71) (174) (400)
---------- ---------- ----------
Net cash provided by (used in) financing activities......................... (5,071) 28,153 (13,475)
---------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS..................................... 14,089 2,461 2,726
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.................................. 5,397 2,936 210
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR........................................ $ 19,486 $ 5,397 $ 2,936
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest...................................... $ 3,640 $ 2,600 $ 3,483
---------- ---------- ----------
---------- ---------- ----------
Cash paid during the year for income taxes.................................. $ 13,490 $ 5,468 $ 700
---------- ---------- ----------
---------- ---------- ----------
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See notes to consolidated financial statements.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
1. DESCRIPTION OF THE BUSINESS AND MERGER
TransDigm Holding Company ("Holding") through its wholly-owned operating subsidiary, TransDigm Inc. ("TransDigm"), is a premier supplier of proprietary mechanical components servicing the aircraft, mining, marine and other manufacturing industries. TransDigm along with its wholly-owned subsidiary, Marathon Power Technologies Company ("Marathon"), offers a broad line of component products including tube connectors, valves, batteries, static inverters, pumps, quick disconnects, clamps and ball bearing and sliding controls. Holding has no operations, liabilities or assets except for its investment in TransDigm.
On August 3, 1998, Phase II Acquisition Corp. ("Acquiror"), an entity formed by affiliates of Odyssey Investment Partners, LP ("Odyssey") and Holding entered into a definitive agreement and plan of merger which agreement was amended on November 9, 1998 (the "Merger Agreement" or the "Merger"). Pursuant to the terms of the Merger, Acquiror will be merged with and into Holding, with Holding being the surviving corporation in the Merger (the "Surviving Corporation"). In the Merger, holders of Holding's outstanding common stock will be entitled to receive, in exchange for each outstanding share of common stock (except for shares held directly or indirectly by Holding or the Rolled Shares, as defined below) the "Per Share Merger Consideration" as defined in the Merger Agreement. The aggregate consideration payable pursuant to the Merger, including amounts payable to holders of options and warrants, is expected to be approximately $299.7 million.
In connection with the Merger, Kelso Investment Associates IV, LP and Kelso Equity Partners II, L.P. (collectively "Kelso") will retain approximately 15.4% of the Surviving Corporation's outstanding common stock (the "Rolled Shares") subject to adjustment for certain transactions prior to closing. In addition, certain members of management of Holding agreed, in connection with and as a condition to entering into the Merger Agreement, to rollover stock options with an estimated gross and net value of approximately $17.2 million and $13.7 million, respectively.
The Merger is intended to be treated as a recapitalization for financial reporting purposes which will have no impact on the historical basis of Holding's consolidated assets and liabilities. The Merger is subject to customary closing conditions, including the termination or expiration of the relevant waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, Holding having a minimum consolidated net worth, as defined, at closing of not less than $52 million and funding of committed financing. Odyssey has received financing commitments for the transactions from Bankers Trust Corporation, whose commitments are subject to certain conditions.
Simultaneously with the Merger, Holding and TransDigm will refinance all of its existing debt (Note 9). The Merger, the refinancing, and payment of fees and expenses are expected to be funded by (i) existing cash balances, (ii) investments by Odyssey of $100.2 million, (iii) funds from a new $120 million Senior Credit Facility, (iv) funds from $125 million senior subordinated notes and (v) Holding PIK notes and additional common stock of $20 million issued to certain stockholders. After consummation of the Merger, Holding anticipates that it will have approximately $27.0 million available for working capital, certain permitted acquisitions and for general corporate purposes under the new Senior Credit Facility.
Upon consummation of the Merger, Odyssey and its co-investors will own approximately 73.7% of the Surviving Corporation's common stock and Kelso and other continuing stockholders will own approximately 26.3% of the outstanding shares of Holdings' common stock on a fully diluted basis.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
1. DESCRIPTION OF THE BUSINESS AND MERGER (CONTINUED) During each of the years ended September 30, 1998, 1997 and 1996, TransDigm paid Kelso a management fee of approximately $0.1 million.
2. ACQUISITION
On August 8, 1997, TransDigm acquired all of the outstanding common stock of Marathon for approximately $41.6 million in cash (including acquisition expenses), $4 million of which was placed into two $2 million escrow accounts (an environmental escrow and an indemnity escrow) to indemnify TransDigm in the event certain defined environmental and other costs were incurred by Marathon or TransDigm subsequent to the acquisition. At September 30, 1997, a post-closing purchase price adjustment of approximately $.8 million was due from the seller (see Note 4), which was received during November 1997 from the indemnity escrow. The remainder of the indemnity escrow was released to the seller during the year ended September 30, 1998. The environmental escrow account expires after the occurrence of certain defined events in the Stock Purchase Agreement. During September 1998, the seller filed a lawsuit against the Company to release the environmental escrow alleging that the Company had violated the requirements of the Stock Purchase Agreement relating to the investigation of the presence of certain contaminants at the Marathon facility in Texas (Note 15). The Company has filed counter claims against the seller and the ultimate outcome of this matter cannot presently be determined.
The acquisition has been accounted for using the purchase method and, accordingly, the accompanying consolidated financial statements include the operating results of Marathon since the date of the acquisition. The acquisition was financed with available cash of approximately $11.6 million and the proceeds of senior term debt of approximately $30 million. The excess of the aggregate purchase price over the fair market value of net assets acquired of approximately $28.9 million was recognized as goodwill.
The following table summarizes the unaudited consolidated pro forma results of operations, as if the acquisition had occurred at the beginning of the following periods:
YEAR ENDED SEPTEMBER
30,
--------------------
1997 1996
--------- ---------
(UNAUDITED)
(DOLLARS IN
THOUSANDS)
Net sales............................................................... $ 96,075 $ 82,425
Income before income taxes and extraordinary items...................... 11,220 9,190
Net income.............................................................. 3,894 1,522
|
Pro forma net income for the year ended September 30, 1997 includes an extraordinary loss from extinguishment of debt (net of income taxes of $975) of $1,462. Pro forma net income for the year ended September 30, 1996 includes an extraordinary gain from Marathon's extinguishment of debt (net of income taxes of $135) of $230.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
2. ACQUISITION (CONTINUED) This pro forma information does not purport to be indicative of the results that actually would have been obtained if the operations had been combined during the periods presented and is not intended to be a projection of future results.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION--The accompanying consolidated financial statements include the accounts of TransDigm Holding Company and subsidiaries (collectively the "Company"). All significant intercompany balances and transactions have been eliminated.
SALES AND EARNINGS--The Company follows the guidelines of AICPA Statement of Position 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts" (the contract method of accounting) for substantially all commercial and governmental contracts. Under the contract method of accounting, the Company's sales are primarily under fixed-price contracts, certain of which require delivery of products over several years. Sales and profit on each contract are recognized primarily in accordance with the percentage-of-completion method of accounting, using the units of delivery method. Revisions of estimated profits on contracts are included in earnings by the reallocation method, which spreads the change in estimate over future deliveries. Any anticipated losses on contracts are charged to earnings when identified.
CASH EQUIVALENTS--The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS--The Company reserves for amounts determined to be uncollectible based on specific identification and historical experience.
INVENTORIES--Inventories are stated at the lower of cost or market. Cost of inventories is determined by the average cost and the first-in, first-out (FIFO) methods. In accordance with industry practice, all inventories are classified as current assets even though a portion of the inventories is not expected to be realized within one year.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method at rates based on the estimated useful lives of the assets.
DEBT ISSUE COSTS AND DISCOUNTS--The cost of obtaining financing for the acquisition as well as debt discounts are amortized using the interest method over the respective terms of the related debt issues.
INTANGIBLE ASSETS--Intangible assets are amortized on a straight-line basis over their respective estimated useful lives ranging from 2 to 40 years. The Company assesses the recoverability of intangibles by determining whether the amortization over the remaining life can be recovered through projected undiscounted cash flows from future operations.
INCOME TAXES--The Company accounts for income taxes using an asset and liability approach. Deferred taxes are recorded for the difference between the book and tax basis of various assets and liabilities.
PRODUCT WARRANTY COSTS--The Company provides a one year warranty on certain products beginning on the date the product is installed on an aircraft. A provision for estimated sales returns and the cost of repairs is recorded at the time of sale and periodically adjusted to reflect actual experience.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates.
4. ACCOUNTS RECEIVABLE, MAJOR CUSTOMERS AND EXPORT SALES
Accounts receivable consist of the following at September 30 (dollars in thousands):
1998 1997
--------- ---------
Due from U.S. government or prime contractors under
U.S. government programs.............................................. $ 1,217 $ 773
Commercial customers.................................................... 11,578 11,439
Marathon post-closing purchase price adjustment (Note 2)................ -- 766
Allowance for uncollectible amounts..................................... (265) (503)
--------- ---------
Accounts receivable--net................................................ $ 12,530 $ 12,475
--------- ---------
--------- ---------
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The Company's sales and receivables are concentrated in the aircraft industry. The Company's customers consist primarily of original equipment manufacturers of aircraft and aircraft subassemblies, commercial airlines, distributors, and various agencies of the United States government, including the U.S. military.
For the year ended September 30, 1998, two customers represented approximately 20% and 14%, respectively, of the Company's net sales. One customer represented approximately 15% of the Company's net sales during the year ended September 30, 1997 and a group of related customers represented approximately 11% of the Company's net sales for the year ended September 30, 1996.
Export sales were $17.8 million in 1998, $15.5 million in 1997 and $12.3 million in 1996.
Approximately 9.6% of the Company's receivables at September 30, 1998 were due from one customer and approximately 14.5% of the receivables were due from entities which principally operate outside of the United States. Credit is extended based on an evaluation of the customer's financial condition and collateral is generally not required.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
5. INVENTORIES
Inventories consist of the following at September 30 (dollars in thousands):
1998 1997
--------- ---------
Work-in-progress and finished goods............................................... $ 10,577 $ 14,913
Raw materials and purchased component parts....................................... 12,038 6,268
--------- ---------
Total........................................................................... 22,615 21,181
Reserve for excess and obsolete inventory......................................... (4,335) (3,771)
--------- ---------
Inventories--net.................................................................. $ 18,280 $ 17,410
--------- ---------
--------- ---------
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6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at September 30 (dollars in thousands):
1998 1997
---------- ----------
Land and improvements........................................................... $ 4,683 $ 4,667
Buildings and improvements...................................................... 8,125 7,575
Machinery and equipment......................................................... 26,198 21,977
Construction in progress........................................................ 150 265
---------- ----------
Total......................................................................... 39,156 34,484
Accumulated depreciation........................................................ (17,205) (13,462)
---------- ----------
Property, plant and equipment--net.............................................. $ 21,951 $ 21,022
---------- ----------
---------- ----------
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7. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consist of the following at September 30 (dollars in thousands):
1998 1997
--------- ---------
Goodwill.................................................................................... $ 33,341 $ 34,155
Technology and other........................................................................ 1,953 3,353
--------- ---------
Total....................................................................................... $ 35,294 $ 37,508
--------- ---------
--------- ---------
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Accumulated amortization of intangibles was $16.5 million at September 30, 1998 and $14 million at September 30, 1997.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
8. ACCRUED LIABILITIES
Accrued liabilities consist of the following at September 30 (dollars in thousands):
1998 1997
--------- ---------
Compensation and related benefits....................................... $ 3,993 $ 4,025
Estimated losses on uncompleted contracts............................... 3,012 3,733
Sales returns and repairs............................................... 1,391 1,797
Environmental costs..................................................... 280 683
Income taxes............................................................ 380 266
Interest................................................................ 135 350
Other................................................................... 1,048 1,848
--------- ---------
Total................................................................... $ 10,239 $ 12,702
--------- ---------
--------- ---------
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9. DEBT
SUMMARY--The Company's long-term debt consists of the following at September
30 (dollars in thousands):
1998 1997
--------- ---------
Term loans.............................................................. $ 45,000 $ 50,000
Current maturities...................................................... (5,000) (5,000)
--------- ---------
Long-term portion....................................................... $ 40,000 $ 45,000
--------- ---------
--------- ---------
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REVOLVING CREDIT, SWING LINE, AND TERM LOANS--During the year ended September 30, 1997, the Company obtained a new $70 million credit facility with a group of financial institutions which consist of a $20 million revolving credit line (including $1 million of available swing line loans) and $50 million of term loans. At September 30, 1998, the Company had $20 million of borrowings (the entire revolving credit line) available under the credit facility. Any amounts borrowed under the revolving credit and swing line loans mature in the year 2003 and amounts borrowed under the term loans mature on various dates through the year 2003.
Borrowings under the credit facility bear interest at the Company's option of (1) the Alternate Base Rate plus .25% or (2) the LIBO rate for Eurodollar loans plus 1.25%, payable quarterly. The Alternate Base Rate is equal to the highest of (a) the Prime Rate, (b) the Base CD Rate plus 1% or (c) the Federal Funds Effective Rate plus .5%. The interest rate on outstanding borrowings at September 30, 1998 was approximately 6.9%.
Any amounts borrowed under the credit facility are collateralized by substantially all of the tangible assets of the Company. The agreement also contains a number of restrictive covenants that, among other things, limit the ability of the Company to incur indebtedness, pay dividends, engage in mergers and consolidations, engage in transactions with affiliates, make capital expenditures, engage in sales of assets or the stock of a subsidiary company and make certain investments. The agreement also requires the maintenance of a minimum net worth as well as debt to adjusted earnings, interest coverage, and other ratios.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
9. DEBT (CONTINUED) The maturities of the Company's term loans are as follows: 1999--$5 million; 2000 through 2003-- $10 million each year.
SUBORDINATED NOTES--During the year ended September 30, 1997, the Company redeemed, in advance of their scheduled maturity, outstanding subordinated notes which had a carrying value at the time of the redemption of approximately $19.3 million ($20 million principal balance net of an unamortized discount of approximately $.7 million). As a result of the redemption, the Company recognized an extraordinary loss of approximately $1.5 million (net of a current income tax benefit of approximately $1 million) on the early extinguishment of debt which included prepayment costs of approximately $.8 million and the write-off of the remaining unamortized debt issue costs of approximately $1 million. The subordinated notes bore interest at an annual rate of 13%, payable semi-annually.
The subordinated notes included detachable warrants to purchase approximately 16,000 shares of non-voting common stock of TransDigm Holding Company at a price of $.10 per share which were not affected by the redemption of the subordinated notes. The warrants are not exercisable except in connection with the following triggering events: public offering of TransDigm Holding Company's common stock, a business combination in which the Company is not the surviving entity, and a change of control (see Note 1). If no transaction constituting a triggering event is consummated prior to July 31, 1999, warrant holders have the right to exercise a put option requiring the Company to repurchase all of the warrants at their then appraised fair market value. If the warrant holders have not exercised their put option prior to September 30, 2001, then TransDigm Holding Company will have the right to call the warrants at their then appraised fair market value.
10. RETIREMENT PLANS
The Company has two non-contributory, defined benefit pension plans which together cover all of its union employees. The plans provide benefits of stated amounts for each year of service. The Company's funding policy is to contribute actuarially determined amounts allowable under Internal Revenue Service regulations. The plans' assets consist primarily of guaranteed investment contracts with an insurance company.
Net periodic pension cost of the defined benefit plans consists of the following for the years ended September 30 (dollars in thousands):
1998 1997 1996
--------- --------- ---------
Service cost--benefits earned during the period..................... $ 86 $ 74 $ 72
Interest cost on projected benefit obligation....................... 306 288 262
Actual return on plan assets........................................ (190) (136) (130)
Net amortization and deferral....................................... 94 101 28
--------- --------- ---------
Net periodic pension cost........................................... $ 296 $ 327 $ 232
--------- --------- ---------
--------- --------- ---------
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TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
10. RETIREMENT PLANS (CONTINUED) The following table sets forth the funded status of the plans and amounts recognized in the Company's consolidated balance sheets at September 30 (dollars in thousands).
1998 1997
--------- ---------
Actuarial present value of benefit obligation, substantially
all vested............................................................... $ 4,969 $ 4,096
Plan assets at fair value.................................................. 2,817 2,232
--------- ---------
Projected benefit obligation in excess of plan assets...................... 2,152 1,864
Unrecognized net loss from past experience different from that assumed..... (1,196) (791)
Unamortized prior service cost............................................. (226) (98)
Adjustment required to recognize additional minimum liability.............. 1,422 889
--------- ---------
Accrued pension cost recognized in the consolidated balance sheets (current
and long-term portions).................................................. $ 2,152 $ 1,864
--------- ---------
--------- ---------
|
The assumptions used to determine net periodic pension cost as well as the funded status are:
1998 1997
----- -----
Discount rate................................................................... 6.5% 7.5%
Long-term rate of return on plan assets......................................... 7.5% 7.5%
|
The provisions of Financial Accounting Standards Board Statement No. 87, "Employers' Accounting for Pensions" require recognition in the balance sheet of an additional minimum liability and related intangible asset (limited by the amount of unamortized prior service cost) for pension plans with accumulated benefits in excess of plan assets. At September 30, 1998 and 1997, an additional liability of $1.4 million and $.9 million, respectively, is reflected in the consolidated balance sheets. At September 30, 1998 and 1997, the liability exceeded the unrecognized prior service cost resulting in a charge to stockholders' equity, net of taxes, of $.8 million and $.5 million, respectively.
The Company also sponsors a defined contribution employee savings plan which covers substantially all of the Company's non-union employees. Under the plan, the Company contributes a percentage of employee compensation and matches a portion of employee contributions to the plan. The cost recognized for such contributions under this plan for the years ended September 30, 1998, 1997 and 1996 was approximately $.6 million in all years.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
11. INCOME TAXES
The provision (benefit) for income taxes consists of the following for the years ended September 30 (dollars in thousands):
1998 1997 1996
--------- --------- ---------
Current......................................................... $ 13,327 $ 6,926 $ 2,897
Deferred........................................................ (341) (1,733) 839
Benefit of operating loss carryforward.......................... -- -- (1,691)
--------- --------- ---------
Total........................................................... $ 12,986 $ 5,193 $ 2,045
--------- --------- ---------
--------- --------- ---------
|
The difference between the provision for income taxes at the federal statutory income tax rate and the tax shown in the consolidated statements of income and retained earnings (deficit) for the years ended September 30 is as follows (dollars in thousands):
1998 1997 1996
--------- --------- ---------
Tax at statutory rate of 35% (34% in 1997 and 1996)............. $ 9,493 $ 3,341 $ 1,095
State and local income taxes.................................... 1,053 445 160
Nondeductible warrant put value adjustment...................... 2,289 1,632 734
Benefit from foreign sales corporation.......................... (349) (394) --
Nondeductible goodwill amortization............................. 353 70 --
Other--net...................................................... 147 99 56
--------- --------- ---------
Provision for income taxes...................................... $ 12,986 $ 5,193 $ 2,045
--------- --------- ---------
--------- --------- ---------
|
The components of the deferred tax assets at September 30 consist of the following (dollars in thousands):
1998 1997
--------- ---------
CURRENT ASSET:
Estimated losses on uncompleted contracts.................................. $ 1,175 $ 1,300
Employee benefits.......................................................... 649 743
Sales returns and repairs.................................................. 548 541
Other accrued liabilities.................................................. 1,427 1,318
--------- ---------
Total...................................................................... $ 3,799 $ 3,902
--------- ---------
--------- ---------
NON-CURRENT ASSET:
Intangible assets.......................................................... $ 3,724 $ 3,638
Retirement obligations..................................................... 596 401
Property, plant and equipment.............................................. (646) (970)
--------- ---------
Total...................................................................... $ 3,674 $ 3,069
--------- ---------
--------- ---------
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TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
12. STOCKHOLDERS' EQUITY
CAPITAL STOCK--Authorized capital stock of the Company consists of 900,000 shares of common stock (voting), par value $.01 per share and 100,000 shares of Class A (non-voting) common stock. At September 30, 1998, outstanding common shares were 236,120 of voting common stock and 13,750 of Class A non-voting common stock. There was no change in the number of outstanding Class A non-voting shares during the years ended September 30, 1998, 1997 and 1996.
During the years ended September 30, 1998, 1997, and 1996, the Company issued voting common shares, principally to employees and members of its board of directors, as follows (dollars in thousands):
1998 1997 1996
----- ----- ---------
Number of shares........................................................ -- 200 575
--- --- ---------
--- --- ---------
Proceeds................................................................ -- $ 67 $ 115
--- --- ---------
--- --- ---------
|
During the years ended September 30, 1998, 1997, and 1996, the Company also repurchased certain voting common shares, principally from terminated employees, as follows (dollars in thousands):
1998 1997 1996
----- --------- ---------
Number of shares....................................................... 175 410 1,085
--- --------- ---------
--- --------- ---------
Acquisition cost....................................................... $ 71 $ 174 $ 400
--- --------- ---------
--- --------- ---------
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STOCK OPTIONS--The Company has certain stock option plans for its employees. The options generally vest upon the earlier of: (1) the occurrence of certain events such as the achievement of certain earnings targets or a change in the control of the Company or (2) certain specified dates in the option agreements. A summary of the status of the Company's stock option plans as of September 30, 1998, 1997 and 1996 and changes during the years then ended is presented below:
1998 1997 1996
------------------------------ ------------------------------ ---------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES
--------- ------------------- --------- ------------------- ---------
Outstanding at beginning of year....... 37,467 $ 158 31,150 $ 116 36,700
Granted................................ -- -- 7,597 324 4,900
Exercised.............................. -- -- (220) 145 (5,090)
Forfeited.............................. -- -- (1,060) 147 (5,360)
--------- --------- ---------
Outstanding at end of year............. 37,467 158 37,467 158 31,150
--------- --------- ---------
--------- --------- ---------
Exercisable at end of year............. 19,670 113 17,121 110 14,792
--------- --------- ---------
--------- --------- ---------
WEIGHTED-AVERAGE
EXERCISE PRICE
-------------------
Outstanding at beginning of year....... $ 105
Granted................................ 200
Exercised.............................. 100
Forfeited.............................. 100
Outstanding at end of year............. 116
Exercisable at end of year............. 106
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TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
12. STOCKHOLDERS' EQUITY (CONTINUED) The following table summarizes information about stock options outstanding at September 30, 1998:
OPTIONS OUTSTANDING
-----------------------------------------------
WEIGHTED-AVERAGE
EXERCISE NUMBER REMAINING NUMBER
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISABLE
------------------------------------------------- ----------- --------------------- -----------
$100............................................. 25,170 5.8 17,020
154............................................. 400 6.8 200
200............................................. 4,900 7.5 2,450
335............................................. 6,997 8.5
----------- -----------
37,467 19,670
----------- -----------
----------- -----------
|
The Company applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock option plans. No compensation cost has been recognized for its stock option plans. Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method specified in Statement of Financial Accounting Standards No. 123, the Company's net income for the years ended September 30, 1998 and 1997 would have been reduced by approximately $115,000 in both years.
The weighted average fair value of options granted during fiscal 1997 and 1996 was $950,000 and $340,000, respectively. The fair value of the options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions for grants in both fiscal 1997 and 1996: risk-free interest rates ranging from 6.25% to 6.85%, expected life of seven years, expected volatility and dividend yield of 0%.
13. LEASES
TransDigm leases office space for its corporate headquarters and one of its divisions. The lease requires rental payments of approximately $200,000 per year through the initial term of the lease, which expires in 1999. TransDigm may also be required to share in the operating costs of the facility under certain conditions. TransDigm has the option to renew the lease for an additional five years beyond the expiration of the initial lease term. TransDigm also has commitments under operating leases for vehicles and equipment. Rental expense was $599,000 in 1998, $540,000 in 1997, and $570,000 in 1996. Future, minimum rental commitments at September 30, 1998 under operating leases having initial or remaining non-cancelable lease terms exceeding one year are $383,000 in 1999, $166,000 in 2000, $79,000 in 2001, and $29,000 in 2002.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's cash and cash equivalents, accounts receivable and payable, and accrued liabilities approximate their fair value due to the short-term maturities of these assets and liabilities. The Company also believes that the aggregate fair value of its term loans approximates its carrying amount because the interest rates on the debt are reset on a frequent basis to reflect current market rates.
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
15. CONTINGENCIES
ENVIRONMENTAL--The soil and groundwater beneath the Company's facility in Waco, Texas have been impacted by releases of hazardous materials. The resulting contaminants of concern have been delineated and characterized. Because the majority of these contaminants are presently below action levels prescribed by the Texas Natural Resources Conservation Commission ("TNRCC"), and because an escrow (Note 2) was previously funded to cover the cost of remediation that TNRCC might require for those contaminants currently in excess of action limits, management does not believe the condition of the soil and groundwater at the Waco facility will require incurrence of material expenditures.
OTHER--While the Company is currently involved in certain legal proceedings, management believes the results of these proceedings will not have a material effect on the financial condition, results of operations or cash flows of the Company. During the ordinary course of business, the Company is from time to time threatened with, or may become a party to, legal actions and other proceedings. The Company believes that its potential exposure to such legal actions is adequately covered by its aviation product and general liability insurance.
16. NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income." The statement requires that an enterprise classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Company will adopt this standard during fiscal 1999.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." The statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments such as a measure of segment profit or loss, certain specific revenue and expense items, and segment assets. The Company will adopt this standard during fiscal 1999.
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132, "Employer's Disclosures about Pensions and Other Postretirement Benefits." The statement requires an enterprise to disclose certain information about its pension and postretirement benefits, including a reconciliation of beginning and ending balances of the benefit obligation, the funded status of the plans, and the amount of net periodic benefit cost recognized. The Company will adopt this standard during fiscal 1999.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, (b)
a hedge of the exposure to variable cash flows of a forecasted transaction, or
(c) a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an
TRANSDIGM HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
16. NEW ACCOUNTING STANDARDS (CONTINUED) available-for-sale security, or a foreign-currency-denominated forecasted transaction. The Company will adopt this standard during fiscal 2000.
While management has not completed its analysis of these new accounting standards, the adoption of these standards is not expected to have a material effect on the Company's financial statements.
17. ACCOUNTING CHANGE
In connection with the planned registration of the Senior Subordinated Notes described in Note 1 with the Securities and Exchange Commission ("Commission"), the Company has retroactively adopted a new method of accounting for the put warrants issued in 1993 (see Note 9). The Company adopted the new method to comply with the requirements of the Commission for put warrants. Under the new method of accounting, the Company has recorded a liability for the estimated put value of the warrants and is recognizing changes in the estimated put value in earnings. Previously, the Company recognized the warrants as a component of stockholders' equity and adjusted the carrying value of the warrants on a straight-line basis for the difference between their original recorded amount of $1.6 million and their estimated put value in July 1999, with an offsetting charge to the Company's retained earnings (deficit). The Company has restated its 1997 and 1996 consolidated financial statements for this change in accordance with the provisions of Accounting Principles Board Opinion No. 20, "Accounting Changes." The significant effects of the change in accounting on the Company's consolidated statements of income and retained earnings (deficit) are as follows (dollars in thousands):
1997 1996
--------- ---------
As previously reported:
Income before extraordinary loss......................................... $ 9,434 $ 3,335
Net income............................................................... 7,972 3,335
As restated:
Income before extraordinary loss......................................... 4,634 1,175
Net income............................................................... 3,172 1,175
|
Because the Merger described in Note 1 constitutes a "triggering event" pursuant to the terms of the warrants, the warrant holders will be permitted to exercise their put option in connection with the closing of the transaction. Accordingly, the Company has adjusted the carrying value of the warrants in the accompanying September 30, 1998 consolidated balance sheet to their estimated fair value.
18. SUBSEQUENT EVENT
The Merger described in Note 1 was completed on December 3, 1998.
* * * * * * *
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Marathon Power Technologies Company
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and retained earnings and of cash flows present fairly, in all material respects, the financial position of Marathon Power Technologies Company and its subsidiary at December 31, 1996 and 1995, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 the opinion expressed above.
Price Waterhouse LLP
Dallas, Texas
January 17, 1997
MARATHON POWER TECHNOLOGIES COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE INFORMATION)
DECEMBER 31,
--------------------
1996 1995
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents................................................................. $ 326 $ 79
Accounts receivable, less allowance for doubtful accounts of $25 and $24 at December 31,
1996 and 1995, respectively............................................................. 2,419 2,636
Inventories............................................................................... 3,191 3,076
Deferred income taxes..................................................................... 321 292
Prepaid income taxes...................................................................... 40 119
Other current assets...................................................................... 68 67
--------- ---------
Total current assets.................................................................. 6,365 6,269
Property, plant and equipment............................................................. 6,496 6,570
--------- ---------
Total assets.......................................................................... $ 12,861 $ 12,839
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................................... $ 776 $ 719
Accrued expenses.......................................................................... 2,108 2,238
Short-term debt........................................................................... 518 476
Current maturities of long-term debt...................................................... 475 --
--------- ---------
Total current liabilities............................................................. 3,877 3,433
--------- ---------
Deferred income taxes....................................................................... 339 216
Long-term debt.............................................................................. 2,025 5,000
--------- ---------
Total long-term liabilities........................................................... 2,364 5,216
--------- ---------
Commitments and contingencies (Note 13)
Shareholders' equity:
Common stock, $.01 par value; 50,000 shares authorized, 30,000 shares issued and
outstanding............................................................................. 1 1
Capital in excess of par value............................................................ 2,999 2,999
Retained earnings......................................................................... 3,628 1,198
Treasury stock, at cost; 75 shares........................................................ (8) (8)
--------- ---------
Total shareholders' equity............................................................ 6,620 4,190
--------- ---------
Total liabilities and shareholders' equity.......................................... $ 12,861 $ 12,839
--------- ---------
--------- ---------
|
The accompanying notes are an integral part of these financial statements.
MARATHON POWER TECHNOLOGIES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS)
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Net sales................................................................................... $ 20,065 $ 18,072
Cost of goods sold.......................................................................... 11,833 11,280
--------- ---------
Gross profit................................................................................ 8,232 6,792
Selling expenses............................................................................ 1,286 1,024
General and administrative expenses......................................................... 3,100 2,959
--------- ---------
Income from operations...................................................................... 3,846 2,809
Interest expense............................................................................ (403) (644)
--------- ---------
Income before income taxes and extraordinary items.......................................... 3,443 2,165
Provision for income taxes.................................................................. (1,243) (759)
--------- ---------
Income before extraordinary items........................................................... 2,200 1,406
Extraordinary gain on extinguishment of debt, net of income taxes........................... 230 --
--------- ---------
Net income.................................................................................. 2,430 1,406
Retained earnings (accumulated deficit), beginning of period................................ 1,198 (208)
--------- ---------
Retained earnings, end of period............................................................ $ 3,628 $ 1,198
--------- ---------
--------- ---------
|
The accompanying notes are an integral part of these financial statements.
MARATHON POWER TECHNOLOGIES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER
31,
--------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income................................................................................. $ 2,430 $ 1,406
Adjustments to reconcile net income to net cash provided by operating activities:
Extraordinary gain on early extinguishment of debt, net of income taxes................ (230) --
Depreciation and amortization.......................................................... 766 673
Deferred income tax provision.......................................................... 94 175
Other.................................................................................. (4) --
Changes in operating assets and liabilities:
Accounts receivable.................................................................... 217 (500)
Inventories............................................................................ (246) 604
Prepaid income taxes................................................................... 79 (119)
Other current assets................................................................... (1) 126
Accounts payable....................................................................... 57 313
Accrued expenses....................................................................... (130) (293)
Income taxes payable................................................................... -- (45)
--------- ---------
Net cash provided by operating activities............................................ 3,032 2,340
--------- ---------
Cash flows from investing activities:
Property, plant and equipment additions.................................................... (702) (363)
Property, plant and equipment dispositions................................................. 10 --
--------- ---------
Net cash used in investing activities................................................ (692) (363)
--------- ---------
Cash flows from financing activities:
Net increase of line of credit............................................................. 42 476
Repayment of long-term debt................................................................ (2,125) (3,000)
Other...................................................................................... (10) --
Acquisition of treasury stock.............................................................. -- (8)
--------- ---------
Net cash used in financing activities................................................ (2,093) (2,532)
--------- ---------
Net increase (decrease) in cash and cash equivalents......................................... 247 (555)
Cash and cash equivalents at beginning of period............................................. 79 634
--------- ---------
Cash and cash equivalents at end of period................................................... $ 326 $ 79
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................................................. $ 459 $ 672
Income taxes............................................................................. $ 1,198 $ 748
|
The accompanying notes are an integral part of these financial statements.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND FORMATION
Marathon Power Technologies Company ("Company") was organized in March 1994 and purchased substantially all of the net assets of Marathon Power Technologies, a wholly-owned subsidiary of American Premier Underwriters, Inc., on May 19, 1994. The Company, located in Waco, Texas, manufactures vented and sealed nickel cadmium rechargeable batteries which are used in aviation and consumer electrical equipment. The Company also manufactures static inverters, used largely in the aviation industry, which convert DC power into AC power, as well as other items, such as battery chargers. The Company maintains a subsidiary in the United Kingdom used primarily for distribution of vented products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are as follows:
PRINCIPLES OF CONSOLIDATION--The financial statements include the accounts of the Company and its wholly-owned subsidiary after elimination of intercompany transactions and balances. Certain reclassifications were made to conform prior year amounts to the current year presentation.
USE OF ESTIMATES--Financial statements prepared in conformity with generally accepted accounting principles require management to make estimates and assumptions about reported amounts of assets and liabilities; disclosure of contingent assets and liabilities and reported amounts of revenues and expenses. Management must also make estimates and judgments about future results of operations related to specific elements of the business in assessing recoverability of assets and recorded values of liabilities. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS--Cash and cash equivalents include cash on hand and short-term investments with original maturities of three months or less.
CREDIT CONCENTRATIONS--The Company sells products chiefly to aviation companies and/or suppliers to aviation companies, generally on an unsecured basis. The Company provides estimated reserves against accounts receivable for collection losses.
INVENTORIES--Inventories are stated at the lower of cost or market, cost being determined on a first-in first-out basis.
PROPERTY PLANT AND EQUIPMENT--Property, plant and equipment, including assets under capital lease, are carried at acquisition cost. Depreciation and amortization are computed on the straight-line basis over the estimated remaining useful lives of the assets (ranging from 2 to 30 years) and the remaining term of capital leases, respectively. Repair and maintenance expenditures are charged to operations as incurred, and expenditures for major renewals and betterments are capitalized. When units of property are disposed, the cost and related accumulated depreciation are removed from the accounts, and the resulting gains or losses are included in operations.
REVENUE RECOGNITION--Sales revenue and related cost of sales are recognized as products are shipped to customers. In the normal course of business, the Company provides for product defects through the issuance of one to two year warranties covering its products. The costs associated with these warranties are accrued at the time of sale which totaled $130,000 and $232,000 in 1996 and 1995, respectively.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES--Deferred income taxes are provided for differences between tax laws and financial accounting standards regarding the recognition and measurement of assets, liabilities, revenues and expenses. Such differences result principally from different methods of purchase price allocation for tax and financial accounting purposes and depreciation.
FAIR VALUE OF FINANCIAL INSTRUMENTS--Management believes the recorded values of financial instruments approximate their current fair values as such items are current in nature and/or generally bear variable interest rates which adjust yield to derive current market value.
STOCK-BASED COMPENSATION--In October 1995, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-based Compensation" ("SFAS 123") was issued. This statement requires the fair value of stock options and other stock-based compensation issued to employees to either be included as compensation in the statement of operations, or the pro forma effect on net income of such compensation expense to be disclosed in the footnotes to the Company's financial statements commencing with the Company's year ending December 31, 1996. The Company has adopted SFAS 123 on a disclosure basis only. As such, implementation of SFAS 123 is not expected to impact the Company's consolidated balance sheet or consolidated statement of operations.
3. INVENTORIES
Inventories comprise the following (dollars in thousands):
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Raw materials.............................................................. $ 887 $ 716
Work-in-process............................................................ 1,601 1,731
Finished goods............................................................. 703 629
--------- ---------
$ 3,191 $ 3,076
--------- ---------
--------- ---------
|
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise the following (dollars in thousands):
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Land....................................................................... $ 693 $ 693
Building and improvements.................................................. 3,379 3,370
Machinery and equipment.................................................... 3,550 3,258
Other...................................................................... 678 294
--------- ---------
8,300 7,615
Less accumulated depreciation and amortization............................. 1,804 1,045
--------- ---------
$ 6,496 $ 6,570
--------- ---------
--------- ---------
|
Routine repairs and maintenance charged to expense were $108,000 and $161, 000 for the years ended December 31, 1996 and 1995, respectively.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACCRUED LIABILITIES
Accrued liabilities comprise the following (dollars in thousands):
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Customer rebates........................................................... $ 690 $ 200
Compensation............................................................... 583 788
Warranty................................................................... 435 535
Other...................................................................... 400 715
--------- ---------
$ 2,108 $ 2,238
--------- ---------
--------- ---------
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6. LONG-TERM DEBT
Long-term debt comprises the following (dollars in thousands):
DECEMBER 31,
--------------------
1996 1995
--------- ---------
$3,000 revolving credit facility with a bank, bearing interest at 0.25%
above prime at December 31, 1996 (8.5%) and 1.0% above prime at December
31, 1995 (9.5%) on the outstanding balance, principal and interest
payable upon deposit of available funds, available until June 1999....... $ 518 $ 476
Note payable to a bank, bearing interest at 0.25% above prime at December
31, 1996 (8.5%) and 1.0% above prime at December 31, 1995 (9.5%) payable
in varying installments through June 1999................................ 2,500 2,500
Subordinated note payable to a corporation, interest payable quarterly at
9.0%, principal due in two installments through May 2000................. -- 2,500
--------- ---------
3,018 5,476
Less current maturities.................................................... 993 476
--------- ---------
$ 2,025 $ 5,000
--------- ---------
--------- ---------
|
The Company's revolving credit facility includes an additional $750,000 overadvance facility under which no borrowings were outstanding in 1996 or 1995. The overadvance facility will be reduced to $500,000, $250,000 and $0 on January 1, April 1, and July 1 of 1997, respectively. The Company pays a commitment fee of .25% per annum of the daily average of the unused portion of the revolving credit facility. Prior to October 1996, the commitment fee paid was .5%.
The above debt is secured by the Company's assets and common stock and is restricted by certain financial covenants including capital base, debt ratio and current ratio requirements, among others.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT (CONTINUED) In 1996, the Company extinguished its $2,500,000 subordinated note payable for a cash payment of $2,125,000, obtained from a combination of operating cash flows and an increase in borrowings under the line of credit. The difference between the carrying amount of the note and the cash paid to the holder of such borrowings (and related expenses of $10,000) was recorded as an extraordinary gain on the early extinguishment of debt of $365,000 ($230,000 net of income taxes). The effective tax rate for the extraordinary gain was 37.0%.
Aggregate maturities of long-term debt as of December 31, 1996 are as follows (dollars in thousands):
1997................................................................ $ 993
1998................................................................ 900
1999................................................................ 1,125
2000................................................................ --
2001................................................................ --
---------
$ 3,018
---------
---------
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7. INCOME TAXES
Income tax provision comprises the following (in thousands):
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Current
Federal.................................................................... $ 1,060 $ 536
State...................................................................... 154 48
--------- ---------
Total current............................................................ 1,214 584
--------- ---------
Deferred:
Federal.................................................................... 25 156
State...................................................................... 4 19
--------- ---------
Total deferred........................................................... 29 175
--------- ---------
Provision for income taxes before extraordinary gain..................... 1,243 759
Income tax expense from extraordinary gain................................... 135 --
--------- ---------
Total provision for income taxes......................................... $ 1,378 $ 759
--------- ---------
--------- ---------
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MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES (CONTINUED) The effective tax rate on earnings before income taxes and extraordinary items was different than the federal statutory tax rate. The following summary reconciles the federal statutory tax rate and provision with the actual effective rate and provision:
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Federal income tax expense................................................. 34.0% 34.0%
State taxes, net of federal expense........................................ 3.0% 3.1%
Disallowed meals and entertainment......................................... 0.2% 1.4%
Valuation allowance........................................................ -- (2.8%)
Other...................................................................... (1.1%) (0.7%)
--- ---
36.1% 35.0%
--- ---
--- ---
|
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's net deferred tax assets and liabilities comprise the following (dollars in thousands):
DECEMBER 31,
--------------------
1996 1995
--------- ---------
Deferred tax assets and liabilities
Accruals and reserves...................................................... $ 321 $ 292
Asset allocation difference................................................ (339) (216)
--------- ---------
Net deferred tax asset (liability)....................................... $ (18) $ 76
--------- ---------
--------- ---------
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8. SALES TO MAJOR CUSTOMERS
The Company made sales to various U.S. governmental agencies representing 14.0% and 7.0% of net sales in 1996 and 1995, respectively. Sales to two of the Company's nongovernmental customers represent 25.6% and 22.8%, respectively, of net sales in 1996 and 31.3% and 29.5% respectively, in 1995. These customers also represented 20.4% and 34.6%, respectively, of outstanding trade receivables at December 31, 1996 and 28.0% and 22.6%, respectively, at December 31, 1995. In the normal course of business, the Company extends credit on open account to its customers, including U.S. governmental agencies and distributors of the Company's products. Extensions of credit to all customers are closely monitored and no significant credit losses have occurred during the years ended December 31, 1996 and 1995.
9. RESEARCH AND DEVELOPMENT
The Company is engaged in several research and development projects. Costs associated with these projects are charged to operations when incurred. Research and development costs are included in general and administrative expenses and totaled $362,000 and $279,000 in 1996 and 1995, respectively.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. RELATED PARTY TRANSACTIONS
The Company paid management fees of $200,000 and $181,000 during 1996 and 1995, respectively, which are included in general and administrative expenses, to its principal shareholder under an agreement which calls for quarterly installments equal to 1.0% of quarterly net sales. Included in accrued liabilities other (Note 5) are management fees payable of $51,000 and $46,000 as of December 31, 1996 and 1995, respectively.
Included in treasury stock at December 31, 1996 and 1995 are 75 shares of the Company's common stock which was repurchased from a former employee during 1995 for approximately $8,000.
11. STOCK OPTIONS
The Company established an incentive stock option plan in 1994 under which options to acquire an aggregate of 3,000 shares of the Company's common stock may be granted to employees and consultants of the Company. The plan requires that the exercise price for each stock option be not less than 100% of the fair market value of common stock at the time the option is granted. Both nonqualified stock options and incentive stock options, as defined by the Internal Revenue Code of 1986, as amended, may be granted under the plan. The options are nontransferable and are cancelable if the optionee's employment or other association with the Company is terminated for any reason. The plan and all underlying options terminate on January 1, 2005 or earlier. As of December 31, 1996 and 1995, options of 2,681 and 2,531, respectively, had been granted under the plan.
NUMBER OF EXERCISE
OPTIONS PRICE
----------- -----------
Options granted (initially) in 1995..................................... 2,531 $ 100
Exercised............................................................. -- --
Canceled/Expired...................................................... -- --
----- -----
Outstanding at December 31, 1995........................................ 2,531 100
Options granted in 1996................................................. 150 100
Exercised............................................................. -- --
Canceled/Expired...................................................... -- --
----- -----
Outstanding at December 31, 1996........................................ 2,681 $ 100
----- -----
----- -----
|
As of December 31, 1996 and 1995, options for 1,609 and 1,012 shares, respectively, were exercisable under the Company's stock option plan.
The fair market values of options as of their grant dates were approximately $49 and $42 per option in December 1996 and 1995, respectively, based on comparison of the fair market value of the underlying shares and the net present value of the exercise price over the period of exercisability at a risk free market rate of 7.9% and 5.7%, respectively. No dividend payments or volatility in stock prices were assumed in the fair market value calculations.
MARATHON POWER TECHNOLOGIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCK OPTIONS (CONTINUED) No compensation expense was recorded during 1996 or 1995 for options issued under the plan since the Company accounts for such transactions in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." Had the Company included the stock-based compensation in the consolidated statement of operations, $17,000 and $28,000 in additional employee compensation expenses, net of the effect of income taxes, would have been recorded in 1996 and 1995, respectively. This would result in pro forma net income of $2,413,000 and $1,378,000, respectively.
12. EMPLOYEE BENEFITS
The Company sponsors a defined contribution retirement plan for Company employees. Employees are eligible to participate in the plan on the first day of the calendar quarter following their employment date. The Company makes annual contributions to the plan equal to 50% of the employees contribution (up to a maximum of 6% of each employee's compensation). The Company's expense under this plan was $68,000 and $62,000 in 1996 and 1995, respectively.
The Company sponsors a self-funded employee welfare benefit plan which provides comprehensive medical benefits to Company employees and their dependents. All full-time employees become eligible on the first day of the month following the month in which they complete 30 days of service. The Company incurred expenses of $366,000 and $304,000 under this plan during the years ended December 31, 1996 and 1995, respectively.
13. COMMITMENTS AND CONTINGENCIES
Under the terms of the May 19, 1994 asset purchase agreement, the Company is indemnified for any preacquisition environment remediation costs. The Company had accrued $36,000 and $25,000 at December 31, 1996 and 1995, respectively, for additional hazardous waste disposal costs.
The Company is party to certain legal proceedings incidental to its business. Certain claims arising in the ordinary course of business have been filed or are pending against the Company. Management does not believe the outcome of any of these proceedings will materially affect the Company's financial position or results of operations. Under the terms of the May 19, 1994 asset purchase agreement, the Company is indemnified for any preacquisition legal costs. The Company accrues for claims that are both probable and for which expected loss can be reasonably estimated.
PROSPECTUS
TRANSDIGM INC.
OFFER TO EXCHANGE ITS
10 3/8% SENIOR SUBORDINATED NOTES
DUE 2008 WHICH HAVE BEEN
REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/8% SENIOR SUBORDINATED NOTES DUE 2008
DEALER PROSPECTUS DELIVERY OBLIGATION
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware ("DGCL") provides that a corporation has the power to indemnify any director or officer, or former director or officer, 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 (other than an action by or in the right of the corporation) against the expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the defense of any action by reason of being or having been directors or officers, if such person shall have acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, provided that such person had no reasonable cause to believe his conduct was unlawful, except that, if such action shall be in the right of the corporation, no such indemnification shall be provided as to any claim, issue or matter as to which such person shall have been judged to have been liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware (the "Court of Chancery"), or any court in such suit or action was brought, shall determine upon application that, despite the liability judgment, but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court of Chancery or such other court shall deem proper.
Accordingly, each of (i) the Restated Certificate of Incorporation (dated
September 28, 1993) and the amendments thereto (dated December 21, 1993) of
TransDigm Holding Company (filed herewith as Exhibits 3.1 and 3.2,
respectively), (ii) the Certificate of Incorporation (dated July 2, 1993) and
the amendments thereto (dated July 22, 1993) of TransDigm Inc. (filed herewith
as Exhibits 3.4 and 3.5, respectively), (iii) the Certificate of Incorporation
(dated March 28, 1994) and the amendments thereto (dated May 18, 1994 and May
24, 1994) of Marathon Power Technologies Company (filed herewith as Exhibits
3.7, 3.8 and 3.9, respectively), provide that subject to certain exceptions,
TransDigm Holding Company, TransDigm Inc. and Marathon Power Technologies
Company (collectively, the "Co-Registrants" and, individually, the
"Co-Registrant") shall indemnify each of its respective director or officer
against any and all expenses (including attorneys' fees), judgments, fines,
excise taxes assessed with respect to any employee benefit plan, or penalties
and amounts paid in settlement actually and reasonably incurred by such director
or officer in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of such Co-Registrant), to which such
director or officer is, was or at any time becomes a party, or is threatened to
be made a party, by reason of the fact that such director or officer is, was or
at any time becomes a director or officer of such Co-Registrant, or is, or was
serving, or at any time serves at the request of such Co-Registrant as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise. The Restated Certificate of Incorporation or the Certificate
of Incorporation, as applicable, and the amendments thereto also provide that
the respective Co-Registrant shall advance expenses (including attorneys' fees)
actually and reasonably incurred by its director or officer in defending any
proceeding and any judgments, fines or amounts to be paid in settlement thereof.
The Restated Certificate of Incorporation or the Certificate of Incorporation,
as applicable, and the amendments thereto provide, however, that the foregoing
provisions shall not require the respective Co-Registrant to pay any indemnity
(i) for which payment is actually made to such director or officer under a valid
and collectible insurance policy, except in respect of any excess beyond the
amount of payment under such insurance; (ii) for which such director or officer
is indemnified by the respective Co-Registrant pursuant to applicable law or
otherwise than pursuant to the Restated Certificate of Incorporation or the
Certificate of Incorporation, as applicable, of the respective Co-Registrant;
(iii) for an accounting of profits made from the purchase or sale by such
director or officer of securities of the respective Co-Registrant within the
meaning of
II-1
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any state statutory law or common law; (iv) on account of
such director's or officer's conduct which is finally adjudged by a court to
have been knowingly fraudulent, deliberately dishonest or willful misconduct; or
(v) if a final decision by a court having jurisdiction in the matter shall
determine that such indemnity is not lawful. Such indemnification shall not be
deemed exclusive of any other rights to which a director or officer seeking
indemnification may be entitled under any statute, the Bylaws, other provisions
of the Restated Certificate of Incorporation or the Certificate of
Incorporation, as applicable, of the respective Co-Registrant, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
such director's or officer's official capacity and as to action in any other
capacity while holding such office.
Furthermore, a director of a Co-Registrant shall not be liable to the
respective Co-Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the respective Co-Registrant or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) for the unlawful payment of a
dividend, unlawful stock purchase or unlawful redemption, (d) for any
transaction from which the director derived an improper personal benefit, or
such exemption from liability or limitation thereof is not permitted under the
DGCL as currently in effect or as the same may hereafter be amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
----------- ---------------------------------------------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated August 3, 1998, between Phase II Acquisition Corp. and TransDigm
Holding Company.
2.2 Amendment One, dated November 9, 1998, to the Agreement and Plan of Merger between Phase II Acquisition
Corp. and TransDigm Holding Company.
3.1 Restated Certificate of Incorporation, filed on September 28, 1993, of TransDigm Holding Company.
3.2 Certificate of Amendment, filed on December 21, 1993, of the Restated Certificate of Incorporation of
TransDigm Holding Company.
3.3 Certificate of Ownership and Merger, filed on December 3, 1998, merging Phase II Acquisition Corp. with
and into TransDigm Holding Company.
3.4 Certificate of Incorporation, filed on July 2, 1993, of NovaDigm Acquisition, Inc. (TransDigm Inc.).
3.5 Certificate of Amendment, filed on July 22, 1993, of the Certificate of Incorporation of NovaDigm
Acquisition, Inc. (TransDigm Inc.).
3.6 Certificate of Ownership and Merger, filed on September 13, 1993, merging IMO Aerospace Company with and
into TransDigm Inc.
3.7 Certificate of Incorporation, filed on March 28, 1994, of MPT Acquisition Corp. (Marathon Power
Technologies Company).
3.8 Certificate of Amendment, filed on May 18, 1994, of the Certificate of Incorporation of MPT Acquisition
Corp. (Marathon Power Technologies Company).
3.9 Certificate of Amendment, filed on May 24, 1994, of the Certificate of Incorporation of MPT Acquisition
Corp. (Marathon Power Technologies Company).
|
II-2
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
----------- ---------------------------------------------------------------------------------------------------------
3.10 Bylaws of TransDigm Holding Company.
3.11 Bylaws of NovaDigm Acquisition, Inc. (TransDigm Inc.).
3.12 Bylaws of MPT Acquisition Corp. (Marathon Power Technologies Company).
4.1 Indenture, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon Power
Technologies Company and State Street Bank and Trust Company, as trustee, relating to $125,000,000
aggregate principal amount of 10 3/8% Senior Subordinated Notes due 2008 and the registered 10 3/8%
Senior Subordinated Notes due 2008.
4.2 Specimen Certificate of 10 3/8% Senior Subordinated Notes due 2008 (the "Old Notes") (included in Exhibit
4.1 hereto).
4.3 Specimen Certificate of the registered 10 3/8% Senior Subordinated Notes due 2008 (the "New Notes")
(included in Exhibit 4.1 hereto).
4.4 Registration Rights Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company
and Marathon Power Technologies Company and BT Alex. Brown Incorporated and Credit Suisse First Boston
Corporation.
4.5 Indenture, dated December 3, 1998, between TransDigm Holding Company and State Street Bank and Trust
Company, as trustee, relating to $20,000,000 aggregate principal amount of 12% Pay-in-Kind Senior Notes
due 2009.
4.6 Specimen Certificate of 12% Pay-in-Kind Senior due 2008 (included in Exhibit 4.5 hereto).
4.7 Registration Rights Agreement, dated December 3, 1998, among TransDigm Holding Company and Kelso
Investment Associates IV, L.P. and Kelso Equity Partners II, L.P.
4.8 Credit Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent, and the various
financial institutions parties thereto.
*4.9 First Amendment to the Credit Agreement, dated December 10, 1998, among TransDigm Inc., TransDigm Holding
Company and Marathon Power Technologies Company and Bankers Trust Company, as the administrative agent,
and the various financial institutions parties thereto.
4.10 Specimen Revolving Note evidencing the revolving borrowings under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.11 Specimen Term A Note evidencing the Term A credit advances under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.12 Specimen Term B Note evidencing the Term B credit advances under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.13 Security Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent under the Credit
Agreement.
4.14 Pledge Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent under the Credit
Agreement.
4.15 Form of Assignment of Security Interest in United States Copyrights by TransDigm Inc., TransDigm Holding
Company and Marathon Power Technologies Company for the benefit of Bankers Trust Company, as the
administrative agent under the Credit Agreement (included in Exhibit 4.13 hereto).
|
II-3
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
----------- ---------------------------------------------------------------------------------------------------------
4.16 Form of Assignment of Security Interest in United States Trademarks and Patents by TransDigm Inc.,
TransDigm Holding Company and Marathon Power Technologies Company for the benefit of Bankers Trust
Company, as the administrative agent under the Credit Agreement (included in Exhibit 4.13 hereto).
*5.1 Opinion of Latham & Watkins regarding the validity of the New Notes.
*10.1 Stockholders' Agreement, dated , 1999, by and among TransDigm Holding Company, Odyssey
Investment Partners Fund, LP, Odyssey Coinvestors, LLC, KIA IV-TD, LLC and Kelso Equity Partners II, L.P.
10.2 Stockholders' Agreement, dated December 3, 1998, by and among TransDigm Holding Company, Odyssey
Investment Partners Fund and certain employee stockholders of TransDigm Holding Company.
10.3 Tax Allocation Agreement, dated December 3, 1998, between TransDigm Holding Company and TransDigm Inc.
*10.4 Employment Agreement, dated , 1999, between TransDigm Holding Company and Douglas W. Peacock.
*10.5 Employment Agreement, dated , 1999, between TransDigm Holding Company and W. Nicholas Howley.
10.6 TransDigm Inc. Senior Executive Benefits Plan.
*10.7 Annual Incentive Compensation Plan for Key Management Employees of TransDigm Inc.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
12.2 Statement of Computation of Ratio of EBITDA, As Defined, to Cash Interest Expense.
12.3 Statement of Computation of Ratio of EBITDA, As Defined, less Capital Expenditures to Cash Interest
Expense.
12.4 Statement of Computation of Ratio of Total Debt to EBITDA.
*21.1 Subsidiaries of TransDigm Holding Company.
*23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney of TransDigm Holding Company, TransDigm Inc. and Marathon Power Technologies (included
on signature pages to this Registration Statement on Form S-4).
*25.1 Statement of Eligibility and Qualification (form T-1) under the Trust Indenture Act of 1939 of State
Street Bank and Trust Company.
27.1 Financial Data Schedule.
*99.1 Form of Letter of Transmittal and related documents to be used in conjunction with the exchange offer.
|
* To be filed as an amendment
SCHEDULES OMITTED
Schedules not listed above are omitted because of the absence of the conditions under which they are required or because the information required by such omitted schedules is set forth in the financial statements or the notes thereto.
II-4
ITEM 22. UNDERTAKINGS.
Each of the undersigned Co-Registrants hereby undertakes that insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the respective Co-Registrant pursuant to the foregoing provisions described under Item 20 above, or otherwise, the respective Co-Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim of indemnification against such liabilities (other than the payment by the respective Co-Registrant of expenses incurred or paid by a director, officer or controlling person of such Co-Registrant in the successful defense of any action, suit paid by a director, officer or controlling person of such Co-Registrant in the successful defense of any action, suit or proceeding) is asserted against such Co-Registrant by such director, officer or controlling person in connection with the securities being registered, such Co-Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
Each of the undersigned Co-Registrants hereby undertakes (i) to respond to requests for information that is incorporated by reference into this Prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This undertaking also includes documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request.
Each of the undersigned Co-Registrants hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective.
Each of the undersigned Co-Registrants hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement); and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
Each of the undersigned Co-Registrants hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the application form.
Each of the undersigned Co-Registrants hereby undertakes that every
prospectus: (i) that is filed pursuant to the immediately preceding paragraph or
(ii) that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933, as amended, and is used in connection with an offering
II-5
of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment 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.
Each of the undersigned Co-Registrants hereby undertakes to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the exchange offer.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, each of the Co-Registrants has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Waco, State of Texas, on January 29, 1999.
TRANSDIGM INC.
By: /s/ PETER B. RADEKEVICH
-----------------------------------------
Peter B. Radekevich
CHIEF FINANCIAL OFFICER
TRANSDIGM HOLDING COMPANY
By: /s/ PETER B. RADEKEVICH
-----------------------------------------
Peter B. Radekevich
CHIEF FINANCIAL OFFICER
MARATHON POWER TECHNOLOGIES COMPANY
By: /s/ PETER B. RADEKEVICH
-----------------------------------------
Peter B. Radekevich
CHIEF FINANCIAL OFFICER
|
II-7
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of TransDigm Inc., a Delaware corporation (the "Company"), for himself and not for one another, does hereby constitute and appoint Peter B. Radekevich, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement with respect to the proposed issuance, offer, exchange and delivery by the Company of its registered 10 3/8% Senior Subordinated Notes due 2008, or any registration statement for this offering that is to be effective upon the filing pursuant to rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.
SIGNATURE TITLE DATE
------------------------------ -------------------------- -------------------
Chief Executive Officer
/s/ DOUGLAS W. PEACOCK (Principal Executive
------------------------------ Officer) and Chairman of January 29, 1999
Douglas W. Peacock the Board
President and Chief
/s/ W. NICHOLAS HOWLEY Operating Officer
------------------------------ (Principal Executive January 29, 1999
W. Nicholas Howley Officer) and Director
/s/ PETER B. RADEKEVICH Chief Financial Officer
------------------------------ (Principal Financial and January 29, 1999
Peter B. Radekevich Accounting Officer
/s/ STEPHEN BERGER
------------------------------ Director January 29, 1999
Stephen Berger
/s/ WILLIAM HOPKINS
------------------------------ Director January 29, 1999
William Hopkins
/s/ MUZZAFAR MIRZA
------------------------------ Director January 29, 1999
Muzzafar Mirza
/s/ JOHN W. PAXTON
------------------------------ Director January 29, 1999
John W. Paxton
/s/ THOMAS R. WALL, IV
------------------------------ Director January 29, 1999
Thomas R. Wall, IV
|
II-8
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of TransDigm Holding Company, a Delaware corporation ("Holdings"), for himself and not for one another, does hereby constitute and appoint Peter B. Radekevich, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement with respect to the proposed issuance, offer, exchange and delivery by Holdings of its guarantee of TransDigm Inc.'s registered 10 3/8% Senior Subordinated Notes due 2008, or any registration statement for this offering that is to be effective upon the filing pursuant to rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.
SIGNATURE TITLE DATE
------------------------------ -------------------------- -------------------
Chief Executive Officer
/s/ DOUGLAS W. PEACOCK (Principal Executive
------------------------------ Officer) and Chairman of January 29, 1999
Douglas W. Peacock the Board
President and Chief
/s/ W. NICHOLAS HOWLEY Operating Officer
------------------------------ (Principal Executive January 29, 1999
W. Nicholas Howley Officer) and Director
/s/ PETER B. RADEKEVICH Chief Financial Officer
------------------------------ (Principal Financial and January 29, 1999
Peter B. Radekevich Accounting Officer
/s/ STEPHEN BERGER
------------------------------ Director January 29, 1999
Stephen Berger
/s/ WILLIAM HOPKINS
------------------------------ Director January 29, 1999
William Hopkins
/s/ MUZZAFAR MIRZA
------------------------------ Director January 29, 1999
Muzzafar Mirza
/s/ JOHN W. PAXTON
------------------------------ Director January 29, 1999
John W. Paxton
/s/ THOMAS R. WALL, IV
------------------------------ Director January 29, 1999
Thomas R. Wall, IV
|
II-9
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of Marathon Power Technologies Company, a Delaware corporation ("Marathon"), for himself and not for one another, does hereby constitute and appoint Peter Radekevich, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement with respect to the proposed issuance, offer, exchange and delivery by Marathon of its guarantee of TransDigm Inc.'s registered 10 3/8% Senior Subordinated Notes due 2008, or any registration statement for this offering that is to be effective upon the filing pursuant to rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and as of the dates indicated.
SIGNATURE TITLE DATE
------------------------------ -------------------------- -------------------
Chief Executive Officer
/s/ DOUGLAS W. PEACOCK (Principal Executive
------------------------------ Officer) and Chairman of January 29, 1999
Douglas W. Peacock the Board
/s/ ROBERT S. HENDERSON
------------------------------ President (Principal January 29, 1999
Robert S. Henderson Executive Officer)
/s/ PETER B. RADEKEVICH Chief Financial Officer
------------------------------ (Principal Financial and January 29, 1999
Peter B. Radekevich Accounting Officer
/s/ W. NICHOLAS HOWLEY
------------------------------ Director January 29, 1999
W. Nicholas Howley
|
II-10
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
--------- ---------------------------------------------------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated August 3, 1998, between Phase II Acquisition Corp. and TransDigm
Holding Company.
2.2 Amendment One, dated November 9, 1998, to the Agreement and Plan of Merger between Phase II Acquisition
Corp. and TransDigm Holding Company.
3.1 Restated Certificate of Incorporation, filed on September 28, 1993, of TransDigm Holding Company.
3.2 Certificate of Amendment, filed on December 21, 1993, of the Restated Certificate of Incorporation of
TransDigm Holding Company.
3.3 Certificate of Ownership and Merger, filed on December 3, 1998, merging Phase II Acquisition Corp. with
and into TransDigm Holding Company.
3.4 Certificate of Incorporation, filed on July 2, 1993, of NovaDigm Acquisition, Inc. (TransDigm Inc.).
3.5 Certificate of Amendment, filed on July 22, 1993, of the Certificate of Incorporation of NovaDigm
Acquisition, Inc. (TransDigm Inc.).
3.6 Certificate of Ownership and Merger, filed on September 13, 1993, merging IMO Aerospace Company with and
into TransDigm Inc.
3.7 Certificate of Incorporation, filed on March 28, 1994, of MPT Acquisition Corp. (Marathon Power
Technologies Company).
3.8 Certificate of Amendment, filed on May 18, 1994, of the Certificate of Incorporation of MPT Acquisition
Corp. (Marathon Power Technologies Company).
3.9 Certificate of Amendment, filed on May 24, 1994, of the Certificate of Incorporation of MPT Acquisition
Corp. (Marathon Power Technologies Company).
3.10 Bylaws of TransDigm Holding Company.
3.11 Bylaws of NovaDigm Acquisition, Inc. (TransDigm Inc.).
3.12 Bylaws of MPT Acquisition Corp. (Marathon Power Technologies Company).
4.1 Indenture, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon Power
Technologies Company and State Street Bank and Trust Company, as trustee, relating to $125,000,000
aggregate principal amount of 10 3/8% Senior Subordinated Notes due 2008 and the registered 10 3/8%
Senior Subordinated Notes due 2008.
4.2 Specimen Certificate of 10 3/8% Senior Subordinated Notes due 2008 (the "Old Notes") (included in Exhibit
4.1 hereto).
4.3 Specimen Certificate of the registered 10 3/8% Senior Subordinated Notes due 2008 (the "New Notes")
(included in Exhibit 4.1 hereto).
4.4 Registration Rights Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company
and Marathon Power Technologies Company and BT Alex. Brown Incorporated and Credit Suisse First Boston
Corporation.
|
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
--------- ---------------------------------------------------------------------------------------------------------
4.5 Indenture, dated December 3, 1998, between TransDigm Holding Company and State Street Bank and Trust
Company, as trustee, relating to $20,000,000 aggregate principal amount of 12% Pay-in-Kind Senior Notes
due 2009.
4.6 Specimen Certificate of 12% Pay-in-Kind Senior due 2008 (included in Exhibit 4.5 hereto).
4.7 Registration Rights Agreement, dated December 3, 1998, among TransDigm Holding Company and Kelso
Investment Associates IV, L.P. and Kelso Equity Partners II, L.P.
4.8 Credit Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent, and the various
financial institutions parties thereto.
*4.9 First Amendment to the Credit Agreement, dated December 10, 1998, among TransDigm Inc., TransDigm Holding
Company and Marathon Power Technologies Company and Bankers Trust Company, as the administrative agent,
and the various financial institutions parties thereto.
4.10 Specimen Revolving Note evidencing the revolving borrowings under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.11 Specimen Term A Note evidencing the Term A credit advances under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.12 Specimen Term B Note evidencing the Term B credit advances under the Credit Agreement (included in
Exhibit 4.8 hereto).
4.13 Security Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent under the Credit
Agreement.
4.14 Pledge Agreement, dated December 3, 1998, among TransDigm Inc., TransDigm Holding Company and Marathon
Power Technologies Company and Bankers Trust Company, as the administrative agent under the Credit
Agreement.
4.15 Form of Assignment of Security Interest in United States Copyrights by TransDigm Inc., TransDigm Holding
Company and Marathon Power Technologies Company for the benefit of Bankers Trust Company, as the
administrative agent under the Credit Agreement (included in Exhibit 4.13 hereto).
4.16 Form of Assignment of Security Interest in United States Trademarks and Patents by TransDigm Inc.,
TransDigm Holding Company and Marathon Power Technologies Company for the benefit of Bankers Trust
Company, as the administrative agent under the Credit Agreement (included in Exhibit 4.13 hereto).
*5.1 Opinion of Latham & Watkins regarding the validity of the New Notes.
*10.1 Stockholders' Agreement, dated , 1999, by and among TransDigm Holding Company, Odyssey
Investment Partners Fund, LP, Odyssey Coinvestors, LLC, KIA IV-TD, LLC and Kelso Equity Partners II,
L.P.
10.2 Stockholders' Agreement, dated December 3, 1998, by and among TransDigm Holding Company, Odyssey
Investment Partners Fund and certain employee stockholders of TransDigm Holding Company.
10.3 Tax Allocation Agreement, dated December 3, 1998, between TransDigm Holding Company and TransDigm Inc.
*10.4 Employment Agreement, dated , 1999, between TransDigm Holding Company and Douglas W.
Peacock.
|
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
--------- ---------------------------------------------------------------------------------------------------------
*10.5 Employment Agreement, dated , 1999, between TransDigm Holding Company and W. Nicholas
Howley.
10.6 TransDigm Inc. Senior Executive Benefits Plan.
*10.7 Annual Incentive Compensation Plan for Key Management Employees of TransDigm Inc.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
12.2 Statement of Computation of Ratio of EBITDA, As Defined, to Cash Interest Expense.
12.3 Statement of Computation of Ratio of EBITDA, As Defined, less Capital Expenditures to Cash Interest
Expense.
12.4 Statement of Computation of Ratio of Total Debt to EBITDA.
*21.1 Subsidiaries of TransDigm Holding Company.
*23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney of TransDigm Holding Company, TransDigm Inc. and Marathon Power Technologies (included
on signature pages to this Registration Statement on Form S-4).
*25.1 Statement of Eligibility and Qualification (form T-1) under the Trust Indenture Act of 1939 of State
Street Bank and Trust Company.
27.1 Financial Data Schedule.
*99.1 Form of Letter of Transmittal and related documents to be used in conjunction with the exchange offer.
|
* To be filed as an amendment
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
between
PHASE II ACQUISITION CORP.
and
TRANSDIGM HOLDING COMPANY
Dated as of August 3, 1998
TABLE OF CONTENTS
Page
1. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . .1
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . .2
2. The Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . .2
2.2 By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.1 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . .2
3.2 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 No Further Rights. . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Closing of the Company's Transfer Books. . . . . . . . . . . . . .7
4. Representations and Warranties of the Company. . . . . . . . . . . . . .7
4.1 Corporate Status and Authority . . . . . . . . . . . . . . . . . .7
4.2 No Conflicts; Consents and Approvals, etc. . . . . . . . . . . . .8
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.4 Ownership of TransDigm Inc . . . . . . . . . . . . . . . . . . . .9
4.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . 10
4.8 Real Property; Assets. . . . . . . . . . . . . . . . . . . . . . 11
4.9 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Employment Agreements and Benefits, etc.. . . . . . . . . . . . 14
4.10.1 Employment Agreements and Plans. . . . . . . . . . . . . 14
4.10.2 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10.3 Tax Qualification. . . . . . . . . . . . . . . . . . . . 15
4.10.4 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 16
4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 16
4.12 Governmental Authorizations; Compliance with Law. . . . . . . . 17
4.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.15 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . 20
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 23
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4.18 Banking and Agency Arrangements . . . . . . . . . . . . . . . . 24
4.19 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . 24
4.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.21 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.22 Products Liability. . . . . . . . . . . . . . . . . . . . . . . 25
4.23 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . 26
4.24 Prohibited Payments . . . . . . . . . . . . . . . . . . . . . . 26
4.25 Additional Agreements . . . . . . . . . . . . . . . . . . . . . 26
5. Representations and Warranties of Buyer. . . . . . . . . . . . . . . . 27
5.1 Corporate Status and Authority . . . . . . . . . . . . . . . . . 27
5.2 No Conflicts; Consents and Approvals, etc. . . . . . . . . . . . 27
5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.4 Financial Ability to Perform . . . . . . . . . . . . . . . . . . 28
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Conduct of Business Pending the Merger . . . . . . . . . . . . . 28
6.2 Satisfaction of Closing Conditions . . . . . . . . . . . . . . . 29
6.3 Access and Information . . . . . . . . . . . . . . . . . . . . . 30
6.4 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6 Indemnification of Officers and Directors. . . . . . . . . . . . 31
6.7 Contact with Customers and Suppliers . . . . . . . . . . . . . . 31
6.8 Stockholders Approval. . . . . . . . . . . . . . . . . . . . . . 31
6.9 No Solicitation; Notification. . . . . . . . . . . . . . . . . . 31
6.10 Notice of Developments. . . . . . . . . . . . . . . . . . . . . 32
6.11 Novation Agreements . . . . . . . . . . . . . . . . . . . . . . 32
7. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Conditions to Obligations of Both Parties. . . . . . . . . . . . 32
7.2.1 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2.2 Consents. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Conditions to Obligations of the Company . . . . . . . . . . . . 33
7.3.1 Representations and Warranties of Buyer . . . . . . . . . 33
7.3.2 Officer's Certificate . . . . . . . . . . . . . . . . . . 33
7.3.3 Outstanding Debt. . . . . . . . . . . . . . . . . . . . . 33
7.3.4 Transaction Costs . . . . . . . . . . . . . . . . . . . . 33
7.3.5 Stockholders' Agreement . . . . . . . . . . . . . . . . . 33
7.4 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . 33
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7.4.1 Representations and Warranties of the Company . . . . . . 34
7.4.2 Officer's Certificate . . . . . . . . . . . . . . . . . . 34
7.4.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4.4 FIRPTA Certificate. . . . . . . . . . . . . . . . . . . . 34
7.4.5 Financial Advisory and Stockholders' Agreement. . . . . . 34
7.4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4.7 Transaction Costs . . . . . . . . . . . . . . . . . . . . 35
7.4.8 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . 35
7.4.9 Approvals . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4.10 Stockholders' Agreement. . . . . . . . . . . . . . . . . 35
7.4.11 Material Adverse Change. . . . . . . . . . . . . . . . . 35
8. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Non-Survival of Representations, Warranties and
Agreements; No Recourse. . . . . . . . . . . . . . . . . . . . 37
8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Assignment and Amendments. . . . . . . . . . . . . . . . . . . . 39
8.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 39
8.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.11 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 39
8.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.13 Consent to Jurisdiction, etc. . . . . . . . . . . . . . . . . . 40
8.14 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 41
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AGREEMENT AND PLAN OF MERGER, dated as of August 3, 1998, between PHASE II ACQUISITION CORP., a Delaware corporation ("BUYER"), and TRANSDIGM HOLDING COMPANY, a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Buyer and the Company have approved the merger of Buyer with and into the Company (the "MERGER"), upon the terms and subject to the conditions set forth herein.
WHEREAS, Buyer is unwilling to enter into this Agreement unless, contemporaneously with the execution and delivery of this Agreement, Kelso Investment Associates IV, L.P., Kelso Equity Partners II, L.P. and the Buyer enter into a Voting Agreement and Messrs. Peacock and Howley enter into an agreement in the form of Exhibit A hereto and such persons have agreed to enter into, execute and deliver such agreements;
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties and agreements contained herein, the parties hereto agree as follows:
1. MERGER.
1.1 THE MERGER . Upon the terms and subject to the conditions hereof, at the Effective Time (as defined in Section 1.3), Buyer shall be merged with and into the Company and the separate existence of Buyer shall thereupon cease, and the Company shall continue as the surviving corporation in the Merger (the "SURVIVING CORPORATION") under the laws of the State of Delaware.
1.2 CLOSING . Unless this Merger Agreement shall have been terminated pursuant to Section 8.3, and subject to the satisfaction or waiver of the conditions set forth in Section 7, the closing of the Merger will take place as promptly as practicable (and in any event within two business days) after satisfaction or waiver of the condition set forth in Section 7.2.1, at the New York offices of Latham & Watkins unless another date, time or place is agreed to in writing by the parties hereto (the "CLOSING DATE").
1.3 EFFECTIVE TIME OF THE MERGER . The Merger shall become effective upon the filing of a Certificate of Merger with the Secretary of State of Delaware in accordance with the provisions of the Delaware General Corporation Law (the "DGCL"), or at such other time as Buyer and the Company shall agree should be specified in the Certificate of Merger, which filling shall be made as soon as practicable on the Closing Date. When used in this Merger Agreement, the term "EFFECTIVE TIME" shall mean the time at which such certificate is accepted for filing by the Secretary of State of Delaware or such time as otherwise specified in the Certificate of Merger.
1.4 EFFECT OF MERGER . The Merger shall, from and after the Effective Time, have all the effects provided by the DGCL. If at any time after the Effective Time any
further action is necessary to vest in the Surviving Corporation the title to any property or rights of Buyer or the Company, the proper officers and directors of the Surviving Corporation shall be fully authorized in the name of each of Buyer or the Company, as the case may be, to take any and all such lawful action.
2. THE SURVIVING CORPORATION.
2.1 CERTIFICATE OF INCORPORATION . The Certificate of Incorporation of the Company as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation after the Effective Time.
2.2 BY-LAWS . The By-laws of the Company as in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable law.
2.3 DIRECTORS . The directors of Buyer immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.
2.4 OFFICERS . The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.
3. CONVERSION OF SHARES.
3.1 MERGER CONSIDERATION . As of the Effective Time, by virtue of the Merger and without any action on the part of any stockholder of the Company or Buyer:
(a) The shares of Common Stock, par value $.01 per share, of Buyer issued and outstanding immediately prior to the Effective Time shall automatically be converted into and thereafter represent a number of validly issued, fully paid and non-assessable shares of common stock, par value $.01 per share, of the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK") equal to the quotient of the Odyssey Equity Investment divided by the Per Share Merger Consideration.
(b) All shares of Common Stock, $.01 par value, of the Company ("VOTING COMMON STOCK") and all shares of Class A Common Stock, $.01 par value, of the Company ("NONVOTING COMMON STOCK," and together with Voting Common Stock, "COMMON STOCK") which are held by the Company shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time, other than those to which Section 3.1(b) or
Section 3.1(d) applies
and other than any shares held by stockholders referred to in Section 3.1(g), shall be converted into and represent the right to receive an amount in cash (such amount in cash being referred to herein as the "PER SHARE MERGER CONSIDERATION") equal to the quotient of (A) the Merger Consideration PLUS the Aggregate Exercise Proceeds PLUS the Option Rollover Amount, PLUS the Kelso Rollover Amount, MINUS the Transaction Costs divided by (B) the total number of Outstanding Shares.
The following terms used in the definition of Per Share Merger Consideration shall have the following meanings:
"MERGER CONSIDERATION" means $365 million MINUS the Kelso Rollover Amount MINUS the Option Rollover Amount.
"AGGREGATE EXERCISE PROCEEDS" means the aggregate exercise price payable upon exercise of the Options (as defined below in Section 3.1(e)) which are to be cancelled pursuant to Section 3.1(e) hereof and all of the Warrants (as defined below in Section 3.1(f)).
"OPTION ROLLOVER AMOUNT" means the gross amount of the Options listed on Schedule 3.1(e).
"KELSO ROLLOVER AMOUNT" means (A) the quotient of the Odyssey Equity Investment Amount divided by .925 MINUS (B) the Odyssey Equity Investment Amount.
"TRANSACTION COSTS" means the fees and expenses listed on Schedule 3.1(c).
"OUTSTANDING SHARES" means 303,294.4 (the number of shares of common stock of the Company on a fully-diluted basis).
"ODYSSEY EQUITY INVESTMENT AMOUNT" shall equal $90 million or such other amount invested by Odyssey in the Buyer immediately prior to the Effective Time but in no event shall such amount exceed $100 million without the Company's consent in its sole discretion.
(d) A number of shares of Common Stock held by Kelso Investment Associates IV, L.P. ("KIA IV") and Kelso Equity Partners II, L.P. ("KEP II") equal to the quotient of the Kelso Rollover Amount divided by the Per Share Merger Consideration (each, a "ROLLOVER SHARE") shall be converted into and become one fully paid and nonassessable share of common stock, $.01 par value, of the Surviving Corporation. Such conversion shall be effected such that KIA IV and KEP II will own 94.39% and 5.61% of such Rollover Shares, rounded to the nearest whole share; provided that in no event shall the number of Rollover Shares exceed the amount equal to the quotient of the Kelso Rollover Amount divided by the Per Share Merger
Consideration. All Rollover Shares shall be subject to the stockholders agreement referred to in Sections 7.3.5 and 7.4.10.
(e) Each outstanding option to purchase shares of Common Stock granted under the Company's 1994 Stock Incentive Plan (each, an "OPTION") to any current or former employee of the Company or any subsidiary thereof (each, an "OPTION HOLDER"), whether or not then exercisable, shall be cancelled and, in exchange therefor, each Option Holder shall be entitled to a cash payment (the "OPTION CANCELLATION PAYMENT") in respect of each such cancelled Option held by each such Option Holder equal to the product of (I) the number of shares of Common Stock covered by such Option immediately prior to the Effective Time multiplied by (II) the excess of (X) the Per Share Merger Consideration over (Y) the per share exercise price under such Option (the "NET VALUE"); PROVIDED, HOWEVER, that with respect to the individuals listed on Schedule 3.1(e) the Options held by each such individual shall be cancelled only to the extent from and after the Effective Time each such individual shall retain Options with an aggregate Net Value not less than the amount set forth opposite such person's name on Schedule 3.1(e). From and after the Effective Time, pursuant to the terms of such stock option agreements, each such Option not cancelled shall represent an option to purchase an equal number of shares of Surviving Corporation Common Stock. Schedule 3.1(e) may be changed from time to time to add additional optionholders or to increase the net amount of any Options not being cancelled. The Option Cancellation Payments shall be subject to all applicable withholding and employment taxes and shall be paid to the Option Holders as soon as practicable following the Effective Time. Prior to the Effective Time, the Board of Directors shall adopt such resolutions or take such actions as are necessary, subject if necessary, to obtaining the consents of the holders thereof, to carry out the terms of this Section 3.1(e).
(f) Each warrant to purchase shares of Common Stock granted under the Company's Warrant Agreement (the "WARRANT AGREEMENT"), dated September 30, 1993 (each, a "WARRANT"), to any person (each, a "WARRANT HOLDER"), shall be cancelled and, in exchange therefor, each Warrant Holder shall be entitled to a cash payment (the "WARRANT CANCELLATION PAYMENT") in respect of each such cancelled Warrant equal to the product of (I) the number of shares of Common Stock covered by such Warrant immediately prior to the Effective Time multiplied by (II) the excess of (X) the Per Share Merger Consideration over (Y) the per share exercise price under such Warrant. Prior to the Effective Time, the Board of Directors shall adopt such resolutions or take such actions as are necessary, subject to obtaining the consents of the holders thereof, to carry out the terms of this Section 3.1(f).
(g) Notwithstanding anything to the contrary herein, shares of Common Stock held by stockholders who dissent from the Merger pursuant to Section 262 of the DGCL shall not be converted as of the Effective Time into a right to receive the Per
Share Merger Consideration, but instead shall have such rights as may be available under the DGCL.
3.2 PAYMENT . (a) Pursuant to an agreement in form and substance acceptable to the Company to be entered into prior to the Effective Time between Buyer and a disbursing agent reasonably satisfactory to Buyer and the Company (the "DISBURSING AGENT"), at the Effective Time, Buyer shall make available to the Disbursing Agent the Merger Consideration MINUS the Transaction Costs (the "PAYMENT FUND"). All payments for shares of Common Stock, Options and Warrants which are made in accordance with the terms hereof shall be deemed to have been made in full satisfaction of all rights pertaining to such shares, Options and Warrants, as the case may be.
(b) Promptly after the Effective Time, Buyer shall cause the
Disbursing Agent to send a notice and a letter of transmittal to each holder of
certificates formerly evidencing (I) shares of Common Stock (other than
certificates representing Rollover Shares, shares of Common Stock to be
cancelled pursuant to Section 3.1(b) and held by stockholders referred to in
Section 3.1(g) (the "DISSENTING SHARES"), (II) Options to be cancelled pursuant
to Section 3.1(e) and (III) Warrants (collectively, the "CERTIFICATES") advising
holders of such Certificates of the effectiveness of the Merger and the
procedure for surrendering to the Disbursing Agent such Certificates for
exchange into the Per Share Merger Consideration, the Option Cancellation
Payment or the Warrant Cancellation Payment, as the case may be, and that
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery to the Disbursing Agent of the Certificates and a duly executed
letter of transmittal and any other required documents of transfer. Each holder
of the Certificates, upon surrender thereof to the Disbursing Agent together
with such letter of transmittal (duly executed) and any other required documents
of transfer, shall be entitled to receive in exchange therefor the Per Share
Merger Consideration, the Option Cancellation Payment or the Warrant
Cancellation Payment, as the case may be. Upon such surrender, the Disbursing
Agent shall promptly deliver the merger consideration due hereunder (less any
applicable withholding tax) in accordance with the instructions set forth in the
related letter of transmittal, and the Certificates so surrendered shall
promptly be cancelled. Until surrendered, the Certificates (other than those
evidencing Dissenting Shares) shall be deemed for all purposes to evidence only
the right to receive the merger consideration due hereunder, or, in the case of
Dissenting Shares, the fair value of such Dissenting Shares. No interest shall
accrue or be paid on any cash payable upon the surrender of the Certificates
(other than Dissenting Shares to the extent required by the DGCL).
(c) If the merger consideration due hereunder is to be delivered to a person other than the person in whose name the Certificates surrendered in exchange therefor are registered, it shall be a condition to the payment of such merger consideration that the Certificates so surrendered shall be properly endorsed or accompanied by appropriate powers and otherwise in proper form for transfer, that such transfer otherwise be proper and that the person requesting such transfer pay to the Disbursing Agent any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction of the Disbursing Agent that such taxes have been paid or are not required to be paid.
(d) Unless required otherwise by applicable law, any portion of the Payment Fund that remains undistributed to holders of the Certificates 180 days after the Effective Time shall be delivered to the party who provided such funds to the Disbursing Agent and any Certificate holder who has not theretofore complied with the provisions of this Section 3 shall thereafter look only to the Surviving Corporation for payment of any merger consideration due hereunder, to which he is entitled pursuant to this Section 3. Neither Buyer nor the Disbursing Agent shall be liable to any such Certificate holder for any cash from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
3.3 NO FURTHER RIGHTS . From and after the Effective Time, holders of certificates theretofore evidencing shares of Common Stock, other than Rollover Shares, shall cease to have any rights as stockholders of the Company, except as provided herein or by law.
3.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS . At the Effective Time, the stock transfer books of the Company shall be closed and no transfer of shares of Common Stock shall be made thereafter. If after the Effective Time certificates for shares of Common Stock are presented to Buyer or the Surviving Corporation, they shall be cancelled and exchanged as provided in this Section 3.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer as follows, except as set forth in the schedules delivered by the Company to Buyer on or prior to the date of execution of this Merger Agreement:
4.1 CORPORATE STATUS AND AUTHORITY . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation in the jurisdictions in which the Company conducts its business, except where the failure to so qualify will not have a Material Adverse Effect (as defined below) on the Company and has the corporate power and authority to execute and deliver this Merger Agreement and perform its obligations hereunder and to conduct its business and to own, use or lease its properties and assets as now conducted, owned, used or leased. The execution and delivery of this Merger Agreement and the consummation of the transactions contemplated hereby by the Company have been duly and validly authorized and approved by the Company's Board of Directors and by the holders of the required percentage of Common Stock and no other corporate or stockholder proceedings on the part of the Company are necessary to authorize or approve this Merger Agreement or to consummate the transactions contemplated hereby. This Merger Agreement has been duly executed and delivered by the Company, and assuming the due authorization, execution and delivery by Buyer, constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or principles applicable to the enforcement of creditors rights generally. The Company has delivered to Buyer true, correct and complete copies of its and its subsidiaries' certificates of incorporation and by-laws (in each case, as amended to date). The Company and its subsidiaries are not in default or in violation of any provision of their certificates of incorporation or by-laws. For the purposes of this Merger Agreement, "MATERIAL ADVERSE EFFECT" or a similar phrase shall mean, with respect to any person, any material adverse effect on (I) the business, operations, assets (taken as a whole), liabilities (taken as a whole), financial condition or results of operations of such person and its subsidiaries, taken as a whole or, (II) the right or ability of such person or its subsidiaries to consummate any of the transactions contemplated hereby. "MATERIAL ADVERSE CHANGE" shall have a corresponding definition.
4.2 NO CONFLICTS; CONSENTS AND APPROVALS, ETC. (a) Except as set
forth in Schedule 4.2(a), the execution and delivery of this Merger Agreement
and the performance of its obligations hereunder will not result in (I) any
conflict with the certificate of incorporation or by-laws of the Company or any
of its subsidiaries, (II) subject to obtaining the consents referred to in
Section 4.2(b), any breach or violation of or default under (A) any law,
statute, regulation, rule, judgment, order, decree, license, permit or other
governmental authorization or (B) any Contract (as defined), mortgage, lease,
agreement, deed of trust, indenture or any other instrument, in each case, to
which the Company or any of its subsidiaries is a party or by which any of them
or their respective properties or assets are bound, or (III) the creation or
imposition of any liens, security interests, adverse claims, charges or
encumbrances ("LIENS") other than Liens created by or resulting from the actions
of Buyer or any of its affiliates, except, in the case of subsections (ii) and
(iii), for such breaches, violations or defaults and such Liens which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(b) Except as set forth in Schedule 4.2(b), no consent, approval or
authorization of or filing with any third party or any governmental authority is
required on the part of the Company or any of its subsidiaries in connection
with the execution and delivery of this Merger Agreement or the consummation of
the transactions contemplated hereby, except (I) filings required with respect
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") and
(II) filings, consents or approvals which, if not made or obtained, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
4.3 CAPITALIZATION . The authorized capital stock of the Company consists of 900,000 shares of Voting Common Stock, par value $0.01 per share, 236,120 of which shares are issued and outstanding and 100,000 shares of Nonvoting Common Stock, par value $0.01 per share, 13,750 of which are issued and outstanding. The shares of the Voting Common Stock and Nonvoting Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable and free of pre-emptive
rights. Except as set forth in this Section 4.3 or on Schedule 4.3 and except
for (I) the Warrants set forth on Schedule 4.3 to purchase 15,957.40 shares of
Nonvoting Common Stock granted under the Warrant Agreement dated September 30,
1993 (subject to adjustment and, under certain circumstances described in the
Warrants, their conversion to the rights to purchase Voting Common Stock), and
(II) the Options set forth on Schedule 4.3 to purchase 37,467 shares of Voting
Common Stock granted under the 1994 Stock Incentive Plan, there are no (I)
outstanding Equity Securities (as defined below) of the Company or (II)
agreements, commitments or obligations of any kind or character for (A) the
issuance of Equity Securities of the Company or (B) the repurchase, redemption
or other acquisition of any Equity Securities of the Company. Other than as set
forth on Schedule 4.3, there are no shareholder agreements, voting trusts,
proxies or other agreements or understandings with respect to the voting of any
Equity Securities in the Company. The only indebtedness for borrowed money is
the Amended and Restated Credit Agreement, dated as of August 8, 1997, among
TransDigm Inc., the Lenders named therein, the Chase Manhattan Bank as
Administrative Agent, Collateral Agent and Issuing Bank, and Chase Securities
Inc. as Arranger (the "CREDIT AGREEMENT"). The Credit Agreement is prepayable
without more than two business days notice and without the payment of any
penalty. For purposes of this Merger Agreement, "EQUITY SECURITIES" shall mean
(I) shares of capital stock or other equity securities, (II) subscriptions,
calls, warrants, options or commitments of any kind or character relating to, or
entitling any person or entity to purchase or otherwise acquire, any capital
stock or other equity securities and (III) securities convertible into or
exercisable or exchangeable for shares of capital stock or other equity
securities.
4.4 OWNERSHIP OF TRANSDIGM INC . TransDigm Inc. is a direct wholly-owned subsidiary of the Company.
4.5 SUBSIDIARIES . (a) The authorized capital stock __ each of the
Company's subsidiaries is set forth on Schedule 4.5. Except as set forth in
Schedule 4.5, all such issued and outstanding shares are owned directly or
indirectly by the Company, free and clear of all Liens, and have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in Schedule 4.5, there are no outstanding Equity Securities or other
rights, obligations, commitments or agreements of any kind for the purchase,
redemption or acquisition from, or the sale or issuance by, the Company or any
of its subsidiaries of any Equity Securities of any of such subsidiaries, and no
authorization therefor has been given. The Company does not have any equity
interest or investment in any corporation, partnership, joint venture,
association or other business organization other than as set forth on Schedule
4.5. There are no shareholder agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of any Equity Securities
in any subsidiaries of the Company.
(b) Each of the Company's subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its incorporation,
which is set forth on Schedule 4.5, and has all requisite corporate power and authority to conduct its business and to own, use or lease its properties and assets, as now conducted, owned, used or leased, and is duly qualified to do business in each jurisdiction in which the failure to be so qualified would reasonably be likely to have a Material Adverse Effect on such subsidiary.
4.6 FINANCIAL STATEMENTS . The Company has delivered to Buyer copies (which copies are complete and correct) of (I) the audited balance sheets and related statements of income and cash flows of the Company and its subsidiaries on a consolidated basis for the fiscal years ending September 30, 1995, 1996 and 1997 (the "AUDITED FINANCIAL STATEMENTS") and (II) the unaudited balance sheet and related statements of income and cash flows of the Company and its subsidiaries on a consolidated basis for the nine months ended June 26, 1998 (the "UNAUDITED FINANCIAL STATEMENTS", together with the Audited Financial Statements, the "FINANCIAL STATEMENTS"). The Financial Statements present fairly in all material respects the financial condition and results of operations of the Company and its subsidiaries on a consolidated basis as of the dates and for the periods indicated. The Audited Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied throughout the periods covered thereby. The Unaudited Financial Statements have been prepared in accordance with GAAP and on a consistent basis with the Audited Financial Statements, except as set forth in Schedule 4.6.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES . Except for liabilities reflected or reserved against in the Audited Financial Statements for the fiscal year ending September 30, 1997 and the Unaudited Financial Statements or reflected in the schedules hereto, none of the Company or any of its subsidiaries has any liabilities or obligations (absolute or accrued or contingent, whether accrued or unaccrued and whether due or to become due) other than liabilities and obligations incurred in the ordinary course of business since June 26, 1998 or liabilities or obligations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Company and its subsidiaries taken as a whole.
4.8 REAL PROPERTY; ASSETS . (a) Schedule 4.8(a) lists all real
property owned by the Company or its subsidiaries (the "OWNED REAL PROPERTY") or
leased by the Company or its subsidiaries (the "LEASED REAL PROPERTY," and
together with Owned Real Property, the "REAL PROPERTY"). Except as set forth in
Schedule 4.8(a), the Company and its subsidiaries have good and marketable title
to the Owned Real Property listed on Schedule 4.8(a) and valid and subsisting
leasehold interests in the Leased Real Property listed on Schedule 4.8(a), in
each case, free and clear of all Liens, except for (I) Liens reflected in
Schedule 4.8(a), (II) Liens for taxes and other governmental charges and
assessments which are not yet due and payable or which are being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor,
(III) Liens of carriers, warehousemen, mechanics and materialmen and other like
Liens arising in the ordinary course of
business for sums that are not yet due and payable, (IV) easements, rights of way, title imperfections and restrictions, zoning ordinances and other similar encumbrances affecting the Real Property, in each case, which do not interfere with the ordinary conduct of the business of the Company or its subsidiaries and do not materially detract from the value of the property to which such encumbrance relates, (V) statutory Liens in favor of lessors arising in connection with any property leased to the Company or any of its subsidiaries which do not interfere with the ordinary conduct of the business of the Company or its subsidiaries and do not materially detract from the value of the property to which such encumbrance relates and (VI) Liens reflected on the face of or in the notes to the Financial Statements ("PERMITTED LIENS"). The Real Property and Leased Personal Property is used and operated (I) in conformity with all applicable leases, and (II) in conformity with all applicable contracts, commitments, licenses and permits, to the extent that the failure so to conform would not individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) Except as set forth in Schedule 4.8(b), the Company and its subsidiaries have legal and beneficial ownership of all of their respective tangible personal property and assets included in the June 26, 1998 balance sheet, except for properties and assets disposed of in the ordinary course of business since the date of such balance sheet and listed on Schedule 4.8, which Schedule shall not include inventory sold pursuant to contracts with customers, in each case, free and clear of all Liens, except for Permitted Liens. Except as set forth on Schedule 4.8(b), the Company and its subsidiaries own or have the right to use all of the tangible personal properties and assets necessary for the conduct of their business as currently conducted. Each such property or asset has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear and any improvements or replacements included within the Company's Capital Expenditure Plan (as defined herein)), and is suitable for the purpose for which it is currently used.
(c) EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE ASSETS OF THE COMPANY AND ITS SUBSIDIARIES AND, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES SUCH ASSETS "AS IS" AND "WHERE IS."
4.9 CONTRACTS . Schedule 4.9 lists all Contracts (as defined below) of the following types to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or any of their respective properties is bound as of the date hereof (other than real property leases, employment-related agreements, and intellectual property licenses, which are provided for in Sections 4.8, 4.10 and 4.11, respectively): (I) joint venture and limited partnership agreements, (II) mortgages, indentures, loan or credit agreements, security agreements and other Contracts (A) relat-
ing to the borrowing of money or extension of credit, (B) under which the
Company or any of its subsidiaries has created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) indebtedness for borrowed money, (C)
constituting a capitalized lease obligation, (D) under which the Company or any
of its subsidiaries has granted (or may grant) a security interest or lien on
any of the assets of the Company or any of its subsidiaries or (E) under which
the Company or any of its subsidiaries has incurred any obligations for any
performance bonds, payment bonds, bid bonds, surety bonds, letters of credit,
guarantees or similar instruments, (III) each distribution, franchise, license,
sales, commission, consulting, agency, advertising or marketing Contract, except
for such Contracts that are cancelable on not more than 30 days' notice by the
Company or its subsidiaries without penalty or increased cost, (IV) each
Contract that involves performance of services or delivery or purchase of goods
or materials by or to the Company or any of its subsidiaries of an amount or
value in excess of $250,000 over the life of such Contract, (V) each Contract
providing for payment in excess of $250,000 over the life of such Contract,
except for such Contracts that are cancelable on not more than 30 days' notice
to the Company or its subsidiaries without penalty, termination payment or
increased cost, (VI) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any personal property (except leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than $75,000
per year, (VII) each Contract containing covenants that in any way purport to
restrict the business activity of the Company or limit the freedom of the
Company or any of its subsidiaries or any officer, director, stockholder or
affiliate thereof to engage in any line of business or to compete with any
person, (VIII) each Contract for capital expenditures in excess of $250,000,
(IX) each Contract (including, without limitation, a subcontract) with the
United States, state or local government or any agency or department thereof, as
of April 30, 1998 ("GOVERNMENT CONTRACTS"), (X) each guaranty of, or agreement
to become liable for, any obligations of another person and (xi) each amendment,
supplement, and modification (whether oral or written) in respect of any of the
foregoing (the "MATERIAL CONTRACTS") provided, however, that Schedule 4.9 does
not include purchase orders from nongovernmental customers. The Company has
furnished or made available to Buyer copies of all of the Contracts listed on
Schedules 4.8, 4.9, 4.10 and 4.11, respectively. Except as set forth in
Schedule 4.9, each such Contract is a valid and binding agreement of the Company
or one of its subsidiaries and is in full force and effect and, to the knowledge
of the Company, is a valid and binding agreement of each party thereto. Neither
the Company nor any of its subsidiaries, nor to the knowledge of the Company,
any other person, is in default under any of the contracts listed on Schedules
4.8, 4.9, 4.10 and 4.11, respectively, except for such defaults which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
With respect to all Government Contracts, there are no pending, and to the knowledge of the Company, there are no contemplated or threatened (A) civil fraud or
criminal investigations by any government investigative agency, (B) suspension or debarment proceedings (or equivalent proceedings) against the Company or any of its subsidiaries, (C) requests by the government for a contract price adjustment based on a claim disallowance by the Defense Contract Audit Agency or similar agency, or claim of defective pricing in excess of $100,000 individually or $500,000 in the aggregate, (D) disputes between the Company or any of its subsidiaries and the government which have resulted in a government contracting officer's final decision where the amount in controversy exceeds or would reasonably be expected to exceed $100,000 individually or $500,000 in the aggregate, or (E) claims or equitable adjustments by the Company or any of its subsidiaries against the government or any third party in excess of $100,000 individually or $500,000 in the aggregate.
With respect to any Government Contract which expired, or was terminated, or for which final payment was made within three years prior to the date hereof, and except as set forth on Schedule 4.9 hereof, to the knowledge of the Company, there are no requests by the U.S. Government for a contract price adjustment based upon a claim of defective pricing in excess of $100,000.
For the purposes of this Agreement "CONTRACT" shall mean any agreement, contract, lease, note, loan, evidence of indebtedness, purchase order, letter of credit, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument, obligation, commitment, purchase and sales order and other executory commitment, whether oral or written, express or implied, (A) to which the Company or any of its subsidiaries is a party or (B) by which the Company, any of its subsidiaries or any of their respective assets are bound or affected.
4.10 EMPLOYMENT AGREEMENTS AND BENEFITS, ETC.
4.10.1 EMPLOYMENT AGREEMENTS AND PLANS . Schedule 4.10.1 lists (I) each Contract with any affiliate of the Company (A) to employ or terminate any officer of the Company and any of its subsidiaries or (B) that will result in the payment by, or the creation or acceleration of any material commitment or obligation (absolute or contingent) to pay on behalf of Buyer or the Company or any of its subsidiaries any material severance, termination, deferred compensation or "golden parachute," to any present or former officer of the Company or any of its subsidiaries following termination of employment or otherwise as a direct result of the consummation of the transactions contemplated hereby other than those which may be terminated by the Company or any of its subsidiaries without any liability upon less than 30 days' notice by the Company or any of its subsidiaries and (II) all profit sharing, pension, retirement, bonus, incentive compensation, stock option, stock appreciation right, stock bonus, deferred compensation, health, life insurance, disability and other written material employee benefit plans, programs, agreements, contracts or commitments for the benefit of the present or former employees of the Company or any of its subsidiaries or under which the Company or any of its subsidiaries may incur any liability (collectively, the "PLANS").
4.10.2 ERISA . Each Plan has been maintained in compliance and presently complies in all material respects with the requirements of all applicable laws, including ERISA and the Internal Revenue Code of 1986, as amended (the "CODE"). No Plan that is subject to section 302 of ERISA or section 412 of the Code has incurred any "accumulated funding deficiency" within the meaning of section 302 of ERISA or section 412 of the Code, whether or not waived, and no material liability (other than for annual premiums) to the Pension Benefit Guaranty Corporation has been incurred by the Company or any of its subsidiaries with respect to any Plan. Except as set forth on Schedule 4.10, as of the last day of the last plan year of each Plan that is an employee pension plan as defined in Section 3(3) of ERISA and as of the Effective Time, the "amount of unfunded benefit liabilities" as defined in Section 4001(a)(18) of ERISA (but excluding from the definition of "current value" of "assets" of such Plan, accrued but unpaid contributions) did not and will not exceed zero. None of the Company or any of its subsidiaries or any Plan has any present or future obligation to make any payment to, or with respect to any present or former employee of the Company or any of its subsidiaries pursuant to, any retiree medical benefit plan. There is no contract, agreement, plan or arrangement covering any employee or former employee of the Company or any of its subsidiaries that, individually or collectively, provides for the payment by the Company of any amount (I) that is not deductible under Section 162(a)(1) of the Code or (II) that is an "excess parachute payment" pursuant to Section 280G of the Code. None of the Company or any of its subsidiaries has withdrawn at any time within the preceding six years from any multi-employer plan, as defined in section 3(37) or 4001(a)(3) of ERISA (a "MULTI-EMPLOYER PLAN"), and incurred any material withdrawal liability which remains unsatisfied. If, as of the Effective Time, the Company and each of its subsidiaries were to withdraw from all multi-employer plans to which it (or any of them) has contributed or been obligated to contribute, it (and they) would incur no material liabilities to such plans under Title IV of ERISA. None of the Company nor any of its subsidiaries has engaged in a transaction with respect to any Plan that would reasonably be expected to subject the Company or any of its subsidiaries to a tax or penalty imposed by either section 4975 of the Code or section 502(i) of ERISA. Except as set forth on Schedule 4.10.2, there are no material pending or, to the Company's knowledge, threatened claims by or on behalf of any of the Plans or by any present and former employee or governmental authority involving any such Plan (other than routine claims for benefits). All contributions required to have been made by the Company or any of its subsidiaries to any Plan under the terms of any such plan or pursuant to any applicable Collective Bargaining Agreement (as defined in Section 4.10.4 below) or applicable law (including, without limitation, ERISA and the Code) have been timely made. With respect to each Plan, the Company has made available to Buyer copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent Form 5500 Annual Report, and related trust agreements and insurance contracts or other funding arrangements which implement each such Plan. None of the Company, any of its subsidiaries or any other trade or business, whether or not incorporated, that is treated as a single employer together with the Company pursuant
to section 414(b), (c) or (m) of the Code has incurred any material liability pursuant to Title IV of ERISA. Except as set forth in Schedule 4.10.2 and except as required by any Contract or Plan, neither the Company nor any of its subsidiaries has any announced Plan or legally binding commitment to create any additional Plans which are intended to cover employees or former employees of the Company or to amend or modify any existing Plan.
4.10.3 TAX QUALIFICATION . Except as disclosed on Schedule 4.10.3, each Plan intended to be qualified under section 401(a) of the Code has received a favorable determination letter from the IRS as to its qualification under the Code and nothing has occurred since the date of such determination letter that will adversely affect such favorable determination or qualification.
4.10.4 LABOR MATTERS . Except as disclosed on Schedule 4.10.4, neither the Company nor any of its subsidiaries is a party to or bound by any collective bargaining agreement or other contract with any labor union or other employee representative of a group of employees (a "COLLECTIVE BARGAINING AGREEMENT"), and there are no labor unions or other organizations representing or, to the knowledge of the Company, purporting or attempting to represent any employees employed by any of the Company and its subsidiaries. Except as disclosed on Schedule 4.10.4, since January 1, 1996, there has not occurred or, to the knowledge of the Company, been threatened any strike, organized slowdown, picketing, organized work stoppage or organized concerted refusal to work overtime with respect to any employees employed by any of the Company or any of its subsidiaries. Except as disclosed on Schedule 4.10.4, there are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or, to the knowledge of the Company, threatened with respect to any employees employed by the Company or any of its subsidiaries.
4.11 INTELLECTUAL PROPERTY . Schedule 4.11 lists all material trademarks, copyright registrations, trade names, service marks, patents and any and all registrations thereof and applications therefor, owned by the Company or any of its subsidiaries (the "INTELLECTUAL PROPERTY"). Except as set forth in Schedule 4.11, the Company and its subsidiaries own the Intellectual Property free and clear of all Liens. Except as set forth in Schedule 4.11, neither the Company nor any of its subsidiaries has any notice or claim that it is infringing the intellectual property rights of any third party and the Company has no knowledge of any infringement by any person or entity of the Intellectual Property. The Intellectual Property and the Licenses (as hereinafter defined) constitute all the Intellectual Property and the Licenses necessary to conduct the Company's and its subsidiaries' businesses as is being conducted on the date hereof. Schedule 4.11 sets forth a complete and correct list, as of the date hereof, of all material written licenses to which the Company or any of its subsidiaries is a party, pursuant to which (A) the Company or such subsidiary permits any person or entity to use any of the Intellectual Property, or (B) any person or entity permits the Company or such subsidiary to use any trademarks, service marks, trade names, copyrights or patents not owned by the Company or any of
its subsidiaries (the "LICENSES"). The Company has furnished or made available to Parent complete and correct copies of the Licenses. Except as set forth on Schedule 4.11, neither the Company nor any of its subsidiaries, nor, to the Company's knowledge, any other party thereto, is in default under any License, and each License is in full force and effect as to the Company or any of its subsidiaries party thereto, and to the Company's knowledge, as to each other party thereto, except for such defaults and failures to be so in full force and effect as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company and its subsidiaries taken as a whole.
4.12 GOVERNMENTAL AUTHORIZATIONS; COMPLIANCE WITH LAW . Except as otherwise set forth in Schedule 4.12, the Company and its subsidiaries hold all licenses, permits, franchises and other governmental authorizations material to the business of the Company and its subsidiaries as presently conducted ("PERMITS"), including, without limitation, all Permits required by the Federal Aviation Administration and the Joint Aviation Authorities. Except as set forth in Schedule 4.12, all such Permits are valid and in full force and effect and are listed on Schedule 4.12. The Company and its subsidiaries have not violated any such Permits in any material respect, and each is in compliance with all such Permits in all material respects. Neither the Company nor its subsidiaries has received any notice to the effect that, or otherwise has any knowledge that, (A) the Company and its subsidiaries are not currently in compliance with, or are in violation of, any such Permits in any material respect or (B) subject to obtaining the consents set forth in Schedule 4.2(b), any currently existing circumstances are likely to result in a failure of the Company and its subsidiaries to comply with, or in a violation by the Company and its subsidiaries of, any such Permits in any material respect. Except as set forth on Schedule 4.12, the Company and its subsidiaries have not violated and are in compliance with (A) all applicable laws, statutes, ordinances, regulations, rules and orders of every federal, state, local or foreign government and every federal, state, local or foreign court or other governmental or regulatory agency, department, authority, body or instrumentality and (B) any judgment, decision, decree, requirement or order of any court or governmental or regulatory agency, department, authority, body or instrumentality (collectively, "LAWS"), relating to the assets, business or operations of the Company or its subsidiaries, except to the extent that any such violation or failure to comply is not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company. Except as set forth on Schedule 4.12, none of the Company or any of its subsidiaries has received any notice of any failure to comply or violation of any applicable Law and none of the Company or any of its subsidiaries has actual knowledge of any currently existing circumstances likely to result in a failure of the Company to comply with, or a violation by the Company of, any Laws, except for failures or violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. This Section 4.12 does not relate to employee benefits matters which are instead the subject of Section 4.10, tax matters
which are instead the subject of Section 4.14 or environmental matters which are instead the subject of Section 4.17.
4.13 LITIGATION . Except as otherwise set forth in Schedule 4.13,
there are no judicial, regulatory or administrative actions, suits, proceedings
or investigations pending or, to the knowledge of the Company, threatened, which
(I) individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole,
(II) assert criminal liability against the Company or any of its subsidiaries or
any officer, director or shareholder of the Company or any of its subsidiaries
as such, or (III) question the validity of this Merger Agreement or any action
taken or to be taken by the Company, or any of its subsidiaries in connection
herewith. Except as set forth in Schedule 4.13, there are no orders, judgments
or decrees of any court or governmental authority, which apply to the Company or
any of its subsidiaries or any of their properties or assets.
4.14 TAX MATTERS . (a) DEFINITIONS. For purposes of this Section 4.14, the following capitalized terms shall have the following meanings. "CODE": the Internal Revenue Code of 1986, as amended. "EMPLOYMENT AND WITHHOLDING TAXES": any federal, state, provincial, local, foreign or other employment, unemployment insurance, social security, disability, workers' compensation, payroll, health care or other similar tax, duty or other governmental charge or assessment and all Taxes required to be withheld by or on behalf of each of the Company and each of its subsidiaries in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other party, in each case, on or in respect of the business or assets thereof. "INCOME TAX": any federal, state, provincial, local or foreign income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits or windfall profits tax or other similar tax, estimated tax, duty or other governmental charge or assessment or deficiencies thereof. "INCOME TAX RETURN": any Tax Return relating to Income Taxes. "IRS": the Internal Revenue Service. "TAX": any federal, state, provincial, local or foreign income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, profits, windfall profits, gross receipts, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, severance, real property, personal property, ad valorem, occupancy, license, occupation, employment, payroll, social security, disability, unemployment, workers' compensation, withholding, estimated or other similar tax, assessment or other governmental charge. "TAX RETURN": any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof that relates to the Company or any of its subsidiaries. "TREASURY REGULATIONS": the regulations promulgated under the Code.
(b) FILING OF RETURNS AND PAYMENT OF TAXES. Except as set forth in Schedule 4.14(b), all material Tax Returns required to be filed on or before the Closing Date have (or by the Closing Date will have) been duly filed on a timely basis and such Tax
Returns are complete and correct in all material respects. Except for Taxes set forth in Schedule 4.14(b) or as reflected or reserved against in the Financial Statements, the following Taxes (collectively, "COMPANY TAXES") have (or by the Closing Date will have) been duly paid: (I) all Taxes shown to be due on material Tax Returns required to be filed on or before the Closing Date and (II) all material Taxes due and payable on or before the Closing Date that are or may become payable by the Company or any of its subsidiaries or chargeable as a Lien upon the assets thereof (whether or not shown on any Tax Return). Except as set forth in Schedule 4.14(b), all material Employment and Withholding Taxes required to be withheld and paid on or before the Closing Date have (or by the Closing Date will have) been duly paid to the proper governmental authority or properly set aside in accounts for such purpose.
(c) EXTENSIONS, ETC. Except as set forth in Schedule 4.14(c), no written agreement or other document extending, or having the effect of extending, the period of assessment or collection of any Company Taxes or Employment and Withholding Taxes, and no power of attorney with respect to any such Taxes, has been executed or filed with the IRS or any other taxing authority.
(d) TAX FILING GROUPS; INCOME TAX JURISDICTIONS. Except as set forth in Schedule 4.14(d), neither the Company nor any of its subsidiaries is or has been at any time a member of any affiliated, consolidated, combined or unitary group for purposes of filing Income Tax Returns or paying Income Taxes. Except as set forth in Schedule 4.14(d), neither the Company nor any of its subsidiaries has been liable for the taxes of any other person (other than the Company and its subsidiaries) or entity as a transferee or successor, by contract, by law or otherwise since 1995. Set forth in Schedule 4.14(d) are all countries, states, provinces, cities or other jurisdictions in which the Company and its subsidiaries currently file or have filed within the last year an Income Tax Return.
(e) COPIES OF RETURNS; AUDITS; ETC. The Company has (or by the Closing Date will have) made available to Buyer complete and accurate copies of all Tax Returns with respect to all periods beginning on or after October 1, 1994 that have been filed or will be required to be filed (after giving effect to all valid extensions of time for filing) on or before the Closing Date. Except as set forth in Schedule 4.14(e), (I) no material Company Taxes or material Employment and Withholding Taxes have been asserted in writing by any governmental authority since October 1, 1994 to be due, (II) no revenue agent's report or written assessment for Taxes has been issued by any governmental authority in the course of any audit that has been completed since October 1, 1994 with respect to material Company Taxes or material Employment and Withholding Taxes, and (III) no material issue has been raised by any governmental authority in the course of any audit that has not been completed with respect to material Company Taxes or material Employment and Withholding Taxes, which issue has been raised in a writing that has been received by the Company. Except as set forth in Schedule 4.14(e), no Tax Return is currently under audit by any taxing authority, and no Employment and Withholding Taxes are currently under audit by any taxing authority. Except as set forth in Sched-
ule 4.14(e), neither the IRS nor any other taxing authority is now asserting in writing against the Company or any of its subsidiaries any material deficiency or claim for additional Taxes or any material adjustment of Taxes.
(f) SECTION 1445(A) OF THE CODE. The Company is not and has not been a United States real property holding Company (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(e)(i)(iii) of the Code, and Buyer will not be required to deduct and withhold any amount pursuant to section 1445(a) of the Code in connection with the Merger.
(g) TAX SHARING AGREEMENTS. Except as set forth in Schedule 4.14(g), neither the Company nor any of its subsidiaries is a party to or bound by or has any obligation under any written Tax sharing agreement or arrangement and any such agreement or arrangement will be terminated prior to the Effective Time.
4.15 ABSENCE OF CHANGES . Since June 26, 1998, other than in connection with, or as a result of, the transactions contemplated by this Merger Agreement or reflected in the schedules hereto, including, without limitation, Schedule 4.15, the Company and its subsidiaries have conducted their business in the ordinary course, in substantially the same manner in which it has been previously conducted, there has been no Material Adverse Change in or with respect to the Company or its subsidiaries, except for any change resulting from general economic, financial, industry or market conditions and none of the Company or any of its subsidiaries has:
(i) purchased or redeemed any shares of its Equity Securities;
(ii) incurred any indebtedness for borrowed money or entered into any guaranty or incurred any material liabilities, or incurred any obligations for any performance bonds, payment bonds, bid bonds, surety bonds, letters of credit, guarantees or other similar instruments;
(iii) mortgaged, pledged or subjected to any Lien any of its properties or assets, except for Liens incurred in the ordinary course of business or Permitted Liens;
(iv) except as required by GAAP, made any material change in its accounting principles or the methods by which such principles are applied for financial reporting purposes;
(v) (A) increased the compensation of any officer or other key management employee, (B) adopted or amended in any material respect the terms of any employee benefit plan maintained by the Company or any of its subsidiaries in a manner that is reasonably expected to increase the costs of the Company in maintaining such plan by a material amount, (C) granted, made or accrued any loan, bonus, fees, incentive compensation, service award or other like benefit, to or for the benefit of any employee except pursuant to the Plans described on Schedule 4.10 or pursuant to the
Company's annual bonus plan in the ordinary course of business, (D) entered into any new employment, severance, material consulting agreement or other material compensation agreement or caused or suffered any material written cancellation or amendment thereof (except with respect to any employee at will without a written agreement and except for entering into, cancelling or amending sales representative agreements in the ordinary course of business), (E) entered into any new bonus or incentive agreement, (F) with respect to any stockholder or any other affiliates, granted, made or accorded any payment or distribution or other like benefit, or otherwise transferred assets, including, but not limited to, any payment of principal of or interest on any debt owed to any stockholder or affiliate; other than (A) in the ordinary course of business or (B) to comply with applicable law or the terms of any Contract or Collective Bargaining Agreement;
(vi) disposed or agreed to lease, assign, transfer or dispose of any material properties or assets necessary for the conduct of the business of the Company and its subsidiaries as currently conducted, other than in the ordinary course of business;
(vii) waived, released, cancelled or forgiven any debts, claims or rights (or series of rights, debts or claims) involving, individually or in the aggregate, consideration in excess of $250,000 except in the ordinary course of business;
(viii) cancelled or terminated, or amended, modified or waived in any material respect the terms of, any Contract to which it is a party or by which it or any of their assets are bound, the executor portion of which provides for aggregate annual revenues to the Company and its subsidiaries in excess of $250,000;
(ix) (A) acquired (by merger, consolidated, acquisition of stock, other securities or assets or otherwise), (B) made a material capital investment in, (C) made a material loan advance or agreement to loan or advance to, (D) entered into any joint venture, partnership or other similar arrangement for the conduct of business with, or (E) guaranteed material indebtedness for borrowed money of, (X) any third party or (Y) any portion of the assets of any person that constitutes a division or operating unit of such person;
(x) made any capital expenditures or commitments therefor in excess of the aggregate amount set forth in the Company's 1998 capital expenditures plan, a true and complete copy of which has been provided to Buyer (the "CAPITAL EXPENDITURE PLAN";
(xi) suffered any theft, damage, destruction or casualty loss affecting its business of any of their assets in excess of $100,000 in any single instance or $300,000 in the aggregate, whether or not covered by insurance;
(xii) (A) issued or sold, or entered into any agreement obligating it to issue or sell or (B) declared, set aside for payment or paid dividends or distributions in respect of or (C) directly or indirectly redeemed, purchased or otherwise acquired or retired or split, combined or otherwise adjusted, any Equity Securities;
(xiii) paid, discharged, cancelled, compromised or satisfied any material liability other than any such payment, discharge or satisfaction in the ordinary course of business;
(xiv) changed or amended its certificate of incorporation or bylaws;
(xv) committed to or entered into any Contract to do the foregoing; or
(xvi) entered into any agreement outside the ordinary course of business.
4.16 INSURANCE . Schedule 4.16 sets forth a complete and correct list, as of the date hereof, of the policies of insurance currently maintained by the Company and its subsidiaries. Such policies are in full force and effect and protect the Company and its subsidiaries against such losses and risks as is consistent with industry practice and all premiums due with respect to all periods to and including the Closing Date have either been paid or adequate provisions for the payment by Company thereof have been made. Neither the Company nor any of its subsidiaries has received any notice of any material increase of premiums with respect to, or cancellation or non-renewal of, any of such insurance policies. There are no material claims by the Company or any of its subsidiaries under any of such policies relating to the business, assets or properties of the Company or its subsidiaries as to which any insurance company is denying liability or defending under a reservation of rights or similar clause.
4.17 ENVIRONMENTAL MATTERS. (a) DEFINITIONS. For purposes of this
Section 4.17, the following capitalized terms shall have the following meanings.
"ENVIRONMENTAL LAW": any foreign, federal, state, or local law, statute, rule,
regulation, order or other requirement of law relating to (I) the manufacture,
transport, use, emission, treatment, storage, disposal, release or threatened
release of pollutants, contaminants, chemicals, industrial materials or wastes,
or (II) the protection of human health or the environment (including, without
limitation, natural resources, air, and surface or subsurface land or waters).
"HAZARDOUS SUBSTANCE": any pollutant, contaminant, chemical, waste, or any
other carcinogenic, toxic or hazardous substances or materials, including but
not limited to asbestos or asbestos containing material, petroleum, including
crude oil and any fractions thereof, or other wastes, chemicals, substances or
materials subject to regulation or remediation under any Environmental Law.
(b) ENVIRONMENTAL COMPLIANCE AND CONDITIONS. Except as set forth in Schedule 4.17:
(i) the Company and its subsidiaries are in material compliance with all applicable Environmental Laws;
(ii) the Company and its subsidiaries have obtained, and are in material compliance with, all permits and authorizations required under applicable Environmental Laws (all of which permits and authorizations are set forth on Schedule 4.17);
(iii) there are and have been no material releases or potential releases of Hazardous Substances at, on, or into any real property currently owned or leased or to its knowledge, formerly owned or leased, by the Company or its subsidiaries;
(iv) the Company and its subsidiaries are not a party, whether as a direct signatory or as successor, assign or third-party beneficiary, or, to its knowledge, otherwise bound, to any Contract under which the Company or its subsidiaries are obligated by or entitled to the benefits of, directly or indirectly, any representation, warranty, indemnification, covenant, restriction or other undertaking concerning compliance with Environmental Laws;
(v) neither the Company nor any of its subsidiaries has received from any governmental authority any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding compliance with applicable Environmental Laws concerning any of the Real Property;
(vi) no material judicial proceeding or governmental or administrative action is pending or, to its knowledge, threatened, under any applicable Environmental Law pursuant to which the Company or any of its subsidiaries is or will be named as a party; and
(vii) neither the Company nor any of its subsidiaries has entered into any agreement with or is subject to any order or decree from any governmental authority pursuant to which the Company or any of its subsidiaries has assumed responsibility for the remediation of any condition resulting from the release, treatment, storage or disposal of Hazardous Substances.
4.18 BANKING AND AGENCY ARRANGEMENTS . Schedule 4.18 sets forth a list of:
(i) each bank, savings and loan or similar financial institution in which either the Company or any of its subsidiaries has an account or safe deposit box or other custodial arrangement and the numbers of such accounts or safe deposit boxes maintained by the Company and its subsidiaries; and
(ii) the names of all persons authorized to draw on each such account or to have access to any such safe deposit box facility.
4.19 AFFILIATE TRANSACTIONS . Except as set forth in Schedule 4.19 or Schedule 4.10.1, neither the Company nor any of its subsidiaries is a party to any Contract with any of their respective directors or officers in their capacity as directors or officers of the Company.
4.20 BROKERS . All negotiations relating to this Merger Agreement and the transactions contemplated hereby have been carried out without the intervention of any person acting on behalf of the Company in such manner as to give rise to any valid claim against Buyer or the Company for any brokerage or finder's commission, fee or similar compensation, except for Goldman, Sachs & Co. and Kelso & Company, whose fees in respect hereof shall be paid by the Company.
4.21 QUALIFICATION . (a) All products sold by the Company and its subsidiaries pursuant to qualification requirements established by the Company's and its subsidiaries' customers were produced in a manner consistent with the requirements of such qualification except for individual defective products produced in the ordinary course of business, or where the failure to do so, individually or in the aggregate, would not have a Material Adverse Effect on the Company. The Company held all necessary qualifications for its products from its customers pursuant to which sales were made to such customers. Except as set forth in Schedule 4.21, the Company has not received notification that any qualifications for the Company's products as established by the Company's customers have been revoked or terminated as a result of the failure of products manufactured by the Company to meet the specifications required by such qualifications, and to the knowledge of the Company, no such revocation or termination is threatened or contemplated.
(b) The Company and its subsidiaries hold such security clearances as are required to perform their respective obligations under any Government Contract. There are no facts or circumstances known to the Company that could result in the suspension or termination of such clearances, or that could render the Company or its subsidiaries ineligible for such security clearances in the future. All security measures required by the Department of Defense Industrial Security Manual have been implemented in all material respects.
4.22 PRODUCTS LIABILITY . Except as set forth on Schedule 4.22, there are not presently pending or, to the knowledge of the Company, threatened any civil, criminal or administrative actions, suits, demands, claims, hearings, notices of violation, investigations, proceedings or demand letters relating to any alleged hazard or alleged defect in design, manufacture, materials or workmanship including, without limitation, any failure to warn or alleged breach of express or implied warranty or representation, relating to any product manufactured, distributed or sold by or on behalf of the Company that would individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. Schedule 4.22 sets forth a true and complete list of (I) all matters referred to in the preceding sentence and (II) all material product recalls or material written post-sales warnings involving a product line of the Company as opposed
to warranty claims in the ordinary course of business ("RECALLS") and any pending investigations being conducted by the Company or by any other person concerning a Recall relating to any product manufactured, distributed or sold by or on behalf of the Company. The Financial Statements contain as of their respective dates, adequate and sufficient reserves for product warranty related expenses and product returns.
4.23 CUSTOMERS AND SUPPLIERS . Schedule 4.23 sets forth a true and correct list of (A) the 10 largest customers of the Company by division, on a consolidated basis, in terms of sales during the fiscal year ended September 30, 1997 PLUS one other customer and (B) the 10 largest suppliers of the Company by division, on a consolidated basis, in terms of purchases during the fiscal year ended September 30, 1997. Except as set forth on Schedule 4.23, there are no ongoing discussions with any of the customers or suppliers involving or in respect of any price increases in the Company's inputs or price decreases in the Company's outputs, the net effect of which could reasonably be expected to have a material negative impact on the Company's gross profit. Since June 26, 1998, there has not been any adverse change in the business relationship of the Company or its subsidiaries with any customer or supplier named in Schedule 4.23 which is material to the Company or any such subsidiary's relationship with such customer or supplier.
4.24 PROHIBITED PAYMENTS . The Company and its subsidiaries have not, directly or indirectly, (A) made or agreed to make any contribution, payment or gift to any government official, employee or agent where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction, (B) established or maintained any unrecorded fund or asset for any purpose or made any false entries on the books and records of the Company and its subsidiaries for any reason, (C) made or agreed to make any contribution, or reimbursed any political gift or contribution made by any other persons, to any candidate for federal, state, local or foreign public office or (D) paid or delivered any fee, commission or any other sum of money or item of property, however characterized, to any finder, agent, government official or other party, in the United States or any other country, which in any manner relates to the assets, business or operations of the Company or its subsidiaries, which the Company or its subsidiaries knows or has reason to believe to have been illegal under any federal, state or local laws (or any rules or regulations thereunder) of the United States or any other country having jurisdiction.
4.25 ADDITIONAL AGREEMENTS . The (I) Stock Purchase Agreement among TransDigm, Inc. and the shareholders of Marathon Power Technologies Company listed therein, dated as of August 8, 1997, (II) Asset Purchase Agreement among American Premier Underwriters, Inc., Marathon Power Technologies Company and the other parties named therein, dated as of April 20, 1994, and (III) Stock Sale and Asset Transfer Agreement by and between IMO Industries Inc. and Novadigm Acquisition Inc., dated as of July 14, 1993, are, in each case, in full force and effect, subject to the terms thereof, and to the knowledge of the Company are enforceable by the Company and its subsidiaries, as applicable, in accordance with their terms.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to the Company as follows:
5.1 CORPORATE STATUS AND AUTHORITY . Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the power and authority to execute and deliver this Merger Agreement and perform its obligations hereunder. Buyer has the requisite corporate power and authority to carry on its business as it is now being conducted and is duly qualified and licensed to do business, and is in good standing, in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not, individually or in the aggregate, impair the ability of Buyer to fulfill its obligations hereunder. The execution and delivery of this Merger Agreement and the consummation of the transactions contemplated hereby by Buyer have been duly and validly authorized and approved by the board of directors of Buyer, and no other corporate or stockholder proceedings on the part of Buyer are necessary to consummate the transactions contemplated hereby. This Merger Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of equity or principles applicable to the enforcement of creditors' rights generally.
5.2 NO CONFLICTS; CONSENTS AND APPROVALS, ETC. (a) Except as set
forth in Schedule 5.2(a), the execution, delivery and performance of this Merger
Agreement by Buyer will not result in (I) any conflict with the certificate of
incorporation or by-laws of Buyer, (II) any breach or violation of or default
under any law, statute, regulation, judgment, order, decree, license, permit or
other governmental authorization or any mortgage, lease, agreement, deed of
trust, indenture or any other instrument to which Buyer or any of its
subsidiaries is a party or by which Buyer or any of its subsidiaries or any of
their respective properties or assets are bound, or (III) the creation or
imposition of any Lien, except, in the case of clauses (ii) and (iii) of this
Section 5.2, for such breaches, violations or defaults and such Liens which
would not, individually or in the aggregate, impair the ability of Buyer to
fulfill its obligations hereunder.
(b) Except as set forth in Schedule 5.2(b), no consent, approval or
authorization of or filing with any third party or governmental authority is
required on the part of Buyer in connection with the execution and delivery of
this Merger Agreement or the consummation of the transactions contemplated
hereby, except (I) filings required with respect to the HSR Act, (II) those
which may be required by the governmental contracts to which the Company is a
party or the governmental permits and authorizations held by the Company, and
(III) the filing of a certificate of merger pursuant to the DGCL.
5.3 CAPITALIZATION . Immediately prior to the Effective Time, Buyer shall not have outstanding any Equity Securities other than shares of common stock.
5.4 FINANCIAL ABILITY TO PERFORM . Buyer has delivered to the Company complete and correct executed copies of letters from Bankers Trust Corporation and Odyssey Investment Partners Fund L.P. (the "FINANCING LETTERS") issued in connection with the financing of the transactions contemplated hereby (the "FINANCING"). Assuming satisfaction of all applicable conditions set forth in the Financing Letters and full funding thereunder, Buyer at the Closing Date shall be capitalized with an equity contribution in an amount up to $90 million (or such other amount as is equal to $116 million MINUS the Option Rollover Amount MINUS the Kelso Rollover Amount; provided that in no event shall Buyer be required to be capitalized with an equity contribution in an amount in excess of $94.5 million) and such funds, together with the proceeds from the debt Financing, will provide sufficient funds to consummate the transactions contemplated hereby.
5.5 LITIGATION . There are no judicial or administrative actions, proceedings or investigations pending or, to the knowledge of Buyer, threatened, which question the validity of this Merger Agreement or any action taken or to be taken by Buyer in connection herewith.
5.6 BROKERS . All negotiations relating to this Merger Agreement and the transactions contemplated hereby have been carried out without the intervention of any person acting on behalf of Buyer in such manner as to give rise to any valid claim against Buyer or the Company for any brokerage or finder's commission, fee or similar compensation.
6. ADDITIONAL AGREEMENTS.
6.1 CONDUCT OF BUSINESS PENDING THE MERGER . From the date hereof until the Closing Date, other than (I) in connection with, or as a result of, the transactions contemplated by this Merger Agreement or reflected in the schedules hereto, or (II) as otherwise consented to by Buyer in writing, such consent not to be unreasonably withheld, the Company and its subsidiaries shall conduct their business in the ordinary course in substantially the same manner in which it previously has been conducted and not take any action that would cause a breach of paragraphs (i)-(xvii) of Section 4.15.
6.2 SATISFACTION OF CLOSING CONDITIONS . (a) The parties shall use their commercially reasonable best efforts to take all action necessary or appropriate to bring about the satisfaction as soon as possible of all the conditions contained in Section 7. Without limiting the generality of the foregoing, the parties shall apply for and diligently prosecute all applications for, and shall use their commercially reasonable best efforts promptly to obtain, such consents, authorizations and approvals from such third parties and governmental authorities as shall be necessary to permit the consummation of the transactions contemplated by this Merger Agreement, including, without limitation, making the requisite filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice pursuant to the HSR Act and each party will refrain
from taking any action which would cause, and shall use its commercially reasonable best efforts to take any action necessary to prevent, any of the representations and warranties made by it in this Merger Agreement not to be true and correct in all material respects at and as of the Closing Date with the same force and effect as then made (except with respect to representation and warranties which are made as of a specific date), subject only to exceptions permitted or expressly contemplated by this Merger Agreement. The Company further covenants and agrees, with respect to any threatened or pending judgment, order, injunction, decree or decision of any governmental authority that will adversely affect the ability of the parties hereto to consummate the transactions contemplated hereby, to use all commercially reasonable efforts to prevent the entry or promulgation thereof and to defend and cooperate with each other in the defending of any legal proceedings, whether judicial or administrative and whether brought derivatively or on behalf of third parties challenging the transaction contemplated hereby as the case may be, it being understood that such efforts shall not include any requirement of the Company to expend material sums of money or grant any material financial or other accommodation.
(b) The Buyer agrees to use commercially reasonable best efforts to obtain the financing necessary to consummate the transactions contemplated hereby as soon as possible. The Buyer agrees that any 144A offerings contemplated by the Financing Letters must be consummated prior to October 31, 1998 and that if any such offering is not consummated prior to such date, then the Buyer will be obligated on October 31, 1998 to obtain the bridge loan financing contemplated by the Financing Letter in substitution therefor pursuant to the terms thereof, subject to the conditions for such bridge loan financing set forth in the Financing Letters. The Company agrees to provide, and will cause its subsidiaries and their respective personnel and advisers to provide, all cooperation reasonably requested in connection with the arrangement of such financing, including without limitation, participation in meetings, due diligence sessions, road shows, the preparation of offering memoranda, private placement memoranda, prospectuses and similar documents, the execution and delivery of any commitment letters, underwriting or placement agreements, pledge and security documents, other definitive financing documents, or other requested certificates or documents, including a certificate of the chief financial officer of the Company with respect to solvency matters, comfort letters of accountants as may be reasonably requested by Buyer. Notwithstanding the foregoing, Buyer agrees that the payment of any expenses relating to providing such cooperation, including fees by the Company in connection with any commitment letters, shall be subject to the occurrence of the Closing.
6.3 ACCESS AND INFORMATION . Prior to the Closing Date, the Company shall give to Buyer and its representatives (including any financial institution providing or proposed to provide financing in connection with the transactions contemplated hereby) reasonable access at all reasonable times to the properties, books and records, assets, data, documents, personnel, tax returns and other information of the Company and its subsidiaries and to furnish such information and documents in its possession relating to
the Company and its subsidiaries as Buyer may reasonably request, PROVIDED that Buyer shall not be entitled to any such access, information or documents for the purposes of conducting any environmental audit or assessment without the prior written consent of the Company. The Company further agrees to furnish Buyer with such financial and operating data and other information which the Company has reasonably available with respect to the Company's business, properties, assets and financial and legal condition as Buyer or its representatives, accountants and attorneys may from time to time reasonably request. All such information and documents obtained by Buyer shall be subject to the terms of the Confidentiality Agreement, dated May, 1998 (the "CONFIDENTIALITY AGREEMENT"), between Buyer and the Company. Buyer hereby agrees that the provisions of the Confidentiality Agreement will apply to any properties, books, records, data, documents and other information relating to the Company provided to Buyer or its affiliates or any of their respective advisors or employees pursuant to this Merger Agreement.
6.4 TRANSFER TAXES . Buyer shall be liable for all transfer Taxes (including, without limitation, any transfer gains Taxes) arising from the transactions contemplated by this Merger Agreement.
6.5 PUBLICITY . No press release or public announcement related to this Merger Agreement or the transactions contemplated hereby shall be issued or made without the joint approval of the Company and Buyer, unless required by law, in which case the Company and Buyer shall have the right to review such press release or announcement prior to its publication.
6.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS . For a period of seven years after the Closing Date, Buyer shall not, and shall not permit the Surviving Corporation to, amend, repeal or modify any provision in the Certificate of Incorporation or By-laws relating to the exculpation or indemnification of former officers and directors (unless required by law) in a manner that would be adverse to such persons, it being the intent of the parties that the officers and directors of the Surviving Corporation prior to the Closing Date shall continue to be entitled to such exculpation and indemnification to the fullest extent permitted under applicable law.
6.7 CONTACT WITH CUSTOMERS AND SUPPLIERS . Buyer and its representatives shall contact and communicate with the employees, customers, suppliers and licensors of the Company in connection with the transactions contemplated hereby only with the prior written consent of the Company, which consent shall not be unreasonably withheld, which consent may be conditioned upon an officer of the Company being present at any such meeting or conference.
6.8 STOCKHOLDERS APPROVAL . The Company shall take all appropriate action in accordance with the DGCL, the Company's Certificate of Incorporation and By-laws (A) to obtain consent of all of its stockholders acting without a meeting with respect to the Merger and this Merger Agreement and (B) prior to the Effective Time to obtain consent
of the requisite number of stockholders to amend the Company's Certificate of Incorporation as reasonably requested by the Buyer and to file such amended Certificate of Incorporation with the Delaware Secretary of State.
6.9 NO SOLICITATION; NOTIFICATION . (i) The Company and its
subsidiaries shall not, and shall cause their respective representatives
(including, without limitation, investment bankers, attorneys and accountants)
not to enter into, solicit, initiate or continue any discussions or negotiations
with, or encourage or respond to any inquiries or proposal by or participate in
any discussions or negotiations with, or provide any information to, or
otherwise cooperate in any other way with, any person other than Buyer and its
representatives concerning any sale of all or any material portion of the
Company's or any subsidiary's assets (other than sales of inventory, product or
obsolete or non-productive assets in the ordinary course of business) or the
business of, or of any Equity Securities of, the Company or any subsidiary, or
any business combination or any recapitalization, dissolution or similar
transaction involving the Company (each such transaction being referred to
herein as "PROPOSED ACQUISITION TRANSACTION").
(ii) The Company will immediately notify Buyer if any written offer is made, discussions or negotiations are sought to be initiated with respect to any Proposed Acquisition Transaction and keep Buyer informed of the status of any developments regarding such offer.
6.10 NOTICE OF DEVELOPMENTS . Each party hereto shall give prompt written notice to the other party of (I) the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be reasonably likely to cause any representation or warranty made by such party in this Merger Agreement or in any Schedule to be untrue or inaccurate and (II) any failure by such other party to comply with, perform or satisfy any covenant, condition or agreement to be complied with, performed by or satisfied by it under this Merger Agreement. No disclosure by any party pursuant to this Section 6.10, however, shall be deemed to amend or supplement the Schedules or to prevent or cure any misrepresentation or breach or failure to satisfy any representations, warrant, covenant, condition or agreement hereunder.
6.11 NOVATION AGREEMENTS . The Company shall use its reasonable best efforts to satisfy all conditions to obtaining any novation agreements which may be required with respect to any of the Government Contracts and to pass to the Surviving Corporation any security clearances relating to such Contracts.
7. CONDITIONS PRECEDENT.
7.1 GENERAL . The respective obligations set forth herein of each party to effect the Merger shall be subject to the fulfillment, on or before the Effective Time, in the case of the Company, of the conditions set forth in Sections 7.2 and 7.3, and in the case of Buyer, of the conditions set forth in Sections 7.2 and 7.4.
7.2 CONDITIONS TO OBLIGATIONS OF BOTH PARTIES .
7.2.1 HSR ACT . The waiting period under the HSR Act shall have been terminated or expired.
7.2.2 CONSENTS . All consents, authorizations, permits or approvals listed on Schedule 7.2.2 shall have been made or obtained. Buyer shall have 30 days after the date hereof to amend Schedule 7.2.2 with the consent of the Company, such consent not to be unreasonably withheld, to include any consents, authorizations, permits or approvals relating to government contracts required to be made or obtained prior to the Closing Date in connection with the execution and delivery of this Merger Agreement and the transactions contemplated hereby, the failure of which to obtain could reasonably be expected to have a Material Adverse Effect.
7.2.3 NO INJUNCTION OR LITIGATION . There shall not be in effect any injunction or other order issued or instituted or overtly threatened by a court of competent jurisdiction or governmental authority restraining or prohibiting or seeking to restrain or prohibit the consummation of the transactions contemplated by this Merger Agreement and there shall not have been promulgated, entered, issued or determined by any court or other governmental authority to be applicable to this Merger Agreement any applicable law making illegal the consummation of the transactions contemplated hereby and no proceeding brought by any governmental authority with respect to the application of any such applicable law shall be pending. No suit, proceeding or similar action by any person shall have been instituted which questions the validity or legality of the transactions contemplated hereby and which is reasonably likely to materially adversely affect the value of the Buyer's equity interest in the Surviving Corporation.
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY .
7.3.1 REPRESENTATIONS AND WARRANTIES OF BUYER . Each of the representations and warranties in Section 5 shall be true and correct in all material respects when made and at and as of the Effective Time with the same effect as though made at and as of such time. Buyer shall have duly performed and complied in all material respects with all agreements contained herein required to be performed or complied with by it at or before the Effective Time.
7.3.2 OFFICER'S CERTIFICATE . Buyer shall have delivered to the Company a certificate, dated the Effective Time and signed by its President or a Vice President, as to the fulfillment of the conditions set forth in Section 7.3.1.
7.3.3 OUTSTANDING DEBT . Buyer shall have paid or provided sufficient funds to the Company to pay all amounts owing with respect to the Credit Agreement.
7.3.4 TRANSACTION COSTS . Buyer shall have provided sufficient funds to the Company to pay the Transaction Costs.
7.3.5 STOCKHOLDERS' AGREEMENT . Odyssey shall have entered into a stockholders' agreement with Kelso Investment Associates IV, L.P. and Kelso Equity Partners II, L.P. ("KELSO") in form and substance reasonably satisfactory to Kelso.
7.4 CONDITIONS TO OBLIGATIONS OF BUYER .
7.4.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . Each of the representations and warranties in Section 4 shall be true and correct when made and at and as of the Effective Time with the same effect as though made at and as of such time, except (A) that those representations and warranties which are made of a specific date shall be true and correct in all material respects only as of such date and (B) where the truth or incorrectness of such representations and warranties would not, singly or in the aggregate, have a Material Adverse Effect. For purposes of this Section 7.4.1, the representations and warranties of the Company contained in this Merger Agreement shall be deemed to have been made without any qualification as to knowledge or materiality and, accordingly, all references in such representations and warranties to "material," "Material Adverse Effect," "in all material respects," "Material Adverse Change," "knowledge," "best knowledge" and similar terms and phrases (including, without limitation, references to the dollar thresholds therein) shall be deemed to be deleted therefrom. The Company shall have duly performed and complied in all material respects with all agreements and covenants contained herein required to be performed or complied with by it at or before the Effective Time.
7.4.2 OFFICER'S CERTIFICATE . The Company shall have delivered to Buyer a certificate, dated the Effective Time and signed by its President or a Vice President, as to the fulfillment of the conditions set forth in Sections 7.4.1, 7.4.8 and 7.4.11.
7.4.3 DIRECTORS . All directors of the Company shall have tendered their resignations.
7.4.4 FIRPTA CERTIFICATE . Buyer shall have received (I) a certification from the Company, dated no more than 30 days prior to the Closing Date and signed by a President or a Vice President of the Company, that the Company is not, and has not been at any time during the five years preceding the date of such certification, a United States real property holding company, as defined in section 897(c)(2) of the Code, and (II) proof reasonably satisfactory to Buyer that the Company has provided notice of such certification to the Internal Revenue Service in accordance with the provisions of Treasury Regulations section 1.897-2(h)(2).
7.4.5 FINANCIAL ADVISORY AND STOCKHOLDERS' AGREEMENT . The Financial Advisory Agreement referred to in Schedule 4.19 shall have been terminated in consideration of the fee referred to in Section 4.20 and each of the Stockholders' Agreement and Investor Stockholders' Agreement referred to in Schedule 4.9 shall have been terminated.
7.4.6 FINANCING . The debt funding contemplated by the Financing Letters shall have been obtained; it being understood that as of October 31, 1998 this condition shall only apply to the credit agreement and bridge loan financing in the Financing Letters.
7.4.7 TRANSACTION COSTS . The Company shall have paid the Transaction Costs with funds provided by Buyer.
7.4.8 MINIMUM NET WORTH . As of the close of business on the day prior to the Effective Time, the Company and its subsidiaries on a consolidated basis shall have a minimum net worth (as determined in accordance with GAAP applied on a basis consistent with the Audited Financial Statements) of not less than $52 million, it being understood that net worth will be calculated without reflecting the transactions contemplated by the Merger Agreement or any of the costs and expenses incurred or to be incurred by the Company in connection therewith.
7.4.9 APPROVALS . All payments to be made to employees or former employees pursuant to the Executive Retention Bonuses shall have been approved by stockholders holding more than 75% of the voting power of all outstanding stock of the Company in accordance with the provisions of Code Section 280G(a)(5)(B) so as to be excluded from the definition of "parachute payment" under Code Section 280G.
7.4.10 STOCKHOLDERS' AGREEMENT . Kelso shall have entered into a stockholders' agreement with Odyssey in form and substance reasonably satisfactory to Odyssey.
7.4.11 MATERIAL ADVERSE CHANGE . Since June 26, 1998, there shall not have been any Material Adverse Change with respect to the Company and to the knowledge of the Company there shall not have occurred any event which could reasonably be expected to result in a Material Adverse Change.
8. GENERAL PROVISIONS.
8.1 WAIVER . Any of the terms and conditions of this Merger Agreement may be waived in writing at any time on or prior to the Effective Time by the party entitled to the benefits thereof.
8.2 ENTIRE AGREEMENT . This Merger Agreement, including the exhibits and schedules hereto (which are hereby incorporated by reference and made a part hereof) is the entire agreement of the parties with respect to the subject matter hereof and supersedes all other prior agreements, understandings, documents, projections, studies, statements, environmental site assessments or investigations, financial data, representations and warranties, oral or written, express or implied, between the parties hereto and their respective affiliates, representatives and agents in respect of the subject matter hereof (including, without limitation, the Confidential Memorandum, dated May 1998, prepared by Goldman Sachs & Co., with respect to the Company and any supplements thereto), except that this Merger Agreement does not supersede the Confidentiality
Agreement, the terms and conditions of which the parties hereto expressly reaffirm. Without limiting the generality of the foregoing, the parties hereto acknowledge and agree that neither party nor any of its affiliates, representatives or agents is making any representation or warranty whatsoever, oral or written, express or implied, other than those set forth in Section 4 and 5 and neither party is relying on any statement, representation or warranty, oral or written, express or implied, made by the other party or such other party's affiliates, representatives or agents, except for the representations and warranties set forth in such sections.
8.3 TERMINATION . (a) This Merger Agreement may be terminated: (I) at any time prior to the Effective Time by mutual consent of Buyer and the Company, (II) by either Buyer or the Company, if the Merger shall not have been consummated on or before December 15, 1998 (and such party is not then in material breach hereunder) or such later date as the parties may have agreed to in writing, (III) by either Buyer or the Company if Buyer, in the case of the Company, or the Company in the case of Buyer, shall (and the terminating party shall not) have failed to perform and comply with all agreements and covenants required to have been performed or complied with by such party prior to the time of such termination, with such exceptions as are not in the aggregate material, and such failure shall not have been cured within 30 days following notice of such failure, or (IV) by Buyer, if within two weeks of the date hereof, the Company shall not have delivered letters reasonably satisfactory to Buyer executed by the employees listed on Schedule 8.3 hereto reflecting the matters set forth on Schedule 8.3 hereof.
(b) In the event of termination by the Company or Buyer pursuant to this Section 8.3, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Merger Agreement shall be terminated without further action by either party. If the transactions contemplated by this Merger Agreement are terminated as provided herein:
(i) Buyer shall return to the Company all documents and other materials received from the Company, its affiliates or its agents (including all copies of or materials developed from any such documents or other materials) relating to the transactions contemplated hereby, whether obtained before or after the execution hereof; and
(ii) all confidential information received by Buyer with respect to the Company and its affiliates shall be treated in accordance with the Confidentiality Agreement which shall remain in full force and effect notwithstanding the termination of this Merger Agreement.
(c) If this Merger Agreement is terminated as provided in this
Section 8.3, this Merger Agreement shall become null and void and of no further
force or effect, except for the Confidentiality Agreement, Section 6.5
(Publicity) and Section 8.4 (Expenses).
Nothing in this Section 8.3 shall be deemed to release any party hereto from any liability for any willful breach by such party of the terms and provisions of this Merger Agreement or to impair the right of any party hereto to compel specific performance under this Merger Agreement.
8.4 EXPENSES . Except as expressly provided herein, whether or not the transactions contemplated herein shall be consummated, each party shall pay its own expenses incident to the preparation and performance of this Merger Agreement; PROVIDED that Buyer shall be responsible for all filing fees in connection with the filings required by the HSR Act; PROVIDED, FURTHER, that the Transaction Costs shall be paid by the Company from funds deducted from the Merger Consideration.
8.5 FURTHER ACTIONS . Each party shall execute and deliver such certificates and other documents and take such other actions as may reasonably be requested by any other party in order to consummate or implement the transactions contemplated hereby.
8.6 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO RECOURSE . Notwithstanding anything herein or in the Confidentiality Agreement to the contrary, no representations, warranties or agreements in this Merger Agreement or in any certificate delivered in connection herewith shall survive the Merger, except that the agreements contained in Section 3 and the agreements of Buyer referred to in Sections 6.6 (Indemnification of Officers and Directors), 8.12 (Governing Law) and this Section 8.6 shall survive the Merger indefinitely (except to the extent a shorter period of time is explicitly specified therein). In no event shall Buyer or the Surviving Corporation, or the Company or any of their respective affiliates, agents, representatives, successors or assigns, have any recourse against the present or former directors, officers, stockholders, Option Holders or Warrant Holders of the Company or Buyer, as the case may be, or any affiliates or agents thereof with respect to any representation, warranty or agreement made by the Company or Buyer in this Merger Agreement or in any certificate delivered in connection herewith.
8.7 NOTICES . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given or made as follows: (I) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (II) if sent by reputable overnight air courier (such as DHL or Federal Express), two business days after mailing; (III) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (i) or (ii) above, when transmitted and receipt is confirmed by telephone; or (IV) if otherwise actually personally delivered, when delivered, and shall be delivered as follows:
if to the Company (prior to the Effective Time):
TransDigm Holding Company
c/o Marathon Power Technologies
8301 Imperial Drive
Waco, Texas 76712
Attention: Douglas W. Peacock
Fax: 254-741-5420
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Fax Number: (212) 909-6836
Attention: Margaret A. Davenport
Fax: 212-909-6667
and to:
Kelso & Company
320 Park Avenue - 24th Floor
New York, New York 10022
Attention: James J. Connors II
Fax: 212-223-2379
if to Buyer or to the
Surviving Company (after the Effective Time):
Odyssey Investment Partners, LLC
280 Park Avenue, 38th Floor
New York, NY 10017
Attention: Muzzafar Mirza
Fax: (212) 351-7925
with a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
Attention: Richard Trobman
Fax: (214) 751-4864
or to such other address or to such other person as either party hereto shall have last designated by notice to the other party.
8.8 ASSIGNMENT AND AMENDMENTS . This Merger Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of Buyer, the Company and each of their respective successors and assigns, except that neither this Merger Agreement nor any of the rights, interests or obligations hereunder may be assigned by Buyer, or the Surviving Corporation without the prior written consent of the Company. This Merger Agreement and the Schedules hereto cannot be altered or otherwise amended except prior to the Effective Time pursuant to an instrument in writing signed by Buyer and the Company.
8.9 NO THIRD PARTY BENEFICIARIES . Nothing in this Merger Agreement shall confer any rights upon any person or entity which is not a party or a successor or permitted assignee of a party to this Merger Agreement.
8.10 COUNTERPARTS . This Merger Agreement may be executed in two or more counterparts, each such counterpart being deemed to constitute one and the same instrument.
8.11 INTERPRETATION . The section headings in this Merger Agreement are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provision hereof. Any references to Company's knowledge or the knowledge of the Company shall mean the actual knowledge of Douglas W. Peacock, Nicholas Howley, John D. Peterson, Robert S. Henderson and Peter B. Radekevich obtained in the normal course of their respective duties as officers of the Company. Such individuals will be also deemed to have knowledge of a particular fact or other matter if a prudent person could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. The disclosure of any matter in the schedules hereto shall not be deemed to be a disclosure under any other schedule hereto unless expressly made therein or unless, and only to the extent that, it is apparent on the face of such disclosure that such disclosure contains information which also modifies another representation and warranty. For the purpose of this Merger Agreement, the following terms shall have the following meanings: "AFFILIATE" shall mean, with respect
to any person or entity (the "REFERENT PERSON"), any person or entity which controls the referent person, any person or entity which the referent person controls, or any person or entity which is under common control with the referent person. For purposes of the preceding sentence, the term "CONTROL" shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of a person or entity through voting securities, by contract or otherwise; "PERSON" shall mean and include an individual, partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof; and "SUBSIDIARY" shall mean any corporation or other business entity, whether or not incorporated, of which at least 50% of the securities or interests having, by their terms, ordinary voting power to elect members of the board of directors, or other persons performing similar functions with respect to such entity, are held, directly or indirectly by such party.
8.12 GOVERNING LAW . This Merger Agreement shall be construed, performed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of law principles of such state.
8.13 CONSENT TO JURISDICTION, ETC. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court sitting in the County of New York or Federal court of the United States of America sitting in New York City, in any action or proceeding arising out of or relating to this Merger Agreement or the transactions contemplated hereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Merger Agreement or the transactions contemplated hereby in any such New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Merger Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.7. Nothing in this Merger Agreement will affect the right of any party to this Merger Agreement to serve process in any other manner permitted by law.
8.14 WAIVER OF JURY TRIAL . (a) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS MERGER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS MERGER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.14.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to be executed as of the date first above written.
PHASE II ACQUISITION CORP.
By /s/ Muzzi Murza
----------------------------------
Name: Muzzi Murza
Title: Chairman of the Board, President &
Treasurer
|
TRANSDIGM HOLDING COMPANY
By /s/ Douglas W. Peacock ---------------------------------- Name: Douglas W. Peacock Title: Chairman & Chief Executive Officer |
Exhibit 2.2
AMENDMENT NUMBER ONE
Amendment Number One, dated as of November 9, 1998, to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 3, 1998, between Phase II Acquisition Corp. ("Buyer") and TransDigm Holding Company (the "Company"). Any capitalized term used herein without definition shall have the meaning assigned thereto in the Merger Agreement.
Buyer and the Company hereby agree to amend the Merger Agreement as follows:
1. Amendment to Section 1.2. Section 1.2 is hereby amended to delete the phrase "will take place as promptly as practicable (and in any event within two business days) after satisfaction or waiver of the condition set forth in 7.2.1" and to replace such phrase with "will take place on December 3, 1998."
2. Amendment to Section 3.1(c). Section 3.1(c) is hereby amended by deleting Section 3.1(c) in its entirety and substituting the following:
"(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time, other than those to which Section 3.1(b) or
Section 3.1(d) applies and other than any shares held by stockholders
referred to in Section 3.1(g), shall be converted into and represent the
right to receive an amount in cash (such amount in cash being referred to
herein as the "Per Share Merger Consideration") equal to the quotient of
(a) the Merger Consideration plus the Aggregate Exercise Proceeds plus the
Option Rollover Amount, plus the Kelso Rollover Amount, minus the
Transaction Costs divided by (b) the total number of Outstanding Shares.
The following terms used in the definition of Per Share Merger Consideration shall have the following meanings:
"Merger Consideration" means $330 million minus the Kelso Rollover Amount minus the Option Rollover Amount.
"Aggregate Exercise Proceeds" means the aggregate exercise price payable upon exercise of the Options (as defined below in Section 3.1(e)) which are to be canceled pursuant to Section 3.1(e) hereof and all of the Warrants (as defined below in Section 3.1(f)).
"Option Rollover Amount" means the gross value of the Options listed on Schedule 3.1(e).
"Kelso Rollover Amount" means (a) the quotient of the Odyssey Equity Investment Amount divided by .925 minus (b) the Odyssey Equity Investment Amount plus $5 million.
"Transaction Costs" means the fees and expenses listed on Schedule 3.1(c).
"Outstanding Shares" means 303,294.4 (the number of shares of common stock of the Company on a fully-diluted basis).
"Odyssey Equity Investment Amount" shall equal $100.2 million.
3. Amendment to Section 3.1(d). Section 3.1(d) is hereby amended by deleting Section 3.1(d) in its entirety and substituting the following:
"(d) (i) A number of shares of Common Stock held by Kelso Investment Associates IV, L.P. ("KIA IV") and Kelso Equity Partners II, L.P. ("KEP II") equal to the quotient of the Kelso Rollover Amount divided by the Per Share Merger Consideration shall remain outstanding as shares of the Surviving Corporation (the "Rollover Shares") and shall not be entitled to receive any Per Share Merger Consideration. KIA IV (or an affiliate thereof) and KEP II will own 94.39% and 5.61%, respectively, of such Rollover Shares. All Rollover Shares shall be subject to the stockholders agreement referred to in Sections 7.3.5 and 7.4.10.
(ii) A number of shares of KIA IV and KEP II equal to the quotient of
$20.0 million divided by the Per Share Merger Consideration (the "Exchange
Shares") shall be converted into and become senior pay-in-kind notes of
the Surviving Corporation with the terms set forth in Exhibit A hereto
plus a number of shares of Surviving Corporation Common Stock equal to 2%
of the outstanding shares of the Surviving Corporation Common Stock as of
the Effective Time, (calculated by taking into account only (a)
outstanding shares of Surviving Corporation Common Stock as of the
Effective Time, including those shares issued pursuant to this Section
3.1(d)(ii) (but excluding any shares or warrants of Surviving Corporation
Common Stock that may be outstanding as of the Effective Time as a result
of Section 6.12) and (b) the number of shares of Surviving Corporation
Common Stock underlying the Options listed on Schedule 3.1(e)) and shall
not be entitled to any Per Share Merger Consideration. KIA IV (or an
affiliate thereof) and KEP II will own 94.39% and 5.61%, respectively, of
such consideration. Such shares of Surviving Corporation Common Stock will
be subject to the stockholders agreement referred to in Section 7.3.5 and
7.4.10."
4. Amendment to Section 3.2(b). Section 3.2(b) is hereby amended by deleting Section 3.2(b) in its entirety and substituting the following:
"(b) Promptly after the Effective Time, Buyer shall cause the Disbursing Agent to send a notice and a letter of transmittal to each holder of certificates formerly evidencing (i) shares of Common Stock (other than certificates representing Rollover Shares, Exchange Shares, or shares of Common Stock to be canceled pursuant to Section 3.1(b) and certificates held by stockholders referred to in Section 3.1(g) (the "Dissenting Shares"), (ii) Options to be canceled pursuant to Section 3.1(e) and (iii) Warrants (collectively, the "Certificates") advising holders of such Certificates of the effectiveness of the Merger and the procedure for surrendering to the Disbursing Agent such Certificates for exchange into the Per Share Merger Consideration, the Option Cancellation Payment or the Warrant Cancellation Payment, as the case may be, plus, if applicable, each such holder's pro rata portion of the equity securities or interests referred to in Section 6.12, and that delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery to the Disbursing Agent of the Certificates and a duly executed letter of transmittal and any other required documents of transfer. Each holder of the Certificates, upon surrender thereof to the Disbursing Agent together with such letter of transmittal (duly executed) and any other required documents of transfer, shall be entitled to receive in exchange therefor the Per Share Merger Consideration, the Option Cancellation Payment or the Warrant Cancellation Payment, as the case may be, plus, if applicable, such holder's pro rata portion of the equity securities or interests referred to in Section 6.12. Upon such surrender, the Disbursing Agent shall promptly deliver the merger consideration due hereunder (less any applicable withholding tax) in accordance with the instructions set forth in the related letter of transmittal, and the Certificates so surrendered shall promptly be canceled. Until surrendered, the Certificates (other than those evidencing Dissenting Shares) shall be deemed for all purposes to evidence only the right to receive the merger consideration due hereunder, or, in the case of Dissenting Shares, the fair value of such Dissenting Shares. No interest shall accrue or be paid on any cash payable upon the surrender of the Certificates (other than Dissenting Shares to the extent required by the DGCL)."
5. Amendment to Section 5.4. Section 5.4 is hereby amended by deleting Section 5.4 in its entirety and substituting the following:
"5.4 Financial Ability to Perform. Buyer has delivered to the Company complete and correct executed copies of letters, dated November 9, 1998, from BT Alex. Brown Incorporated and Credit Suisse First Boston Corporation (together, the
"Underwriters"), from Bankers Trust Company and from Odyssey Investment Partners Fund L.P. (the "Financing Letters") issued in connection with the financing of the transactions contemplated hereby (the "Financing"). Assuming satisfaction of all applicable conditions set forth in the Financing Letters and full funding thereunder, Buyer at the Closing Date shall be capitalized with an equity contribution in an amount equal to $100.2 million and such funds, together with the proceeds from the debt Financing, will provide sufficient funds to consummate the transactions contemplated hereby."
6. Amendment to Section 6.2(b). Section 6.2(b) is hereby amended to delete the second sentence thereof in its entirety and to replace such sentence with the following:
"The Buyer agrees that the 144A offering contemplated by the Financing Letters must be consummated prior to December 3, 1998 and that if any such offering is not consummated prior to such date, then the Buyer will be obligated on December 3, 1998 to exercise its rights under the Financing Letters with respect to the Underwriters' obligations to purchase the senior subordinated notes of TransDigm Inc. pursuant to the Financing Letters in substitution therefor pursuant to the terms thereof, subject to the conditions for such purchase set forth in the Financing Letters."
7. Addition of Section 6.12. Section 6.12 is hereby added after
Section 6.11 to read as follows:
"6.12 Agreement as to Warrants. In connection with the 144A offering of senior subordinated notes of TransDigm Inc. contemplated by the Financing Letters, the Company may issue warrants to purchase up to 6% of the Surviving Corporation Common Stock, (calculated to include only (a) outstanding shares of Surviving Corporation Common Stock as of the Effective Time, including the shares of Surviving Corporation Common Stock issued pursuant to Section 3.1(d)(ii) and the shares (or the shares underlying the warrants) issued pursuant to this Section 6.12, and (b) the number of shares of Surviving Corporation Common Stock underlying the Options listed on Schedule 3.1(e)). To the extent that the Underwriters are able to sell such notes pursuant to such 144A offering without issuing such warrants, then the Company agrees that the balance (up to such 6%) of such warrants (or, at Odyssey's election, the Surviving Corporation Common Stock underlying such warrants) shall be issued 50% to Odyssey and 50% to the existing equity holders of the Company as additional merger consideration. The warrants (or shares of Surviving Corporation Common Stock) that are issued to the existing equity holders of the Company as additional merger consideration pursuant to the preceding sentence shall be issued to a single entity or pursuant to a comparable arrangement which vests voting control in one person or entity and in no event shall such warrants
or shares be distributed to such equity holders at any time without the prior written consent of the Company and Odyssey. The economic interest of each existing equity holder of the Company in such warrants or shares shall be based on the number of shares of common stock held by each stockholder and the number of shares of common stock into which each option would be converted or for which each warrant would be exercised, in each case on a cashless basis, calculated immediately prior to the Effective Time. The warrants (or shares of Surviving Corporation Common Stock) issued pursuant to this Section 6.12 shall be subject to the stockholders agreement referred to in Sections 7.3.5 and 7.4.10."
8. Amendment to Section 7.4.6. Section 7.4.6 is hereby amended by deleting Section 7.4.6 in its entirety and substituting the following:
"7.4.6 Financing. The debt funding contemplated by the Financing Letters shall have been obtained; it being understood that as of December 3, 1998 this condition shall only apply to the credit agreement financing and the obligation of the Underwriters to purchase the senior subordinated notes pursuant to the Financing Letters.
9. Amendment to Section 8.3(c). Section 8.3(c) is hereby amended to insert after the phrase "compel specific performance under this Merger Agreement" the words "while this Merger Agreement remains in full force and effect and such party is not in willful breach of this Merger Agreement."
10. Amendment to Schedule 3.1(e). Schedule 3.1(e) to the Merger Agreement is hereby amended to read as set forth on Exhibit B.
11. Amendment to Schedule 4.3. Schedule 4.3 is hereby amended to delete the reference to "Salked & Co. 15,183.60" and replace such reference with "Salked & Co. 15,183.80."
12. Amendment to Schedule 4.13. Schedule 4.13 to the Merger Agreement is hereby amended to add the following at the end thereof:
"5. In September 1998, an action was brought against TransDigm by Metapoint Partners Fund-II L.P. ("Metapoint") in Massachusetts Superior Court. Metapoint alleges that TransDigm breached its August 8, 1997 Stock Purchase Agreement with Metapoint by failing to adequately investigate the presence of contamination at the Marathon Power Technologies Company facility in Waco, Texas. Metapoint seeks the release of $2 million held in escrow that is to fund remediation costs. In October 1998, TransDigm filed counterclaims against Metapoint and cross claims against the escrow agent
State Street Bank and Trust Company ("State Street"). An October 5, 1998 Court Order compelled Metapoint to return to State Street funds that were wrongfully released from State Street's escrow account. The October 5, 1998 Court Order also compelled State Street to seek the return of wrongfully released escrow funds."
13. Full Force and Effect. Except as provided in this Amendment Number One, the Merger Agreement shall continue in full force and effect in accordance with the provisions thereof.
14. Governing Law. This Amendment Number One shall be construed, performed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of law principles of such state.
15. Counterparts. This Amendment Number One may be executed in two or more counterparts, each such counterpart being deemed to constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Amendment Number One as of the date first above written.
PHASE II ACQUISITION CORP.
By: /s/ Muzzi Mirza
-----------------------------------
Name: Muzzi Mirza
Title: Chairman of the Board, President
and Treasurer
|
TRANSDIGM HOLDING COMPANY
By: /s/ Douglas W. Peacock ----------------------------------- Name: Douglas W. Peacock Title: Chairman and Chief Executive Officer |
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
TRANSDIGM HOLDING COMPANY
TransDigm Holding Company, a corporation organized under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 23, 1993.
2. The Corporation has not received any payment for any of its stock.
3. This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Sections 241 and 245 of the General Corporation Law of the State of Delaware.
4. The original Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:
FIRST: The name of the Corporation is TransDigm Holding Company.
SECOND: The Corporation's registered office in the State of Delaware is at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business of the Corporation and its purpose 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.
FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 10,000,000 shares, consisting of 9,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock"), and 1,000,000 shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock").
Except as otherwise provided by this Article or as otherwise required by law, shares of Common Stock and Class A Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges, subject to the same qualifications, limitations and restrictions.
1. Voting Rights. Except as otherwise required by applicable law, the holders of Common Stock will be entitled to one vote per share on all matters
to be voted on by the Corporation's stockholders, and the holders of Class A Common Stock will have no voting rights.
2. Dividends. When and as dividends are declared thereon, whether payable in cash, property or securities of the Corporation, the holders of Common Stock and the holders of Class A Common Stock will be entitled to share equally, share for share, in such dividends, provided, however, that if dividends are declared which are payable in shares of Common Stock or Class A Common Stock, dividends will be declared which are payable at the same rate on each class of stock, and the dividends payable in shares of Common Stock will be payable only to holders of Common Stock, and the dividends payable in shares of Class A Common Stock will be payable only to holders of Class A Common Stock.
3. Conversion and Exchange. (a) Upon the occurrence of any Conversion Event, each record holder of Class A Common Stock shall be entitled to convert into the same number of shares of Common Stock any or all of the shares of such holder's Class A Common Stock being sold, distributed or otherwise disposed of or converted in connection with the occurrence of such Conversion Event. For purposes of this Section 3, (i) a "Conversion Event" shall mean any transfer of shares of Class A Common Stock to any person or persons who are not affiliates of the transferor, including, without limitation, pursuant to any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933 and a public sale pursuant to Rule 144 under the Securities Act or 1933 or any similar rule then in force), (ii) a "person" shall mean any natural person or any corporation, partnership, joint venture, trust, unincorporated organization and any other entity or organization, and (iii) an "affiliate", with respect to any person, shall mean such person's spouse, parents, members of such person's family or such person's lineal descendents and any other person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such person. In addition, all of the Corporation's Class A Common Stock shall be automatically and mandatorily converted into the same number of shares of Common Stock without any action on the part of any holder upon notice to such effect by the Corporation to the record holders of Class A Common Stock.
(b) Subject to Section 3(a), each conversion of shares of Class A Common Stock into shares of Common Stock at the option of the holder shall be effected by the surrender of the certificate or certificates representing the shares to be converted at the principal office of the Corporation at any time (including within a reasonable time prior to the occurrence of any Conversion Event, if necessary to effect the conversion of shares related thereto, provided, however, that the holders of such shares will not be entitled to vote on any matters to be voted on by the Corporation's stockholders during such interim period, such certificates being deemed to represent only shares of Class A Common Stock for such purpose) during normal business hours, together with a written notice by the
holder of such Class A Common Stock stating that a Conversion Event has occurred or is about to occur and that such holder desires to convert the shares, or a stated number of the shares, of such Class A Common Stock represented by such certificate or certificates into shares of Common Stock (and including instructions for issuance of the Common Stock to be issued upon such conversion). Each conversion at the option of the holder shall be deemed to have been effected as of the close of business on the later of (i) the date on which the Conversion Event has occurred and (ii) the date on which such certificate or certificates have been surrendered and such notice has been received, and at such later time the rights of the holder of the converted Class A Common Stock, as a holder of Class A Common Stock, shall cease and the person or persons in whose name or names the certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby. Promptly after the Conversion Event has occurred and the surrender of certificates and the receipt of written notice, the Corporation shall issue and deliver in accordance with the surrendering holder's instructions (x) the certificate or certificates for the shares of Common Stock issuable upon such conversion and (y) a certificate representing any shares of Class A Common Stock which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted. If any shares of Class A Common Stock are converted into shares of Common Stock in connection with a conversion Event and such shares of Common Stock are not actually sold, distributed or otherwise disposed of so that a Conversion Event does not actually occur, such shares of Common Stock shall be automatically converted back into the same number of shares of Class A Common Stock.
Any mandatory conversion of shares of Class A Common Stock into Common Stock shall be effected by the Corporation delivering to the holders of such shares, to the last address appearing for such holders on the books of the Corporation, written notice to the effect that the Board of Directors has determined to mandatorily convert the Class A Common Stock into Common Stock and upon and after such notice all of the shares of Class A Common Stock so converted shall be deemed to be no longer outstanding, any right to receive dividends thereon shall cease and all rights and privileges with respect to the Class A Common Stock so converted shall cease except for the right of the holder thereof to receive any previously declared but unpaid dividends on the Class A Common Stock, and the certificates which theretofore had represented Class A Common Stock shall for all purposes represent only Common Stock; provided, however, no dividends on the Common Stock shall be paid to such holder unless and until the certificates for the Class A Common Stock have been surrendered to the Corporation, which shall upon such surrender issue certificates for the Common Stock to such holder and pay to such holder any dividends on the Common Stock which have been declared as of a record date, and which otherwise would have
been paid, since the date the shares of Class A Common Stock were deemed to be converted.
(c) The issuance of certificates upon conversion will be made without charge to the holders of such shares for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such conversion, except that the holder of any such shares shall be responsible for the payment of all applicable transfer taxes if the shares of Common Stock are issued in the name of a person or persons other than such holder.
(d) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of issuance upon the conversion of the Class A Common Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding Class A Common Stock. All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges. The Corporation shall take all such actions as it deems necessary or appropriate to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed.
(e) Except as provided in the last sentence of the first paragraph of section 3(b), shares of Class A Common Stock that are converted into shares of Common Stock as provided herein shall be retired and cancelled and shall not be reissued.
4. Stock Splits, etc. If the Corporation in any manner subdivides (by stock split, stock dividend or otherwise) or combines (by reverse stock split or otherwise) the outstanding shares of either class of stock, the outstanding shares of the other class of stock will be proportionately subdivided or combined, as the case may be, and effective provision shall be made by the Board of Directors of the Corporation (whose determination with respect thereto will be final and binding) for the protection of all conversion rights hereunder.
5. Merger or Consolidation. In any merger, consolidation or business combination of the Corporation with or into another corporation, whether or not the Corporation is the surviving corporation, the consideration per share to be received by holders of either Common Stock or Class A Common Stock in such merger, consolidation or business combination shall be identical to that received by holders of the other class of stock.
6. Liquidation. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, the remaining assets of the Corporation available for distribution shall be divided
among and paid ratably to the holders of Common Stock and Class A Common Stock as a single class. For the purposes hereof, the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the property or assets of the Corporation shall be deemed a voluntary liquidation, dissolution or winding up of the Corporation, but a consolidation or merger of the Corporation with one or more other corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary.
FIFTH: 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, defining, limiting and regulating the powers of the Corporation and its directors and stockholders:
(a) The number of directors of the Corporation shall be fixed and may be altered from time to time in the manner provided in the By-Laws, and vacancies in the Board of Directors and newly created directorships resulting from any increase in the authorized number of directors may be filled, and directors may be removed, as provided in the By-Laws.
(b) The election of directors may be conducted in any manner approved by the stockholders at the time when the election is held and need not be by ballot.
(c) All corporate powers and authority of the Corporation (except as at the time otherwise provided by law, by this Certificate of Incorporation or by the By-Laws) shall be vested in and exercised by the Board of Directors.
(d) The Board of Directors shall have the power without the assent or vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the Corporation, except to the extent that the By-Laws or this Certificate of Incorporation otherwise provide.
(e) 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, provided that nothing contained in this Article shall eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director derived an improper personal benefit.
SIXTH: The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed
by the laws of the State of Delaware, and all rights herein conferred upon stockholders or directors are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed this certificate on the 23rd day of September, 1993.
/s/ David I. Wahrhaftig
-------------------------
David I. Wahrhaftig
Vice President
ATTEST:
/s/ Peter F. Schweinfurth
-------------------------
Peter F. Schweinfurth
Assistant Secretary
|
Exhibit 3.2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TRANSDIGM HOLDING COMPANY
Under Section 242 of the General Corporation Law
TransDigm Holding Company, a corporation organized under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State on September 23, 1993.
2. The first paragraph of Paragraph Fourth of the Restated Certificate of Incorporation of the Corporation is hereby amended in its entirety to read as follows:
FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is 1,000,000, consisting of 900,000 shares of Common Stock, par value $.01 per share (the "Common Stock"), and 100,000 shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock").
Upon the effectiveness of this Certificate of Amendment of the Restated Certificate of Incorporation of the Corporation pursuant to the Delaware General Corporation Law, each ten issued and outstanding shares of Common Stock shall thereby and thereupon be combined into one validly issued, fully paid and non-assessable share of Common Stock; and each ten issued and outstanding shares of Class A Common Stock shall thereby and thereupon be combined into one validly issued, fully paid and non-assessable share of Class A Common Stock.
3. The amendment of the Restated Certificate of Incorporation of the Corporation set forth in the preceding paragraph has been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law, the Board of Directors of
the Corporation having adopted resolutions setting forth such amendment, declaring its advisability, and directing that it be submitted to the stockholders of the Corporation for their approval; 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 having consented in writing to the adoption of such amendment; and written notice of the adoption of such amendment by the stockholders without a meeting by less than unanimous written consent having been given to those stockholders from whom such written consent was not received.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed this certificate on the 20th day of December 1993.
TRANSDIGM HOLDING COMPANY
By:/s/ Douglas W. Peacock
----------------------
Douglas W. Peacock
President
Attest:
/s/ Steven P. Dolberg
---------------------
Steven P. Dolberg
Secretary
|
Exhibit 3.3
CERTIFICATE OF MERGER
MERGING
Phase II Acquisition Corp.
WITH AND INTO
Trans Holding Company
(Pursuant to Section 251 of the
General Corporation Law of Delaware)
********
The undersigned corporation organized and existing under and by virtue of the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Phase II Acquisition Corp. Delaware
Trans Holding Company Delaware
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SECOND: That a Plan and Agreement of Merger dated as of August 3, 1998 and as amended November 9, 1998 (the "Merger Agreement") by and between Phase II Acquisition Corp. and Trans Holding Company has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of Sections 251 and 228 of the General Corporation Law of Delaware.
THIRD: That Trans Holding Company shall be the surviving corporation (the "Surviving Corporation").
FOURTH: That the Restated Certificate of Incorporation of TransDigm Holding Company will be the Restated Certificate of Incorporation of the Surviving Corporation.
FIFTH: That the executed Merger Agreement is on file at the principal place of business of the Surviving Corporation, the address of which is 8233 Imperial Drive, Waco, TX 76712.
SIXTH: That a copy of the Merger Agreement will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of any constituent corporation.
Dated: December 3, 1998
TransDigm Holding Company
By:/s/ Eileen Fallon ----------------- Name: Eileen Fallon Title: Secretary |
Exhibit 3.4
CERTIFICATE OF INCORPORATION
OF
NOVADIGM ACQUISITION, INC.
FIRST: The name of the Corporation is NovaDigm Acquisition, Inc.
SECOND: The Corporation's registered office in the State of Delaware is at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business of the Corporation and its purpose 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.
FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 1000 shares of Common Stock, par value $.0l per share.
FIFTH: The name and mailing address of the incorporator is as follows:
Philip Galanes
c/o Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
SIXTH: 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, defining, limiting and regulating the powers of the Corporation and its directors and stockholders:
(a) The number of directors of the Corporation shall be fixed and may be altered from time to time in the manner provided in the By-Laws, and vacancies in the Board of Directors and newly created directorships resulting from any increase in the authorized number of directors may be filled, and directors may be removed, as provided in the By-Laws.
(b) The election of directors may be conducted in any manner approved by the stockholders at the time when the election is held and need not be by ballot.
(c) All corporate powers and authority of the Corporation (except as at the time otherwise provided by law, by this Certificate of Incorporation or by the By-Laws) shall be vested in and exercised by the Board of Directors.
(d) The Board of Directors shall have the power without the assent or vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the Corporation, except to the extent that the By-Laws or this Certificate of Incorporation otherwise provide.
(e) 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, provided that nothing contained in this Article shall eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director derived an improper personal benefit.
SEVENTH: The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by the laws of the State of Delaware, and all rights herein conferred upon stockholders or directors are granted subject to this reservation.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make and file this Certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand this 2nd day of July, 1993.
/s/ Philip Galanes ------------------ Philip Galanes |
Exhibit 3.5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NOVADIGM ACQUISITION, INC.
Pursuant to Section 241 of the General
Corporation Law of the State of Delaware
NovaDigm Acquisition, Inc., a corporation organized under the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. Article FIRST of the Certificate of Incorporation of the Corporation is hereby amended to read in its entirety as follows:
"FIRST: The name of the Corporation is TransDigm Inc."
2. The Corporation has not received any payment for any of its stock.
3. The amendment above set forth was duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, I, the undersigned, being the sole Director of the Corporation, for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to Section 241 of the General Corporation Law of the State of Delaware, do make and file this Certificate, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand, this 22nd day of July, 1993.
/s/ David I . Wahrhaftig -------------------------- David I. Wahrhaftig |
Exhibit 3.6
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
IMO AEROSPACE COMPANY
INTO
TRANSDIGM INC.
Pursuant to Section 253 of the
General Corporation Law of the State of Delaware
TransDigm Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:
1. The Corporation owns all of the issued and outstanding shares of Common Stock, par value $.01 per share, of Imo Aerospace Company (the "Subsidiary"), a Delaware corporation having no other outstanding class of stock.
2. The Corporation, by the following resolutions of its Board of Directors, duly adopted on September 30, 1993 by the unanimous written consent of the members thereof and filed with the minutes of the Board of Directors in accordance with the provisions of Section 141(f) of the General Corporation Law of the State of Delaware, determined to merge the Subsidiary into the corporation:
WHEREAS, the Corporation owns all of the outstanding shares of Common Stock, par value $.0l per share (the "Subsidiary Common Stock"), of Imo Aerospace Company, a Delaware corporation (the "Subsidiary"); and
WHEREAS, the Subsidiary Common Stock is the only outstanding class of stock of the Subsidiary; and
WHEREAS, the Corporation desires to merge the Subsidiary into the Corporation pursuant to the provisions of Section 253 of the General Corporation Law of the State of Delaware;
NOW, THEREFORE, IT IS:
RESOLVED, that the Subsidiary shall be merged into the Corporation (the "Merger"), and the Corporation, as the surviving corporation of the Merger, shall assume all of the obligations of the Subsidiary;
RESOLVED, that the proper officers of the Corporation be, and each of them hereby is, authorized and directed in the name and on behalf of the Corporation to execute a Certificate of Ownership and Merger setting forth a copy of these resolutions providing for the Merger, the date of adoption hereof and any additional information required by Section 253 of the General Corporation Law of the State of Delaware, and to cause the same to be filed with the Secretary of State of the State of Delaware; and
RESOLVED, that the officers of the Corporation be, and each of them hereby is, authorized and directed, in the name and on behalf of the Corporation and under its corporate seal if required, to execute and deliver such other documents and to take such other actions as they may deem necessary or advisable in order to carry out fully the intent and purposes of the foregoing resolutions.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed by the undersigned officers on the 30th day of September, 1993.
TRANSDIGM INC.
By:/s/ David I Wahrhaftig
----------------------
David I. Wahrhaftig
Vice President
Attest:
/s/ Peter F. Schweinfurth
-------------------------
Peter F. Schweinfurth
Assistant Secretary
|
Exhibit 3.7
CERTIFICATE OF INCORPORATION
OF
MPT ACQUISITION CORP.
FIRST: The name of the corporation is: MPT Acquisition Corp.
SECOND: The address of its registered office in the State of Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company.
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.
FOURTH: The total number of shares of capital stock which the corporation shall have authority to issue is three thousand (3,000), and the par value of each of such shares is One Cent ($0.01), amounting in the aggregate to Three Hundred Dollars ($300.00) of capital stock.
FIFTH: The name and mailing address of the sole incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Pamela A. Stiglitz c/o Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
|
SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the corporation and for defining and regulating the powers of the corporation and its directors and stockholders and are in furtherance and not in limitation of the powers conferred upon the corporation by statute:
(a) The election of directors need not be by written ballot.
(b) The Board of Directors shall have the power and authority:
(1) to adopt, amend or repeal by-laws of the corporation, subject only to such limitation, if any, as may be from time to time imposed by law or by the by-laws; and
(2) to the full extent permitted or not prohibited by law, and without the consent of or other action by the stockholders, to authorize or create mortgages, pledges or other liens or encumbrances upon any or all of the assets, real, personal or mixed, and franchises of the corporation, including after-acquired property, and to exercise all of the powers of the corporation in connection therewith; and
(3) subject to any provision of the by-laws, to determine whether, to what extent, at what times and places and under what conditions and regulations the accounts, books and papers of the corporation (other than the stock ledger), or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account, book or paper of the corporation except as conferred by statute or authorized by the by-laws or by the Board of Directors.
SEVENTH: No director of the corporation shall be personally liable to the corporation or to any of its stockholders for monetary damage, for breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability; provided, however, that to the extent required from time to time by applicable law, this Article Seventh shall not eliminate or limit the liability of a director, to the extent such liability is provided by applicable law, (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any transaction from which the director derived an improper personal benefits. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to the effective date of such amendment or repeal.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate, hereby declaring and certifying that this is my act and deed and the facts stated herein are true, and accordingly have hereunto set my hand this 28th day of March, 1994.
/s/ Pamela A. Stiglitz ---------------------- Pamela A. Stiglitz |
Exhibit 3.8
MPT ACQUISITION CORP.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
MPT Acquisition Corp., a Delaware corporation (the "Corporation"), does hereby certify, pursuant to Section 241 of the General Corporation Law of the State of Delaware, that:
FIRST: The Corporation has not received any payment for any of its stock.
SECOND: Pursuant to Section 141(f) of the General Corporation Law of the State of Delaware and Section 3.17 of the Corporation's By-Laws, by written consent of the Board of Directors of the Corporation dated May 18, 1994, resolutions were duly adopted proposing an Amendment to the Certificate of Incorporation of the Corporation changing Article Fourth of the Certificate of Incorporation as follows:
RESOLVED: That it is deemed advisable and in the best interests of the
Corporation to amend Article Fourth of its Certificate of
Incorporation to read as set forth below:
"FOURTH: The total number of share, of capital stock
which the corporation shall have authority to issue is fifty
thousand (50,000), and the par value of each of such shares is
One Cent ($0.01), amounting in the aggregate to Five Hundred
Dollars ($500.00) of capital stock."
RESOLVED: That the Corporation be and it hereby is authorized and
directed to amend its Certificate of Incorporation as set
forth in the foregoing resolution and that the appropriate
officers of the Corporation be and they hereby are authorized
and directed to execute and deliver any and all documents or
certificates deemed necessary to effectuate the proposed
amendment outlined above, including a Certificate of Amendment
to the Certificate of Incorporation for filing with the
Delaware Secretary of State.
|
Accordingly, Article Fourth of the Certificate of Incorporation of the Corporation is hereby amended to read as follows:
"FOURTH: The total number of shares of capital stock which the corporation shall have authority to issue in fifty thousand (50,000), and the par value of each of such shares is One Cent ($0.01), amounting in the aggregate to Five Hundred Dollars ($500.00) of capital stock"
IN WITNESS WHEREOF, MPT Acquisition Corp. has caused this Certificate of Amendment to its Certificate of Incorporation to be executed by Keith C. Shaughnessy, its President, and attested by Stuart I. Mathews, its Secretary, this 18th day of May, 1994.
MPT ACQUISITION CORP.
By:/s/ Keith C. Shaughnessy
------------------------
Keith C. Shaughnessy
President
Attest:
By:/s/ Stuart I. Mathews
---------------------
Stuart I. Mathews
Secretary
|
Exhibt 3.9
MPT ACQUISITION CORP.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
MPT Acquisition Corp., a Delaware corporation (the "Corporation"), does hereby certify, pursuant to Section 242 of the General Corporation Law of the State of Delaware, that:
FIRST: Pursuant to Section 141(f) of the General Corporation Law of the State of Delaware and Section 8.17 of the Corporation's By-Laws, by written consent of the Board of Directors of the Corporation dated May 19, 1994, resolutions were duly adopted proposing an Amendment to the Certificate of Incorporation of the Corporation changing Article First of the Certificate of Incorporation and submitting such proposal to the shareholders of the Corporation, as follows:
RESOLVED: That it is deemed advisable and in the best interest of the
Corporation to amend Article First of its Certificate of
Incorporation to read as set forth below:
"FIRST: The name of the corporation is Marathon Power
Technologies Company."
RESOLVED: That the Corporation be and it hereby is authorized and
directed to amend its Certificate of Incorporation as set
forth in the foregoing resolution and that the appropriate
officers of the Corporation be and they hereby are authorized
and directed to execute and deliver any and all documents or
certificates deemed necessary to effectuate the proposed
amendment outlined above, including a Certificate of Amendment
to the Certificate of Incorporation for filing with the
Delaware Secretary of State.
|
SECOND: The proposed Amendment to the Certificate of Incorporation has been unanimously approved and adopted by the shareholders of the Corporation, by written consent dated May 19, 1994.
Accordingly, Article First of the Certificate of Incorporation of the Corporation is hereby amended to read as follows:
"FIRST: The name of the corporation is Marathon Power Technologies Company."
IN WITNESS WHEREOF, MPT Acquisition Corp. has caused this Certificate of Amendment to its Certificate of Incorporation to be executed by Keith C. Shaughnessy, its President, and attested by Stuart I. Mathews, its Secretary, this 19th day of May, 1994.
MPT ACQUISITION CORP.
By:/s/ Keith C. Shaugnessy
-----------------------
Keith C. Shaughnessy
President
Attest:
By:/s/ Stuart I. Mathews
---------------------
Stuart I. Mathews
Secretary
|
Exhibit 3.10
TRANSDIGM HOLDING COMPANY
BY-LAWS
As Adopted on September 23, 1993
TRANSDIGM HOLDING COMPANY
BY-LAWS
TABLE OF CONTENTS
PAGE
----
ARTICLE I. STOCKHOLDERS
Section 1.01. Annual Meetings................................................1
Section 1.02. Special Meetings...............................................1
Section 1.03. Notice of Meetings; Waiver.....................................1
Section 1.04. Quorum.........................................................2
Section 1.05. Voting.........................................................2
Section 1.06. Voting by Ballot...............................................2
Section 1.07. Adjournment....................................................2
Section 1.08. Proxies........................................................2
Section 1.09. Organization; Procedure........................................3
Section 1.10. Consent of Stockholders in Lieu of Meeting.....................3
ARTICLE II. BOARD OF DIRECTORS
Section 2.01. General Powers.................................................4
Section 2.02. Number and Term of Office......................................4
Section 2.03. Election of Directors..........................................4
Section 2.04. Annual and Regular Meetings....................................4
Section 2.05. Special Meetings; Notice.......................................4
Section 2.06. Quorum; Voting.................................................5
Section 2.07. Adjournment....................................................5
Section 2.08. Action Without a Meeting.......................................5
Section 2.09. Regulations; Manner of Acting..................................5
Section 2.10. Action by Telephonic Communications............................5
Section 2.11. Resignations...................................................5
Section 2.12. Removal of Directors...........................................6
Section 2.13. Vacancies and Newly Created Directorships......................6
Section 2.14. Compensation...................................................6
Section 2.15. Reliance on Accounts and Reports, etc..........................6
ARTICLE III. EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted................................................6
Section 3.02. Powers.........................................................7
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Section 3.03. Proceedings....................................................7 Section 3.04. Quorum and Manner of Acting....................................7 Section 3.05. Action by Telephonic Communications............................8 Section 3.06. Absent or Disqualified Members.................................8 Section 3.07. Resignations...................................................8 Section 3.08. Removal........................................................8 Section 3.09. Vacancies......................................................8 ARTICLE IV. OFFICERS Section 4.01. Number.........................................................8 Section 4.02. Election.......................................................8 Section 4.03. Salaries.......................................................9 Section 4.04. Removal and Resignation; Vacancies.............................9 Section 4.05. Authority and Duties of Officers...............................9 Section 4.06. The President..................................................9 Section 4.07. The Vice President.............................................9 Section 4.08. The Secretary.................................................10 Section 4.09. The Treasurer.................................................10 Section 4.10. Additional Officers...........................................11 Section 4.11. Security......................................................11 ARTICLE V. CAPITAL STOCK Section 5.01. Certificates of Stock, Uncertificated Shares..................12 Section 5.02. Signatures; Facsimile.........................................12 Section 5.03. Lost, Stolen or Destroyed Certificates........................12 Section 5.04. Transfer of Stock.............................................12 Section 5.05. Record Date...................................................13 Section 5.06. Registered Stockholders.......................................13 Section 5.07. Transfer Agent and Registrar..................................14 ARTICLE VI. INDEMNIFICATION Section 6.01. Nature of Indemnity...........................................14 Section 6.02. Successful Defense............................................14 Section 6.03. Determination That Indemnification Is Proper..................15 Section 6.04. Advance Payment of Expenses...................................15 Section 6.05. Procedure for Indemnification of Directors and Officers ......15 Section 6.06. Survival; Preservation of Other Rights........................16 Section 6.07. Insurance.....................................................16 Section 6.08. Severability..................................................16 ARTICLE VII. OFFICES |
Section 7.01. Registered Office.............................................17 Section 7.02. Other Offices.................................................17 ARTICLE VIII. GENERAL PROVISIONS Section 8.01. Dividends.....................................................17 Section 8.02. Reserves......................................................17 Section 8.03. Execution of Instruments......................................17 Section 8.04. Corporate Indebtedness........................................18 Section 8.05. Deposits......................................................18 Section 8.06. Checks........................................................18 Section 8.07. Sale, Transfer, etc. of Securities............................18 Section 8.08. Voting as Stockholder.........................................18 Section 8.09. Fiscal Year...................................................19 Section 8.10. Seal..........................................................19 Section 8.11. Books and Records; Inspection.................................19 ARTICLE IX. AMENDMENT OF BY-LAWS Section 9.01. Amendment.....................................................19 ARTICLE X. CONSTRUCTION Section 10.01. Construction .................................................19 |
TRANSDIGM HOLDING COMPANY
BY-LAWS
As adopted on September 23, 1993
ARTICLE I.
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of Delaware, and at such date and hour, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting. [Sections 211(a), (b).]
Section 1.02. Special Meetings. Special meetings of the stockholders may be called at any time by the President (or, in the event of his absence or disability, by any Vice President), or by the Board of Directors. A special meeting shall be called by the President (or, in the event of his absence or disability, by any Vice President), or by the Secretary, immediately upon receipt of a written request thereof or by stockholders holding in the aggregate not less than a majority of the outstanding shares of the Corporation at the time entitled to vote at any meeting of the stockholders. If such officers or the Board of Directors shall fail to call such meeting within 20 days after receipt of such request, any stockholder executing such request may call such meeting. Such special meetings of the stockholders shall be held at such places, within or without the State of Delaware, as shall be specified in the respective notices or waivers of notice thereof. [Section 211(d).]
Section 1.03. Notice of Meetings; Waiver. The Secretary or any Assistant Secretary shall cause written notice of the place, date and hour of each meeting of the stockholders, and, in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten nor more than sixty days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is mailed, it shall be deemed to have been given to a stockholder when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the record of stockholders of the Corporation, or, if he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, then directed to him at such other address. Such further notice shall be given as may be required by law.
No notice of any meeting of stockholders need be given to any stockholder who submits a signed waiver of notice, whether before or after the meeting. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in a written waiver of notice. The attendance of
any stockholder at a meeting of stockholders shall constitute 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 on the ground that the meeting is not lawfully called or convened.
[Sections 222, 229.]
Section 1.04. Quorum. Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting. [Section 216.]
Section 1.05. Voting. If, pursuant to Section 5.05 of these By-Laws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation 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 meeting is held. Except as otherwise required by law or by the Certificate of Incorporation, the vote of a majority of the shares 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. [Sections 212(a), 216.]
Section 1.06. Voting by Ballot. No vote of the stockholders need be taken by written ballot unless otherwise required by law. Any vote which need not be taken by ballot may be conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any meeting
of the stockholders, the stockholders present in person or by proxy shall have
the power to adjourn any such meeting from time to time until a quorum is
present. Notice of any adjourned meeting of the stockholders of the Corporation
need not be given if the place, date and hour thereof are announced at the
meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
By-Laws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 hereof, shall be given to each stockholder of record entitled to
vote at such meeting. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted on the original date
of the meeting. [Section 222(c).]
Section 1.08. Proxies. Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action without a meeting may authorize another person or persons to vote at any such meeting and express such consent or
dissent for him by proxy. 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 the
transmission of a telegram, cablegram or other means of electronic transmission
to the person designated as the holder of the proxy, a proxy solicitation firm
or a like authorized agent. No such proxy shall 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 shall be revocable at the pleasure of
the stockholder executing it, except in those cases where applicable law
provides that a proxy shall be irrevocable. A stockholder may revoke any proxy
which 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. Proxies by telegram,
cablegram or other electronic transmission must either set forth or be submitted
with information from which it can be determined that the telegram, cablegram or
other 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, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. [Sections 212(b),
(c).)
Section 1.09. Organization; Procedure. At every meeting of stockholders the presiding officer shall be the President or, in the event of his absence or disability, a presiding officer chosen by a majority of the stockholders present in person or by proxy. The Secretary, or in the event of his 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 order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.
Section 1.10. Consent of Stockholders in Lieu of Meeting. To the fullest extent permitted by law, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action 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, shall be 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 and shall be 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder or member who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the
manner required by law to the Corporation, written consents signed by a sufficient number of holders or members to take action are 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. [Section 228.]
ARTICLE II.
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers of the Corporation. [Section 141(a).]
Section 2.02. Number and Term of Office. The number of Directors constituting the entire Board of Directors shall be one, which number may be modified from time to time by resolution of the Board of Directors, but in no event shall the number of Directors be less than one. Each Director (whenever elected) shall hold office until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. [Section 141(b).]
Section 2.03. Election of Directors. Except as otherwise provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at each annual meeting of the stockholders. If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. 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. [Sections 211(b), (c), 216.]
Section 2.04. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, radio or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him at his usual place of business, or shall be delivered to him personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any
Director who submits a signed waiver of notice, whether before or after such meeting. [Section 141(g).]
Section 2.05. Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the President or, in the event of his absence or disability, by any Vice President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on 24 hours' notice, if notice is given to each Director personally or by telephone or telegram, or on five days' notice, if notice is mailed to each Director, addressed to him at his usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. Quorum; Voting. At all meetings of the Board of Directors, the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law, 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 of Directors. [Section 141(b).]
Section 2.07. Adjournment. A majority of the Directors present,
whether or not a quorum is present, may adjourn any meeting of the Board of
Directors to another time or place. No notice need be given of any adjourned
meeting unless the 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 shall be given to each Director.
Section 2.08. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors. [Section 141(f).]
Section 2.09. Regulations; Manner of Acting. To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such.
Section 2.10. Action by Telephonic Communications. Members of the Board of Directors may participate in a meeting of the Board of Directors 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 141(i).]
Section 2.11. Resignations. Any Director may resign at any time by delivering a written notice of resignation, signed by such Director, to the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. [Section 141(b).]
Section 2.12. Removal of Directors. 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 for the election of such Director, cast at a special meeting of stockholders called for the purpose. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the stockholders entitled to vote for the election of the Director so removed. If such stockholders do not fill such vacancy at such meeting (or in the written instrument effecting such removal, if such removal was effected by consent without a meeting), such vacancy may be filled in the manner provided in Section 2.13 of these By-Laws. [Section 141(b).]
Section 2.13. Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships may be filled by a majority of the Directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold office until his successor has been elected and qualified or until his earlier death, resignation or removal. Any such vacancy or newly created directorship may also be filled at any time by vote of the stockholders. [Section 223.]
Section 2.14. Compensation. The amount, if any, which each Director shall be entitled to receive as compensation for his services as such shall be fixed from time to time by resolution of the Board of Directors. [Section 141(h).]
Section 2.15. Reliance on Accounts and Reports, etc. A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his 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 of Directors, 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. [Section 141(e).]
ARTICLE III.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any such Committee, who may replace any absent or
disqualified member or members at any meeting of such Committee. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or re-designated from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his successor shall have been designated or until he shall cease to be a Director, or until his earlier death, resignation or removal. [Section 141(c).]
Section 3.02. Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee, except as otherwise provided in this section, shall have and may exercise all the powers and authority of the Board of Directors in the management of the property, affairs and business of the Corporation, including the power to declare dividends and to authorize the issuance of stock. Each such other Committee, except as otherwise provided in this section, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. Neither the Executive Committee nor any such other Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series),
(b) to adopt an agreement of merger or consolidation,
(c) to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, or
(d) to recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution.
The Executive Committee shall have, and any such other Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. Proceedings. Each such Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.
Section 3.04. Quorum and Manner of Acting. Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing and such writing or writings are filed with the minutes of the proceedings of the Committee. The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such. [Section 141(c).]
Section 3.05. Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee 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 141(i).]
Section 3.06. Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. [Section 141(c).]
Section 3.07. Resignations. Any member (and any alternate member) of any Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Chairman or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.
Section 3.08. Removal. Any member (and any alternate member) of any Committee may be removed at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.
Section 3.09. Vacancies. If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also may elect one or more Assistant Secretaries and
Assistant Treasurers in such numbers as the Board of Directors may determine. Any number of offices may be held by the same person. No officer need be a Director of the Corporation. [Section 142(a), (b).]
Section 4.02. Election. Unless otherwise determined by the Board of Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his successor has been elected and qualified, or until his earlier death, resignation or removal. [Section 142(b).]
Section 4.03. Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.
Section 4.04. Removal and Resignation; Vacancies. Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering a written notice of resignation, signed by such officer, to the Board of Directors or the President. 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, shall be filled by the Board of Directors. [Section 142(b), (e).]
Section 4.05. Authority and Duties of Officers. The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. [Section 142(a).]
Section 4.06. The President. The President shall preside at all meetings of the stockholders and directors at which he is present, shall be the chief executive officer and the chief operating 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 of Directors are carried into effect. He 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 and a chief operating officer of a corporation. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the President or the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors or the Chairman may from time to time prescribe.
Section 4.07. The Vice President. Each Vice President shall perform such duties and exercise such powers as may be assigned to him from time to time by the President. In the absence of the President, the duties of the President shall be performed and his powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President.
Section 4.08. The Secretary. The Secretary shall have the following powers and duties:
(a) He shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose.
(b) He shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he shall furnish a copy of such resolution to the members of such Committee.
(d) He 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 instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he may attest the same.
(e) He 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 By-Laws.
(f) He 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 became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.
(h) He shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him
from time to time by the Board of Directors, or the President.
Section 4.09. The Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the following powers and duties:
(a) He 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 of all receipts of the Corporation.
(b) He 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 selected in accordance with Section 8.05 of these By-Laws.
(c) He shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.
(d) He shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.
(e) He 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 may desire with respect to any and all financial transactions of the Corporation.
(f) He may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.
(g) He shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President.
Section 4.10. Additional Officers. The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him, for or without cause. [Section 142(a), (b).]
Section 4.11. Security. The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his duties, in such amount and of such character as may be determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V.
CAPITAL STOCK
Section 5.01. Certificates of Stock, Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, 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 of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. Signatures; Facsimile. All of such signatures on the certificate may be a facsimile, engraved or printed, to the extent permitted by law. In case 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 were such officer, transfer agent or registrar at the date of issue. [Section 158.]
Section 5.03. Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it 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 167.)
Section 5.04. Transfer of Stock. 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 General Corporation Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation. [Section 151.]
Section 5.05. Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty nor less than ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors 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 of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by law, 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 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. [Section 213.]
Section 5.06. 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 claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it 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 159.]
Section 5.07. Transfer Agent and Registrar. The Board of Directors 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. Nature of Indemnity. The Corporation shall indemnify 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, by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful; except that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (1) such indemnification shall be limited to expenses (including attorneys' fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person 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 Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.02. Successful Defense. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 6.01 hereof or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
Section 6.03. Determination That Indemnification Is Proper. Any indemnification of a director or officer of the Corporation under Section 6.01 hereof (unless ordered by a court) shall be made by the Corporation unless a determination is made that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Section 6.01 hereof. Any indemnification of an employee or agent of the Corporation under Section 6.01 hereof (unless ordered by a court) may be made by the Corporation upon a determination that indemnification of the employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.01 hereof. Any such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.
Section 6.04. Advance Payment of Expenses. Expenses (including attorneys' fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may authorize the Corporation's counsel to represent such director, officer, employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.
Section 6.05. Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the Corporation under Sections 6.01 and 6.02, or advance of costs, charges and expenses to a director or officer under Section 6.04 of this Article, shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within
sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction. Such person's costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of this Article where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of this Article, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.01 of this Article, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 6.06. Survival; Preservation of Other Rights. The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in any such capacity at any time while these provisions as well as the relevant provisions of the Delaware Corporation Law are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a "contract right" may not be modified retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 6.07. Insurance. The Corporation shall 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 him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors.
Section 6.08. Severability. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent 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, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE VII.
OFFICES
Section 7.01. Registered Office. The registered office of the Corporation in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
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 of Directors may from time to time determine or as the business of the Corporation may require.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.01. Dividends. 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 of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation's Capital Stock.
A member of the Board of Directors, or a member of any Committee designated by the Board of Directors 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 of Directors, 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. [Sections 172, 173.]
Section 8.02. Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve. [Section 171.]
Section 8.03. Execution of Instruments. The President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.
Section 8.04. Corporate Indebtedness. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors or the President. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors or the President shall authorize. When so authorized by the Board of Directors or the President, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of the interest thereon, by instruments executed and delivered in the name of the Corporation.
Section 8.05. Deposits. Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination.
Section 8.06. Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors or the President from time to time may determine.
Section 8.07. Sale, Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the President, any Vice President, the Secretary or the Treasurer or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment.
Section 8.08. Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, 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. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons.
Section 8.09. Fiscal Year. The fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation's first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31.
Section 8.10. 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 of Directors. 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 8.11. 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 of Directors.
ARTICLE IX.
AMENDMENT OF BY-LAWS
Section 9.01. Amendment. These By-Laws may be amended, altered or repealed
(a) by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board 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
(b) at any regular or special meeting of the stockholders 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.
[Section 109(a).]
ARTICLE X.
CONSTRUCTION
Section 10.01. Construction. In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the certificate of incorporation of the Corporation as in effect from time to time, the provisions of such certificate of incorporation shall be controlling.
Exhibit 3.11
NOVADIGM ACQUISITION, INC.
BY-LAWS
As Adopted on July 6, 1993
NOVADIGM ACQUISITION, INC.
BY-LAWS
TABLE OF CONTENTS
SECTION PAGE
------- ----
ARTICLE I STOCKHOLDERS......................................................1
Section 1.01. Annual Meetings..........................................1
Section 1.02. Special Meetings.........................................1
Section 1.03. Notice of Meetings; Waiver...............................1
Section 1.04. Quorum...................................................2
Section 1.05. Voting...................................................2
Section 1.06. Voting by Ballot.........................................2
Section 1.07. Adjournment..............................................2
Section 1.08. Proxies..................................................2
Section 1.09. Organization; Procedure..................................3
Section 1.10. Consent of Stockholders in Lieu of Meeting...............3
ARTICLE II BOARD OF DIRECTORS...............................................4
Section 2.01. General Powers...........................................4
Section 2.02. Number and Term of Office................................4
Section 2.03. Election of Directors....................................4
Section 2.04. Annual and Regular Meetings..............................4
Section 2.05. Special Meetings; Notice.................................4
Section 2.06. Quorum; Voting...........................................5
Section 2.07. Adjournment..............................................5
Section 2.08. Action Without a Meeting.................................5
Section 2.09. Regulations; Manner of Acting............................5
Section 2.10. Action by Telephonic Communications......................5
Section 2.11. Resignations.............................................5
Section 2.12. Removal of Directors.....................................5
Section 2.13. Vacancies and Newly Created Directorships................6
Section 2.14. Compensation.............................................6
Section 2.15. Reliance on Accounts and Reports, etc....................6
ARTICLE III EXECUTIVE COMMITTEE AND OTHER COMMITTEES........................6
Section 3.01. How Constituted..........................................6
Section 3.02. Powers...................................................6
Section 3.03. Proceedings..............................................7
Section 3.04. Quorum and Manner of Acting..............................7
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SECTION PAGE
------- ----
Section 3.05. Action by Telephonic Communications......................8
Section 3.06. Absent or Disqualified Members...........................8
Section 3.07. Resignations.............................................8
Section 3.08. Removal..................................................8
Section 3.09. Vacancies................................................8
ARTICLE IV OFFICERS.........................................................8
Section 4.01. Number...................................................8
Section 4.02. Election.................................................8
Section 4.03. Salaries.................................................9
Section 4.04. Removal and Resignation; Vacancies.......................9
Section 4.05. Authority and Duties of Officers.........................9
Section 4.06. The President............................................9
Section 4.07. The Vice President.......................................9
Section 4.08. The Secretary............................................9
Section 4.09. The Treasurer...........................................10
Section 4.10. Additional Officers.....................................11
Section 4.11. Security................................................11
ARTICLE V CAPITAL STOCK....................................................11
Section 5.01. Certificates of Stock, Uncertificated Shares............11
Section 5.02. Signatures; Facsimile...................................12
Section 5.03. Lost, Stolen or Destroyed Certificates..................12
Section 5.04. Transfer of Stock.......................................12
Section 5.05. Record Date.............................................12
Section 5.06. Registered Stockholders.................................13
Section 5.07. Transfer Agent and Registrar............................13
ARTICLE VI INDEMNIFICATION.................................................14
Section 6.01. Nature of Indemnity.....................................14
Section 6.02. Successful Defense......................................14
Section 6.03. Determination That Indemnification Is Proper............14
Section 6.04. Advance Payment of Expenses.............................15
Section 6.05. Procedure for Indemnification of Directors
and Officers............................................15
Section 6.06. Survival; Preservation of Other Rights..................16
Section 6.07. Insurance...............................................16
Section 6.08. Severability............................................16
ARTICLE VII OFFICES........................................................16
Section 7.01. Registered Office.......................................16
Section 7.02. Other Offices...........................................17
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SECTION PAGE
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ARTICLE VIII GENERAL PROVISIONS............................................17
Section 8.01. Dividends...............................................17
Section 8.02. Reserves................................................17
Section 8.03. Execution of Instruments................................17
Section 8.04. Corporate Indebtedness..................................17
Section 8.05. Deposits................................................18
Section 8.06. Checks..................................................18
Section 8.07. Sale, Transfer, etc. of Securities......................18
Section 8.08. Voting as Stockholder...................................18
Section 8.09. Fiscal Year.............................................18
Section 8.10. Seal....................................................18
Section 8.11. Books and Records; Inspection...........................18
ARTICLE IX AMENDMENT OF BY-LAWS............................................19
Section 9.01. Amendment...............................................19
ARTICLE X CONSTRUCTION.....................................................19
Section 10.01. Construction...........................................19
|
NOVADIGM ACQUISITION, INC.
BY-LAWS
As adopted on July 6, 1993
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of Delaware, and at such date and hour, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting. [Sections 211(a), (b).]
Section 1.02. Special Meetings. Special meetings of the stockholders may be called at any time by the President (or, in the event of his absence or disability, by any Vice President), or by the Board of Directors. A special meeting shall be called by the President (or, in the event of his absence or disability, by any Vice President), or by the Secretary, immediately upon receipt of a written request therefor by stockholders holding in the aggregate not less than a majority of the outstanding shares of the Corporation at the time entitled to vote at any meeting of the stockholders. If such officers or the Board of Directors shall fail to call such meeting within 20 days after receipt of such request, any stockholder executing such request may call such meeting. Such special meetings of the stockholders shall be held at such places, within or without the State of Delaware, as shall be specified in the respective notices or waivers of notice thereof. [Section 211(d).]
Section 1.03. Notice of Meetings; Waiver. The Secretary or any Assistant Secretary shall cause written notice of the place, date and hour of each meeting of the stockholders, and, in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten nor more than sixty days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is mailed, it shall be deemed to have been given to a stockholder when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the record of stockholders of the Corporation, or, if he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, then directed to him at such other address. Such further notice shall be given as may be required by law.
No notice of any meeting of stockholders need be given to any stockholder who submits a signed waiver of notice, whether before or after the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a written waiver of notice. The attendance of any stockholder at a meeting of stockholders shall constitute 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 on the ground that the meeting is not lawfully called or convened. [Sections 222, 229.]
Section 1.04. Quorum. Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting. [Section 216.]
Section 1.05. Voting. If, pursuant to Section 5.05 of these By-Laws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation 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 meeting is held. Except as otherwise required by law or by the Certificate of Incorporation, the vote of a majority of the shares 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. [Sections 212(a), 216.]
Section 1.06. Voting by Ballot. No vote of the stockholders need be taken by written ballot unless otherwise required by law. Any vote which need not be taken by ballot may be conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any meeting
of the stockholders, the stockholders present in person or by proxy shall have
the power to adjourn any such meeting from time to time until a quorum is
present. Notice of any adjourned meeting of the stockholders of the Corporation
need not be given if the place, date and hour thereof are announced at the
meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
By-Laws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 hereof, shall be given to each stockholder of record entitled to
vote at such meeting. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted on the original date
of the meeting. [Section 222(c).]
Section 1.08. Proxies. Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action without a meeting may authorize another person or persons to vote at any such meeting and express such consent or dissent for him by proxy. 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 the transmission of a telegram, cablegram or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation
firm or a like authorized agent. No such proxy shall 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 shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which 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. Proxies by telegram, cablegram or other electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other 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, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. [Sections 212(b), (c).]
Section 1.09. Organization; Procedure. At every meeting of stockholders the presiding officer shall be the President or, in the event of his absence or disability, a presiding officer chosen by a majority of the stockholders present in person or by proxy. The Secretary, or in the event of his 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 order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.
Section 1.10. Consent of Stockholders in Lieu of Meeting. To the fullest extent permitted by law, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action 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, shall be 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 and shall be 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder or member who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by law to the Corporation, written consents signed by a sufficient number of holders or members to take action are 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. [Section 228.]
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers of the Corporation. [Section 141(a).]
Section 2.02. Number and Term of Office. The number of Directors constituting the entire Board of Directors shall be one, which number may be modified from time to time by resolution of the Board of Directors, but in no event shall the number of Directors be less than one. Each Director (whenever elected) shall hold office until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. [Section 141(b).]
Section 2.03. Election of Directors. Except as otherwise provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at each annual meeting of the stockholders. If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. 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. [Sections 211(b), (c), 216.]
Section 2.04. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, radio or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him at his usual place of business, or shall be delivered to him personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting. [Section 141(g).]
Section 2.05. Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the President or, in the event of his absence or disability, by any Vice President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on 24 hours' notice, if notice is given
to each Director personally or by telephone or telegram, or on five days' notice, if notice is mailed to each Director, addressed to him at his usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. Quorum; Voting. At all meetings of the Board of Directors, the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law, 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 of Directors. [Section 141(b).]
Section 2.07. Adjournment. A majority of the Directors present,
whether or not a quorum is present, may adjourn any meeting of the Board of
Directors to another time or place. No notice need be given of any adjourned
meeting unless the 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 shall be given to each Director.
Section 2.08. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors. [Section 141(f).]
Section 2.09. Regulations; Manner of Acting. To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such.
Section 2.10. Action by Telephonic Communications. Members of the Board of Directors may participate in a meeting of the Board of Directors 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 141(i).]
Section 2.11. Resignations. Any Director may resign at any time by delivering a written notice of resignation, signed by such Director, to the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. [Section 141(b).]
Section 2.12. Removal of Directors. 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 for the election of such Director, cast at a special meeting of stockholders called for the purpose. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the stockholders entitled
to vote for the election of the Director so removed. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 2.13 of these By-Laws.
[Section 141(b).]
Section 2.13. Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships may be filled by a majority of the Directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold office until his successor has been elected and qualified or until his earlier death, resignation or removal. Any such vacancy or newly created directorship may also be filled at any time by vote of the stockholders. [Section 223.]
Section 2.14. Compensation. The amount, if any, which each Director shall be entitled to receive as compensation for his services as such shall be fixed from time to time by resolution of the Board of Directors. [Section 141(h).]
Section 2.15. Reliance on Accounts and Reports, etc. A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his 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 of Directors, 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. [Section 141(e).]
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any such Committee, who may replace any absent or disqualified member or members at any meeting of such Committee. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or redesignated from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his successor shall have been designated or until he shall cease to be a Director, or until his earlier death, resignation or removal. [Section 141(c).]
Section 3.02. Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee, except as otherwise provided in this section, shall have and may exercise all the powers and authority of the Board of Directors in the management of the property, affairs and business of the Corporation, including the power to declare dividends and to authorize the issuance of stock. Each such other Committee, except as otherwise provided in this section, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. Neither the Executive Committee nor any such other Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series),
(b) to adopt an agreement of merger or consolidation,
(c) to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, or
(d) to recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution.
The Executive Committee shall have, and any such other Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. Proceedings. Each such Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.
Section 3.04. Quorum and Manner of Acting. Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing and such writing or writings are filed with the minutes of the proceedings of the Committee. The members of any such Committee shall act only as a
Committee, and the individual members of such Committee shall have no power as such. [Section 141(c).]
Section 3.05. Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee 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 141(i).]
Section 3.06. Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. [Section 141(c).]
Section 3.07. Resignations. Any member (and any alternate member) of any Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Chairman or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.
Section 3.08. Removal. Any member (and any alternate member) of any Committee may be removed at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.
Section 3.09. Vacancies. If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also may elect one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board of Directors may determine. Any number of offices may be held by the same person. No officer need be a Director of the Corporation. [Section 142(a), (b).]
Section 4.02. Election. Unless otherwise determined by the Board of Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors.
Each officer shall hold office until his successor has been elected and qualified, or until his earlier death, resignation or removal. [Section 142(b).]
Section 4.03. Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.
Section 4.04. Removal and Resignation; Vacancies. Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering a written notice of resignation, signed by such officer, to the Board of Directors or the President. 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, shall be filled by the Board of Directors. [Section 142(b), (e).]
Section 4.05. Authority and Duties of Officers. The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. [Section 142 (a).]
Section 4.06. The President. The President shall preside at all meetings of the stockholders and directors at which he is present, shall be the chief executive officer and the chief operating 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 of Directors are carried into effect. He 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 and a chief operating officer of a corporation. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the President or the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors or the Chairman may from time to time prescribe.
Section 4.07. The Vice President. Each Vice President shall perform such duties and exercise such powers as may be assigned to him from time to time by the President. In the absence of the president, the duties of the President shall be performed and his powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President.
Section 4.08. The Secretary. The Secretary shall have the following powers and duties:
(a) He shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose.
(b) He shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he shall furnish a copy of such resolution to the members of such Committee.
(d) He 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 instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he may attest the same.
(e) He 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 By-Laws.
(f) He 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 became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.
(h) He shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President.
Section 4.09. The Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the following powers and duties:
(a) He 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 of all receipts of the Corporation.
(b) He 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 selected in accordance with Section 8.05 of these By-Laws.
(c) He shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.
(d) He shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.
(e) He 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 may desire with respect to any and all financial transactions of the Corporation.
(f) He may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.
(g) He shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him from time to time by the Board of Directors, or the President.
Section 4.10. Additional Officers. The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him, for or without cause. [Section 142(a), (b).]
Section 4.11. Security. The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his duties, in such amount and of such character as may be determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. Certificates of Stock, Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, 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 of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. Signatures; Facsimile. All of such signatures on the certificate may be a facsimile, engraved or printed, to the extent permitted by law. In case 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 were such officer, transfer agent or registrar at the date of issue. [Section 158.]
Section 5.03. Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it 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 167.]
Section 5.04. Transfer of Stock. 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 General
Corporation Law of the State of Delaware. Subject to the provisions of the
Certificate of Incorporation and these By-Laws, the Board of Directors may
prescribe such additional rules and regulations as it may deem appropriate
relating to the issue, transfer and registration of shares of the Corporation.
[Section 151.]
Section 5.05. Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty nor less than ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors 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 of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by law, 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 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. [Section 213.]
Section 5.06. 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 claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it 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 159.]
Section 5.07. Transfer Agent and Registrar. The Board of Directors 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. Nature of Indemnity. The Corporation shall indemnify 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, by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful; except that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (1) such indemnification shall be limited to expenses (including attorneys' fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person 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 Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.02. Successful Defense. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Section 6.01 hereof or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
Section 6.03. Determination That Indemnification Is Proper. Any indemnification of a director or officer of the Corporation under Section 6.01 hereof (unless ordered by a court) shall be made by the Corporation unless a determination is made that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Section 6.01 hereof. Any indemnification of an employee or agent of the Corporation under Section 6.01 hereof (unless ordered by a court) may be made by the Corporation upon a determination that indemnification of the employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.01 hereof. Any such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.
Section 6.04. Advance Payment of Expenses. Expenses (including attorneys' fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may authorize the Corporation's counsel to represent such director, officer, employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.
Section 6.05. Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the Corporation under Sections 6.01 and 6.02, or advance of costs, charges and expenses to a director or officer under Section 6.04 of this Article, shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by the director or officer in any court of competent jurisdiction. Such person's costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of this Article where the required undertaking, if any, has been
received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of this Article, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.01 of this Article, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 6.06. Survival; Preservation of Other Rights. The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in any such capacity at any time while these provisions as well as the relevant provisions of the Delaware Corporation Law are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a "contract right" may not be modified retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 6.07. Insurance. The Corporation shall 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 him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article, provided that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors.
Section 6.08. Severability. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent 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, to the
fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE VII
OFFICES
Section 7.01. Registered Office. The registered office of the Corporation in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
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 of Directors may from time to time determine or as the business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Dividends. 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 of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation's Capital Stock.
A member of the Board of Directors, or a member of any Committee designated by the Board of Directors 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 of Directors, 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. [Sections 172, 173.]
Section 8.02. Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve. [Section 171.]
Section 8.03. Execution of Instruments. The President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.
Section 8.04. Corporate Indebtedness. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors or the President. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors or the President shall authorize. When so authorized by the Board of Directors or the President, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of the interest thereon, by instruments executed and delivered in the name of the Corporation.
Section 8.05. Deposits. Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination.
Section 8.06. Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors or the President from time to time may determine.
Section 8.07. Sale, Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the President, any Vice President, the Secretary or the Treasurer or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment.
Section 8.08. Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, 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. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons.
Section 8.09. Fiscal Year. The fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation's first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31.
Section 8.10. 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 of Directors. 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 8.11. 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 of Directors.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. Amendment. These By-Laws may be amended, altered or repealed
(a) by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board 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
(b) at any regular or special meeting of the stockholders 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.
[Section 109(a).]
ARTICLE X
CONSTRUCTION
Section 10.01. Construction. In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the certificate of incorporation of the Corporation as in effect from time to time, the provisions of such certificate of incorporation shall be controlling.
Exhibit 3.12
MPT ACQUISITION CORP.
B Y - L A W S
Article I. - General
Section 1.1. Offices. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
Section 1.2. Seal. The seal of the Corporation shall be in the form of a circle and shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware".
Section 1.3. Fiscal Year. The fiscal year of the Corporation shall be the period from January 1 through December 31.
Article II. - Stockholders
Section 2.1. Place of Meetings. All meetings of the stockholders shall be held at the office of the Corporation in the State of Texas except such meetings as the Board of Directors expressly determine shall be held elsewhere, in which case meetings may be held upon notice as hereinafter provided at such other place or places within or without the State of Texas as the Board of Directors shall have determined and as shall be stated in such notice.
Section 2.2. Annual Meeting. The annual meeting of the stockholders shall be held in the month of March of each year on such date and at such time as the Board of Directors may determine. At each annual meeting the stockholders entitled to vote shall elect a Board of Directors by plurality vote by ballot, and they may transact such other corporate business as may properly be brought before the meeting. At the annual meeting any business may be transacted, irrespective of whether the notice calling such meeting shall have contained a reference thereto, except where notice is required by law, the Certificate of Incorporation, or these by-laws.
Section 2.3. Quorum. At all meetings of the stockholders the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum requisite for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or by proxy, by a majority vote, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of voting stock shall be present. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting, at which the requisite amount of voting stock shall be
represented, any business may be transacted which might have been transacted if the meeting had been held as originally called.
Section 2.4. Right to Vote; Proxies. Each holder of a share or shares of capital stock of the Corporation having the right to vote at any meeting shall be entitled to one vote for each such share of stock held by him. Any stockholder entitled to vote at any meeting of stockholders may vote either in person or by proxy, but no proxy which is dated more than three years prior to the meeting at which it is offered shall confer the right to vote thereat unless the proxy provides that it shall be effective for a longer period. A proxy may be granted by a writing executed by the stockholder or his authorized officer, director, employee or agent or by transmission or authorization of transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, subject to the conditions set forth in Section 212 of the Delaware General Corporation Law, as it may be amended from time to time (the "Delaware GCL").
Section 2.5. Voting. At all meetings of stockholders, except as otherwise expressly provided for by statute, the Certificate of Incorporation or these by-laws, (a) in all matters other than the election of directors, the affirmative vote of a majority of shares present in person or represented by proxy at the meeting and entitled to vote on such matter shall be the act of the stockholders and (b) directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Except as otherwise expressly provided by law, the Certificate of Incorporation or these by-laws, at all meetings of stockholders the voting shall be by voice vote, but any stockholder qualified to vote on the matter in question may demand a stock vote, by shares of stock, upon such question, whereupon such stock vote shall be taken by ballot, each of which shall state the name of the stockholder voting and the number of shares voted by him, and, if such ballot be cast by a proxy, it shall also state the name of the proxy.
Section 2.6. Notice of Annual Meetings. Written notice of the annual meeting of the stockholders shall be mailed to each stockholder entitled to vote thereat at such address as appears on the stock books of the Corporation at least ten (10) days (and not more than sixty (60) days) prior to the meeting. It shall be the duty of every stockholder to furnish to the Secretary of the Corporation or to the transfer agent, if any, of the class of stock owned by him, his post-office address and to notify said Secretary or transfer agent of any change therein.
Section 2.7. Stockholders' List. A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder, and the number of shares registered in the name of each stockholder, shall be prepared by the Secretary and filed either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held, at least ten days before such meeting, and shall at all times
during the usual hours for business, and during the whole time of said election, be open to the examination of any stockholder for a purpose germane to the meeting.
Section 2.8. Special Meeting. Special meetings of the stockholders for any purpose or purposes, unless otherwise provided by statute, may be called by the Board of Directors, the Chairman of the Board, if any, the President or any Vice President.
Section 2.9. Notice of Special Meetings. Written notice of a special meeting of stockholders, stating the time and place and object thereof shall be mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days before such meeting, to each stockholder entitled to vote thereat, at such address as appears on the books of the Corporation. No business may be transacted at such meeting except that referred to in said notice, or in a supplemental notice given also in compliance with the provisions hereof, or such other business as may be germane or supplementary to that stated in said notice or notices.
Section 2.10. Inspectors.
1. One or more inspectors may be appointed by the Board of Directors before or at any meeting of stockholders, or, if no such appointment shall have been made, the presiding officer may make such appointment at the meeting. At the meeting for which the inspector or inspectors are appointed, he or they shall open and close the polls, receive and take charge of the proxies and ballots, and decide all questions touching on the qualifications of voters, the validity of proxies and the acceptance and rejection of votes. If any inspector previously appointed shall fail to attend or refuse or be unable to serve, the presiding officer shall appoint an inspector in his place.
2. At any time at which the Corporation has a class of voting stock that is (a) listed on a national securities exchange, (b) authorized for quotation on an inter-dealer quotation system of a registered national securities association, or (c) held of record by more than 2,000 stockholders, the provisions of Section 231 of the Delaware GCL with respect to inspectors of election and voting procedures shall apply, in lieu of the provisions of paragraph (1) of this Section 2.10.
Section 2.11. Stockholders' Consent in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required by law to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be 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 and shall be 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this Section 2.11 to the Corporation, written consents signed by a sufficient number of stockholders to take action are 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. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
Article III. - Directors
Section 3.1. Number of Directors. Except as otherwise provided by law, the Certificate of Incorporation or these by-laws, the property and business of the Corporation shall be managed by or under the direction of a board of not less than one nor more than thirteen directors. Within the limits specified, the number of directors shall be determined by resolution of the Board of Directors or by the stockholders at the annual meeting. Directors need not be stockholders, residents of Delaware or citizens of the United States. The directors shall be elected by ballot at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify or until his earlier resignation or removal; provided that in the event of failure to hold such meeting or to hold such election at such meeting, such election may be held at any special meeting of the stockholders called for that purpose. If the office of any director becomes vacant by reason of death, resignation, disqualification, removal, failure to elect, or otherwise, the remaining directors, although more or less than a quorum, by a majority vote of such remaining directors may elect a successor or successors who shall hold office for the unexpired term.
Section 3.2. Change in Number of Directors; Vacancies. The maximum number of directors may be increased by an amendment to these by-laws adopted by a majority vote of the Board of Directors or by a majority vote of the capital stock having voting power, and if the number of directors is so increased by action of the Board of Directors or of the stockholders or otherwise, then the additional directors may be elected in the manner provided above for the filling of vacancies in the Board of Directors or at the annual meeting of stockholders or at a special meeting called for that purpose.
Section 3.3. Resignation. Any director of this Corporation may resign at any time by giving written notice to the Chairman of the Board, if any, the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, at the time of receipt if no time is specified therein and at the time of acceptance if the effectiveness of such resignation is conditioned upon its acceptance. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 3.4. Removal. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
Section 3.5. Place of Meetings and Books. The Board of Directors may hold their meetings and keep the books of the Corporation outside the State of Delaware, at such places as they may from time to time determine.
Section 3.6. General Powers. In addition to the powers and authority expressly conferred upon them by these by-laws, the board may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders.
Section 3.7. Executive Committee. There may be an executive committee of one or more directors designated by resolution passed by a majority of the whole board. The act of a majority of the members of such committee shall be the act of the committee. Said committee may meet at stated times or on notice to all by any of their own number, and shall have and may exercise those powers of the Board of Directors in the management of the business affairs of the Company as are provided by law and may authorize the seal of the Corporation to be affixed to all papers which may require it. Vacancies in the membership of the committee shall be filled by the Board of Directors at a regular meeting or at a special meeting called for that purpose.
Section 3.8. Other Committees. The Board of Directors may also designate one or more committees in addition to the executive committee, by resolution or resolutions passed by a majority of the whole board; such committee or committees shall consist of one or more directors of the Corporation, and to the extent provided in the resolution or resolutions designating them, shall have and may exercise specific powers of the Board of Directors in the management of the business and affairs of the Corporation to the extent permitted by statute and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
Section 3.9. Powers Denied to Committees. Committees of the Board of Directors shall not, in any event, have any power or authority to amend the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares adopted by the Board of Directors as provided in Section 151(a) of the Delaware GCL, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommend
to the stockholders a dissolution of the Corporation or a revocation of a dissolution or to amend the by-laws of the Corporation. Further, no committee of the Board of Directors shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware GCL, unless the resolution or resolutions designating such committee expressly so provides.
Section 3.10. Substitute Committee Member. In the absence or on the disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Any committee shall keep regular minutes of its proceedings and report the same to the board as may be required by the board.
Section 3.11. Compensation of Directors. The Board of Directors shall have the power to fix the compensation of directors and members of committees of the Board. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
Section 3.12. Annual Meeting. The newly elected board may meet at such place and time as shall be fixed and announced by the presiding officer at the annual meeting of stockholders, for the purpose of organization or otherwise, and no further notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such place and time as shall be stated in a notice given to such directors two (2) days prior to such meeting, or as shall be fixed by the consent in writing of all the directors.
Section 3.13. Regular Meetings. Regular meetings of the board may be held without notice at such time and place as shall from time to time be determined by the board.
Section 3.14. Special Meetings. Special meetings of the board may be called by the Chairman of the Board, if any, or the President, on two (2) days' notice to each director, or such shorter period of time before the meeting as will nonetheless be sufficient for the convenient assembly of the directors so notified; special meetings shall be called by the Secretary in like manner and on like notice, on the written request of two or more directors.
Section 3.15. Quorum. At all meetings of the Board of Directors, a majority of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically permitted or provided by statute, or by the Certificate of Incorporation, or by these by-laws. If at any meeting of the board there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at said meeting which shall be so adjourned.
Section 3.16. Telephonic Participation in Meetings. Members of the Board of Directors or any committee designated by such board may participate in a meeting of the board or committee 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 section shall constitute presence in person at such meeting.
Section 3.17. Action by Consent. Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if written consent thereto is signed by all members of the board or of such committee as the case may be and such written consent is filed with the minutes of proceedings of the board or committee.
Article IV. - Officers
Section 4.1. Selection; Statutory Officers. The officers of the Corporation shall be chosen by the Board of Directors. There shall be a President, a Secretary and a Treasurer, and there may be a Chairman of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries, and one or more Assistant Treasurers, as the Board of Directors may elect. Any number of offices may be held by the same person, except that the offices of President and Secretary shall not be held by the same person simultaneously.
Section 4.2. Time of Election. The officers above named shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders. None of said officers need be a director.
Section 4.3. Additional Officers. The board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.
Section 4.4. Terms of Office. Each officer of the Corporation shall hold office until his successor is chosen and qualified, or until his earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors.
Section 4.5. Compensation of Officers. The Board of Directors shall have power to fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers.
Section 4.6. Chairman of the Board. The Chairman of the Board of Directors shall preside at all meetings of the stockholders and directors, and shall have such other duties as may be assigned to him from time to time by the Board of Directors.
Section 4.7. President. Unless the Board of Directors otherwise determines, the President shall be the chief executive officer and head of the Corporation. Unless there is a Chairman of the Board, the President shall preside at all meetings of directors and stockholders. Under the supervision of the Board of Directors and of the executive committee, the President shall have the general control and management of its business and affairs, subject, however, to the right of the Board of Directors and of the executive committee to confer any specific power, except such as may be by statute exclusively conferred on the President, upon any other officer or officers of the Corporation. The President shall perform and do all acts and things incident to the position of President and such other duties as may be assigned to him from time to time by the Board of Directors or the executive committee. Section
4.8. Vice-Presidents. The Vice-Presidents shall perform such of the duties of the President on behalf of the Corporation as may be respectively assigned to them from time to time by the Board of Directors or by the executive committee or by the President. The Board of Directors or the executive committee may designate one of the Vice-Presidents as the Executive Vice-President, and in the absence or inability of the President to act, such Executive Vice-President shall have and possess all of the powers and discharge all of the duties of the President, subject to the control of the board and of the executive committee.
Section 4.9. Treasurer. The Treasurer shall have the care and custody of all the funds and securities of the Corporation which may come into his hands as Treasurer, and the power and authority to endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and to deposit the same to the credit of the Corporation in such bank or banks or depository as the Board of Directors or the executive committee, or the officers or agents to whom the Board of Directors or the executive committee may delegate such authority, may designate, and he may endorse all commercial documents requiring endorsements for or on behalf of the Corporation. He may sign all receipts and vouchers for the payments made to the Corporation. He shall render an account of his transactions to the Board of Directors or to the executive committee as often as the board or the committee shall require the same. He shall enter regularly in the books to be kept by him for that purpose full and adequate account of all moneys received and paid by him on account of the Corporation. He shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors and of the executive committee. He shall when requested, pursuant to vote of the Board of Directors or the executive committee, give a bond to the Corporation conditioned for the faithful performance of his duties, the expense of which bond shall be borne by the Corporation.
Section 4.10. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and of the stockholders; he shall attend to the giving and serving of all notices of the Corporation. Except as otherwise ordered by the Board of Directors or the executive committee, he shall attest the seal of the Corporation upon all contracts and instruments executed under such seal and shall affix the seal of the Corporation thereto and to all certificates of shares of capital stock of the Corporation. He shall have charge of the stock certificate book, transfer book and stock ledger, and such other books and papers as the Board of Directors or the
executive committee may direct. He shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors and of the executive committee.
Section 4.11. Assistant Secretary. The Board of Directors or any two of the officers of the Corporation acting jointly may appoint or remove one or more Assistant Secretaries of the Corporation. Any Assistant Secretary upon his appointment shall perform such duties of the Secretary, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice-President or the Treasurer or the Secretary may designate.
Section 4.12. Assistant Treasurer. The Board of Directors or any two of the officers of the Corporation acting jointly may appoint or remove one or more Assistant Treasurers of the Corporation. Any Assistant Treasurer upon his appointment shall perform such of the duties of the Treasurer, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice-President or the Treasurer or the Secretary may designate.
Section 4.13. Subordinate Officers. The Board of Directors may select such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority, and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof.
Article V. - Stock
Section 5.1. Stock. Each stockholder shall be entitled to a certificate or
certificates of stock of the Corporation in such form as the Board of Directors
may from time to time prescribe. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall certify the holder's name and number and class of shares
and shall be signed by both of (a) either the President or a Vice-President, and
(b) any one of the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, and shall be sealed with the corporate seal of the
Corporation. If such certificate is countersigned (1) by a transfer agent other
than the Corporation or its employee, or, (2) by a registrar other than the
Corporation or its employee, the signature of the officers of the Corporation
and the corporate seal may be facsimiles. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures shall have been
used on, any such certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature shall have
been used thereon had not ceased to be such officer or officers of the
Corporation.
Section 5.2. Fractional Share Interests. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (a)
arrange for the disposition of fractional interests by those entitled thereto,
(b) pay in cash the fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined, or (c) issue scrip or
warrants in registered or bearer form which shall entitle the holder to receive
a certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the Corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing full
shares before a specified date, or subject to the conditions that the shares for
which scrip or warrants are exchangeable may be sold by the Corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Board of Directors may impose.
Section 5.3. Transfers of Stock. Subject to any transfer restrictions then in force, the shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers or to such other person as the directors may designate by whom they shall be cancelled and new certificates shall thereupon be issued. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof save as expressly provided by the laws of Delaware.
Section 5.4. Record Date. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no such record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed; and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 5.5. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or transfer clerks and one or more registrars and may require all certificates of stock to bear the signature or signatures of any of them.
Section 5.6. Dividends.
1. Power to Declare. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and the laws of Delaware.
2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.
Section 5.7. Lost, Stolen or Destroyed Certificates. No certificates for shares of stock of the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction and upon indemnification of the Corporation and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe.
Section 5.8. Inspection of Books. The stockholders of the Corporation, by a majority vote at any meeting of stockholders duly called, or in case the stockholders shall fail to act, the Board of Directors shall have power from time to time to determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation (other than the stock ledger) or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation except as conferred by statute or authorized by the Board of Directors or by a resolution of the stockholders.
Article VI. - Miscellaneous Management Provisions
Section 6.1. Checks, Drafts and Notes. All checks, drafts or orders for the payment of money, and all notes and acceptances of the Corporation shall be signed by such officer or officers, agent or agents as the Board of Directors may designate.
Section 6.2. Notices.
1. Notices to directors may, and notices to stockholders shall, be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same
shall be mailed. Notice to directors may also be given by telegram, telecopy or orally, by telephone or in person.
2. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation of the Corporation of the Corporation or of these by-laws, a written waiver of notice, signed by the person or persons entitled to said notice, whether before or after the time stated therein or the meeting or action to which such notice relates, shall be seemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
Section 6.3. Conflict of Interest. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of or committee thereof which authorized the contract or transaction, or solely because his or their votes are counted for such purpose, if: (a) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee and the board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders of the Corporation entitled to vote thereon, and the contract or transaction as specifically approved in good faith by vote of such stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
Section 6.4. Voting of Securities owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other Corporation and owned or controlled by this Corporation may be voted in person at any meeting of security holders of such other corporation by the President of this Corporation if he is present at such meeting, or in his absence by the Treasurer of this Corporation if he is present at such meeting, and (b) whenever, in the judgment of the President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other Corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the President, without the necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer, provided that if the President is unable to execute such proxy or consent by reason of sickness, absence from the United States or other similar cause, the Treasurer may execute such proxy or consent. Any person or persons designated in the manner above stated as the proxy or
proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation the same as such shares or other securities might be voted by this Corporation.
Article VII. - Indemnification
Section 7.1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of being or having been a director or officer of the Corporation or serving or having served at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an "Indemnitee"), whether the basis of such proceeding is alleged action or failure to act in an official capacity as a director, trustee, officer, employee or agent or in any other capacity while serving as a director, trustee, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto) (as used in this Article VII, the "Delaware Law"), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent and shall inure to the benefit of the Indemnitee's heirs, executors and administrators; provided, however, that, except as provided in Section 7.2 hereof with respect to Proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Indemnitee in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Article VII shall be a contract right and shall include the right to be paid by the Corporation the expenses (including attorneys' fees) incurred in defending any such Proceeding in advance of its final disposition (an "Advancement of Expenses"); provided, however, that, if the Delaware Law so requires, an Advancement of Expenses incurred by an Indemnitee shall be made only upon delivery to the Corporation of an undertaking (an "Undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a "Final Adjudication") that such Indemnitee is not entitled to be indemnified for such expenses under this Article VII or otherwise.
Section 7.2. Right of Indemnitee to Bring Suit. If a claim under Section 7.1 hereof is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an Advancement of
Expenses, in which case the applicable period shall be twenty days, the
Indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an Advancement of
Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the Indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the Indemnitee to enforce a right to an
Advancement of Expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an Advancement of Expenses pursuant to the terms of an
Undertaking the Corporation shall be entitled to recover such expenses upon a
Final Adjudication that, the Indemnitee has not met the applicable standard of
conduct set forth in the Delaware Law. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware Law, nor an actual determination by the Corporation (including its
board of directors, independent legal counsel, or its stockholders) that the
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that the Indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the Indemnitee, be a defense to such
suit. In any suit brought by the Indemnitee to enforce a right to
indemnification or to an Advancement of Expenses hereunder, or by the
Corporation to recover an Advancement of Expenses pursuant to the terms of an
Undertaking, the burden of proving that the Indemnitee is not entitled to be
indemnified, or to such Advancement of Expenses, under this Article VII or
otherwise shall be on the Corporation.
Section 7.3. Non-Exclusivity of Rights. The rights to indemnification and to the Advancement of Expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Certificate or Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 7.4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under this Article VII or under the Delaware Law.
Section 7.5. Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the Advancement of Expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the indemnification and Advancement of Expenses of directors and officers of the Corporation.
Article VIII. - Amendments
Section 8.1. Amendments. The by-laws of the Corporation may be altered, amended or repealed at any meeting of the Board of Directors upon notice thereof in accordance with these by-laws, or at any meeting of the stockholders by the vote of the holders of the majority of the stock issued and outstanding and entitled to vote at such meeting, in accordance with the provisions of the Certificate of Incorporation of the Corporation and of the laws of Delaware.
Exhibit 4.1
TRANSDIGM INC.,
THE GUARANTORS named herein
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
INDENTURE
Dated as of December 3, 1998
up to $200,000,000 10-3/8% Senior Subordinated Notes due 2008
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section ----------- ----------------- 310(a)(1)..................................................... 7.10 (a)(2)..................................................... 7.10 (a)(3)..................................................... N.A. (a)(4)..................................................... N.A. (a)(5)..................................................... 7.10 (i)(b)..................................................... 7.10 (ii)(c).................................................... N.A. 311(a)........................................................ 7.11 (b)........................................................ 7.11 (iii)(c)................................................... N.A. 312(a)........................................................ 2.05 (b)........................................................ 12.03 (iv)(c).................................................... 12.03 313(a)........................................................ 7.06 (b)(2)..................................................... 7.07 (v)(c)..................................................... 7.06; 12.02 (vi)(d).................................................... 7.06 314(a)........................................................ 4.03; 12.02 (c)(1)..................................................... 12.04 |
(c)(2)..................................................... 12.04 (c)(3)..................................................... N.A. (vii)(e)................................................... 11.05 (f)........................................................ NA 315(a)........................................................ 7.01 (b)........................................................ 7.05, 12.02 (A)(c)..................................................... 7.01 (d)........................................................ 7.01 (e)........................................................ 6.11 316(a)(last sentence)......................................... 2.09 (a)(1)(A).................................................. 6.05 (a)(1)(B).................................................. 6.04 (a)(2)..................................................... N.A. (b)........................................................ 6.07 (B)(c)..................................................... 2.12 317(a)(1).................................................. 6.08 (a)(2)..................................................... 6.09 (b)........................................................ 2.04 318(a)..................................................... 12.01 (b)........................................................ N.A. (c)........................................................ 12.01 |
* This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
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EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
|
INDENTURE dated as of December 3, 1998 among TransDigm Inc., a Delaware corporation (the "Company"), the Guarantors (as herein defined) and State Street Bank and Trust Company, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes:
I ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
A. SECTION 1.01. DEFINITIONS.
"Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Subsidiaries or that is assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation.
"Additional Interest" means all additional interest then owing pursuant to Section 4 of the Registration Rights Agreement.
"Additional Notes" means up to $75.0 million in aggregate principal amount of Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof.
"Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Securitization Entity makes an Investment in connection with a Qualified Securitization Transaction shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such investment.
"Agent" means any Registrar, Paying Agent or co-registrar.
"all or substantially all" shall have the meaning given such phrase in the Revised Model Business Corporation Act.
"Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other
transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that Asset Sales or other dispositions shall not include (i) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $1.0 million, (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted by Section 5.01 hereof or any disposition that constitutes a Change of Control, (iii) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (iv) disposals or replacements of obsolete equipment in the ordinary course of business, (v) the sale, lease, conveyance, disposition or other transfer by the Company or any Restricted Subsidiary of assets or property to one or more Restricted Subsidiaries in connection with Investments permitted by Section 4.07 hereof or pursuant to any Permitted Investment, and (vi) sales of accounts receivable, equipment and related assets (including contract rights) of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the fair market value thereof, including cash in an amount at least equal to 75% of the fair market value thereof as determined in accordance with GAAP. For the purposes of the preceding clause (vi) Purchase Money Notes shall be deemed to be cash.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock, of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means: (i) 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 thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either S&P or Moody's; (iii) commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at least
P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than $250.0
million; (v) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (iv) above; and
(vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or Holdings to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), other than to the Permitted Holders or their Related Parties or any Permitted Group; (ii) the approval by the holders of Capital Stock of the Company or Holdings, as the case may be, of any plan or proposal for the liquidation or dissolution of the Company or Holdings, as the case may be (whether or not otherwise in compliance with the provisions of this Indenture); (iii) any Person or Group (other than the Permitted Holders or their Related Parties or any Permitted Group) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Company or Holdings at a time when the Permitted Holders and their Related Parties in the aggregate own a lesser percentage of the aggregate ordinary voting power represented by such issued and outstanding Capital Stock; or (iv) the first day on which a majority of the members of the Board of Directors of the Company or Holdings are not Continuing Directors.
"Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Per son's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.
"Company" means TransDigm Inc., and any and all successors thereto.
"Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of such Person's (i) Consolidated Net Income; and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes and foreign withholding taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period; (B) Consolidated Interest Expense; (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period (other than normal accruals in the ordinary course of business), all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP; and (D) any cash charges resulting from the Transactions that are incurred prior to the six month anniversary of the Issue Date.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the "Four-Quarter Period") ending prior to the date of the transaction giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio for which financial statements are available (the "Transaction Date") to Consolidated Fixed Charges of such Person for the Four-Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness or the issuance of any Designated Preferred Stock of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness or the issuance or redemption of other Preferred Stock (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to revolving credit facilities, occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment or issuance or redemption, as the case may be (and the application of the proceeds thereof), had occurred on the first day of the Four-Quarter Period; and (ii) any Asset Sales or other dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions and other operating improvements that have occurred or are reasonably expected to occur, all as determined in accordance with Regulation S-X promulgated under the Securities Act) attributable to the assets which are the subject of the Asset Acquisition or Asset Sale or other disposition and without regard to clause (iv) of the definition of Consolidated Net Income) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or other disposition or Asset Acquisition (including the incurrence or assumption of any such Acquired Indebtedness) occurred on the first day of the Four-Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such other Indebtedness that was so guaranteed.
Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio": (i) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and (ii) notwithstanding clause
(i) of this paragraph, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements relating to Interest
Swap Obligations, shall be deemed to accrue at the rate per annum resulting
after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense; plus (ii) the product of (x) the amount of all cash dividend payments on any series of Preferred Stock of such Person times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal; plus (iii) the product of (x) the amount of all dividend payments on any series of Permitted Subsidiary Preferred Stock times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person,
expressed as a decimal; provided that with respect to any series of Preferred Stock that was not paid cash dividends during such period but that is eligible to be paid cash dividends during any period prior to the maturity date of the Notes, cash dividends shall be deemed to have been paid with respect to such series of Preferred Stock during such period for purposes of this clause (iii).
"Consolidated Interest Expense" means, with respect to any Person for any period, the sum of, without duplication, (i) the aggregate of all cash and non-cash interest expense with respect to all outstanding Indebtedness of such Person and its Restricted Subsidiaries, including the net costs associated with Interest Swap Obligations, for such period determined on a consolidated basis in conformity with GAAP, but excluding amortization or write-off of debt issuance costs, (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; and (iii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP and without any deduction in respect of Preferred Stock dividends; provided that there shall be excluded therefrom, (i) gains and losses from Asset Sales (without regard to the $1.0 million limitation set forth in the definition thereof) and the related tax effects according to GAAP, (ii) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP, (iii) all extraordinary, unusual or nonrecurring charges, gains and losses (including, without limitation, all restructuring costs and any expense or charge related to the repurchase of Capital Stock or warrants or options to purchase Capital Stock), and the related tax effects according to GAAP, (iv) the net income (or loss) of any Person acquired in a pooling of interests transaction accrued prior to the date it becomes a Restricted Subsidiary of the Company or is merged or consolidated with or into the Company or any Restricted Subsidiary of the Company, (v) the net income (but not loss) of any Restricted Subsidiary of the Company to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of the Company of that income is prohibited by contract, operation of law or otherwise, (vi) the net loss of any Person, other than a Restricted Subsidiary of the Company, (vii) the net income of any Person, other than a Restricted Subsidiary of the Company, except to the extent of cash dividends or distributions paid to the Company or a Restricted Subsidiary of the Company by such Person, (viii) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets, and (ix) any non-cash compensation charges, including any arising from existing stock options resulting from any merger or recapitalization transaction. For purposes of clause (iii)(w) of the first paragraph of Section 4.07 hereof, Consolidated Net Income shall be reduced by any cash dividends paid with respect to any series of Designated Preferred Stock.
"Consolidated Noncash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash charges and expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges that require an accrual of or a reserve for cash payments for any future period other than accruals or reserves associated with mandatory repurchases of equity securities).
"Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company or Holdings who (i) was a member of such Board of Directors on
the Issue Date; or (ii) was nominated for election or elected to such Board of Directors by any of the Permitted Holders or with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company.
"Credit Facilities" means one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) and/or letters of credit or banker's acceptances.
"Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
"Designated Noncash Consideration" means any noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Noncash Consideration will cease to be considered to be outstanding once it has been sold for cash or Cash Equivalents. At the time of receipt of any Designated Noncash Consideration, the Company shall deliver an Officers' Certificate to the Trustee which shall state the fair market value of such Designated Noncash Consideration and shall state the basis of such valuation, which shall be a report of a nationally recognized investment banking, appraisal or accounting firm with respect to the receipt in one or a series of related transactions of Designated Noncash Consideration with a fair market value in excess of $10.0 million.
"Designated Preferred Stock" means Preferred Stock that is so designated as Designated Preferred Stock, pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (iii)(x) of the first paragraph of Section 4.07 hereof.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the New Credit Facility and (ii) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would constitute a Change of Control), matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the final maturity date of the Notes.
"Distribution Compliance Period" means as defined in Regulation S.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary of the Company that is incorporated under the laws of the United States or any state thereof or the District of Columbia.
"Equity Offering" means any offering of Qualified Capital Stock of Holdings or the Company; provided that (i) in the event of an offering by Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such offering necessary to pay the aggregate redemption price (plus accrued interest to the redemption date) of the Notes to be redeemed pursuant to Section 3.07(b) hereof; and (ii) in the event such equity offering is not in the form of a public offering registered under the Securities Act, the proceeds received by the Company directly or indirectly from such offering are not less than $10.0 million.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.
"Exchange Notes" means the 10-3/8% Senior Subordinated Notes due 2008 to be issued in exchange for the Initial Notes pursuant to the Registration Rights Agreement and, with respect to the Additional Notes, if any, issued under this Indenture pursuant to Section 2.02, a registration rights agreement substantially identical to the Registration Rights Agreement.
"Exchange Offer" has the meaning set forth in the Registration Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.
"Four-Quarter Period" has the meaning specified in the definition of Consolidated Fixed Charge Coverage Ratio.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect from time to time.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii) which is required to be placed on all Global Notes issued under this Indenture.
"Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto, issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and for the payment of which the United States pledges its full faith and credit.
"Guarantee" means (i) the guarantee of the Notes by Holdings and the Domestic Restricted Subsidiaries of the Company; and (ii) the guarantee of the Notes by any Restricted Subsidiary required under the terms of Section 4.17 hereof.
"Guarantor" means Holdings and any Restricted Subsidiary that incurs a Guarantee; provided that upon the release and discharge of such Restricted Subsidiary from its Guarantee in accordance with Section 11.06 hereof, such Restricted Subsidiary shall cease to be a Guarantor.
"Hedging Agreement" means any agreement with respect to the hedging of price risk associated with the purchase of commodities used in the business of the Company and its Restricted Subsidiaries, so long as any such agreement has been entered into in the ordinary course of business and not for purposes of speculation.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means TransDigm Holding Company.
"Holdings PIK Notes" means up to $20.0 million in aggregate principal amount of Holdings' 12% pay-in-kind notes due 2009 plus any additional pay-in-kind notes issued in respect of interest thereon in accordance with the terms thereof.
"IAI Global Note" means the global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all Obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business), (v) all
Obligations for the reimbursement of any obligor on any letter of credit,
banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) which are secured by any Lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under currency agreements and interest swap agreements of such Person, and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. For the purposes of calculating the amount of Indebtedness of a Securitization Entity outstanding as of any date, the face or notional amount of any interest in receivables or equipment that is outstanding as of such date shall be deemed to be Indebtedness but any such interests held by Affiliates of such Securitization Entity shall be excluded for purposes of such calculation.
"Indenture" means this Indenture, as amended or supplemented from time to time.
"Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant.
"Initial Notes" means up to $125.0 million in aggregate principal amount of 10 3/8% Senior Subordinated Notes due 2008 of the Company issued on the Issue Date for so long as such securities constitute Restricted Securities.
"Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is not also a QIB.
"Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common
Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Restricted Subsidiary is no longer a Restricted Subsidiary of the Company (or, in the case of a Restricted Subsidiary that is not Wholly Owned Restricted Subsidiary of the Company, such Restricted Subsidiary has a minority interest that is held by an Affiliate of the Company that is not a Restricted Subsidiary of the Company), the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the city in which the principal corporate trust office of the Trustee is located or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).
"Marketable Securities" means publicly traded debt or equity securities that are listed for trading on a national securities exchange and that were issued by a corporation whose debt securities are rated in one of the three highest rating categories by either S&P or Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (i) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions); (ii) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements; and (iii) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.
"New Credit Facility" means the Credit Agreement dated as of the Issue Date among the Company, Holdings, the lenders party thereto in their capacities as lenders thereunder and Bankers Trust Company, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.
"Notes" means, collectively, the Initial Notes, the Additional Notes, if any, and the Exchange Notes, treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Sections 12.04 and 12.05 hereof.
"144A Global Note" means a global note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee that meets the requirements of Sections 12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement.
"Permitted Business" means any business (including stock or assets) that derives a majority of its revenues from the business engaged in by the Company and its Restricted Subsidiaries on the Issue Date and/or activities that are reasonably similar, ancillary or related to, or a reasonable
extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
"Permitted Group" means any group of investors that is deemed to be a "person" (as such term is used in Section 13(d)(3) of the Exchange Act) by virtue of the Stockholders Agreements, as the same may be amended, modified or supplemented from time to time, provided that no single Person (together with its Affiliates), other than the Permitted Holders and their Related Parties, is the "beneficial owner" (as such term is used in Section 13(d) of the Exchange Act), directly or indirectly, of more than 50% of the voting power of the issued and outstanding Capital Stock of the Company or Holdings (as applicable) that is "beneficially owned" (as defined above) by such group of investors.
"Permitted Holders" means Odyssey Investment Partners Fund, LP, its Affiliates and any general or limited partners of Odyssey Investment Partners Fund, L.P.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes in an aggregate principal amount not to exceed $125.0 million;
(ii) Indebtedness of the Company or any of its Restricted Subsidiaries incurred pursuant to one or more Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $155.0 million, less: (A) the aggregate amount of Indebtedness of Securitization Entities at the time outstanding, less (B) the amount of all mandatory principal payments actually made by the Company or any such Restricted Subsidiary since the Issue Date with the Net Cash Proceeds of an Asset Sale in respect of term loans under a Credit Facility (excluding any such payments to the extent refinanced at the time of payment), and (C) further reduced by any repayments of revolving credit borrowings under a Credit Facility with the Net Cash Proceeds of an Asset Sale that are accompanied by a corresponding commitment reduction thereunder; provided that the amount of Indebtedness permitted to be incurred pursuant to the Credit Facilities in accordance with this clause (ii) shall be in addition to any Indebtedness permitted to be incurred pursuant to the Credit Facilities in reliance on, and in accordance with, clauses (vii), (xiii) and (xiv) below;
(iii) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions therein;
(iv) Interest Swap Obligations of the Company or any of its Restricted Subsidiaries covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided that any Indebtedness to which any such Interest Swap Obligations correspond is otherwise permitted to be incurred under this Indenture; and provided, further, that such Interest Swap Obligations are entered into, in the judgment of the Company, to protect the Company or any of its Restricted Subsidiaries from fluctuation in interest rates on its outstanding Indebtedness;
(v) Indebtedness of the Company or any Restricted Subsidiary under Hedging Agreements and Currency Agreements;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any such Restricted Subsidiaries; provided, however, that: (a) if the Company is the obligor on such Indebtedness and the payee is a Restricted Subsidiary that is not a Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and (b) (1) any subsequent issuance or transfer of Capital Stock that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof (other than by way of granting a Lien permitted under this Indenture or in connection with the exercise of remedies by a secured creditor) shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi);
(vii) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any person owning such assets) in an aggregate principal amount outstanding not to exceed $5.0 million;
(viii) Refinancing Indebtedness;
(ix) guarantees by the Company and its Restricted Subsidiaries of each other's Indebtedness; provided that such Indebtedness is permitted to be incurred under this Indenture and provided, further that in the event such Indebtedness (other than Acquired Indebtedness) is incurred pursuant to the Consolidated Fixed Charge Coverage Ratio, such guarantees are by the Company or a Guarantor only;
(x) Indebtedness arising from agreements of the Company or a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price, earn out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Restricted Subsidiary of the Company, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(xi) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business;
(xii) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Subsidiary of the Company (except for Standard Securitization Undertakings);
(xiii) Indebtedness incurred by the Company or any of the Guarantors in connection with the acquisition of a Permitted Business which Indebtedness is incurred on or prior to September 30, 1999; provided that on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof and the use of proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio of the Company would be greater than the greater of (x) the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to the incurrence of such Indebtedness and (y) the Consolidated Fixed Charge Coverage Ratio of the Company on the Issue Date;
(xiv) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount that does not exceed $10.0 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under a Credit Facility);
(xv) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days of incurrence; and
(xvi) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, issued in the ordinary course of business of the Company or such Restricted Subsidiary, including, without limitation, in order to provide security for workers' compensation claims or payment obligations in connection with self-insurance or similar requirements in the ordinary course of business and other Indebtedness with respect to workers' compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business.
For purposes of determining compliance with Section 4.09 hereof, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (xvi) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of Section 4.09 hereof, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with Section 4.09 hereof. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section 4.09 hereof.
"Permitted Investments" means: (i) Investments by the Company or any Restricted Subsidiary of the Company in any Restricted Subsidiary of the Company (other than a Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) (whether existing on the Issue Date or created thereafter) or any Person (including by means of any transfer of cash or other property) if as a result of such Investment such Person shall become a Restricted Subsidiary of the Company (other than a Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) or that will merge with or consolidate into the Company or a Restricted Subsidiary of the Company and Investments in the Company by any Restricted Subsidiary of the Company; (ii) investments in cash and Cash Equivalents; (iii) loans and advances to employees and officers of the Company and its Restricted Subsidiaries for bona fide business purposes in an aggregate principal amount not to exceed $5.0 million at any one time outstanding; (iv) Currency Agreements, Hedging Agreements and Interest Swap Obligations entered into in the ordinary course
of business and otherwise in compliance with this Indenture; (v) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in good faith settlement of delinquent obligations of such trade creditors or customers; (vi) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.10 hereof; (vii) Investments existing on the Issue Date; (viii) accounts receivable created or acquired in the ordinary course of business; (ix) guarantees by the Company or a Restricted Subsidiary of the Company permitted to be incurred under this Indenture; (x) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (x) that are at that time outstanding, not to exceed $10.0 million (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (xi) any Investment by the Company or a Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; provided that any Investment in a Securitization Entity is in the form of a Purchase Money Note or an equity interest; and (xii) Investments the payment for which consists exclusively of Qualified Capital Stock of the Company
"Permitted Liens" means the following types of Liens:
Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;
Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
judgment Liens not giving rise to an Event of Default;
easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
any interest or title of a lessor under any Capitalized Lease Obligation;
purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary of the Company acquired, constructed or improved in the ordinary course of business; provided, however, that (A) the related purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired and (B) the Lien securing such Indebtedness shall be created within 90 days of such acquisition;
(8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created
for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;
(11) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under this Indenture;
(12) Liens securing Indebtedness under Currency Agreements and Hedging Agreements;
(13) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary with respect to obligations that do not in the aggregate exceed $5.0 million at any one time outstanding;
(14) Liens on assets transferred to a Securitization Entity or on assets of a Securitization Entity, in either case incurred in connection with a Qualified Securitization Transaction;
(15) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;
(16) Liens arising from filing Uniform Commercial Code financing statements regarding leases;
(17) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods;
(18) Liens securing Acquired Indebtedness incurred in compliance with Section 4.09;
(19) Liens placed upon assets of a Restricted Subsidiary of the Company that is not a Guarantor to secure Indebtedness of such Restricted Subsidiary that is otherwise permitted under this Indenture; and
(20) Liens existing on the Issue Date, together with any Liens securing Indebtedness incurred in reliance on clause (viii) of the definition of Permitted Indebtedness in order to refinance the Indebtedness secured by Liens existing on the Issue Date; provided that the Liens securing the refinancing Indebtedness shall not extend to property other than that pledged under the Liens securing the Indebtedness being refinanced.
"Permitted Subsidiary Preferred Stock" means any series of Preferred Stock of a Restricted Subsidiary of the Company that constitutes Qualified Capital Stock and has a fixed dividend rate, the liquidation value of all series of which, when combined with the aggregate amount
of Indebtedness of the Company and its Restricted Subsidiaries incurred pursuant to clause (xiv) of the definition of Permitted Indebtedness, does not exceed $5.0 million.
"Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
"Productive Assets" means assets (including Capital Stock) that are used or usable by the Company and its Restricted Subsidiaries in Permitted Businesses.
"Purchase Money Note" means a promissory note of a Securitization Entity evidencing a line of credit, which may be irrevocable, from the Company or any Restricted Subsidiary of the Company in connection with a Qualified Securitization Transaction, which note shall be repaid from cash available to the Securitization Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables or newly acquired equipment.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock.
"Qualified Securitization Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Restricted Subsidiaries pursuant to which the Company or any of its Subsidiaries
may sell, convey or otherwise transfer to (i) a Securitization Entity (in the
case of a transfer by the Company or any of its Restricted Subsidiaries); and
(ii) any other Person (in the case of a transfer by a Securitization Entity), or
may grant a security interest in any accounts receivable or equipment (whether
now existing or arising or acquired in the future) of the Company or any of its
Restricted Subsidiaries, and any assets related thereto including, without
limitation, all collateral securing such accounts receivable and equipment, all
contracts and contract rights and all guarantees or other obligations in respect
of such accounts receivable and equipment, proceeds of such accounts receivable
and equipment and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted in
connection with assets securitization transactions involving accounts receivable
and equipment.
"Recapitalization" means the recapitalization of Holdings consummated on the Issue Date.
"Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in
exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing, modification, replacement, restatement, refunding, deferral, extension, substitution, supplement, reissuance or resale of existing or future Indebtedness (other than intercompany Indebtedness), including any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such existing or future Indebtedness as in effect at the time of issuance thereof ("Required Premiums") and fees in connection therewith; provided that any such event shall not (i) directly or indirectly result in an increase in the aggregate principal amount of Permitted Indebtedness (except to the extent such increase is a result of a simultaneous incurrence of additional Indebtedness (A) to pay Required Premiums and related fees or (B) otherwise permitted to be incurred under this Indenture) of the Company and its Restricted Subsidiaries; and (ii) create Indebtedness with a Weighted Average Life to Maturity at the time such Indebtedness is incurred that is less than the Weighted Average Life to Maturity at such time of the Indebtedness being refinanced, modified, replaced, renewed, restated, refunded, deferred, extended, substituted, supplemented, reissued or resold.
"Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issue Date by and among the Company, the Guarantors and the Initial Purchasers.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Distribution Compliance Period.
"Regulation S Temporary Global Note" means a temporary global Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Permitted Holder means (i)(A) any spouse, sibling, parent or child of such Permitted Holder; or (B) the estate of any Permitted Holder during any period in which such estate holds Capital Stock of the Company for the benefit of any Person referred to in clause (i)(A) or (ii) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning an interest of more than 50% of which consist of, or the sole managing partner or managing member of which is, one or more Permitted Holders and/or such other Persons referred to in the immediately preceding clause (i).
"Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement Legend.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard & Poor's.
"Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Entity" means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable or equipment and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (i) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (A) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings; (B) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings; or (C) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; (ii) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity; and (iii) to which neither the Company nor any Restricted Subsidiary of the Company has any obligations to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with foregoing conditions.
"Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company or any Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes or the Guarantees, as the case may be. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company or any Guarantor under the New Credit Facility, including, without limitation, obligations (including guarantees thereof) to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations (and guarantees thereof), and (z) all obligations (and guarantees thereof) under Currency Agreements and Hedging Agreements, in each case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company or a Guarantor to the Company or to a Subsidiary of the Company, (ii) other than the Holdings PIK Notes, any Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Facilities (including the New Credit Facility), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) that portion of any Indebtedness incurred in violation of Section 4.09 hereof (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (vi) if the holder(s) of such obligation or their representative and the Trustee shall have received an Officers' Certificate of the Company to the effect that the incurrence of such Indebtedness does not (or in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of this Indenture), (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company, and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company.
"Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary," with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a "significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the Securities Act.
"Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable or equipment transaction.
"Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
"Stockholders Agreements" means those certain stockholders agreements entered into in connection with the Recapitalization.
"Subsidiary," with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.
"Tax Allocation Agreement" means the tax allocation agreement dated as of the Issue Date between Holdings and the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA.
"Total Assets" means the total consolidated assets of the Company and its Restricted Subsidiaries, as set forth on the Company's most recent consolidated balance sheet.
"Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form of Exhibit A-1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend.
"Unrestricted Subsidiary" of any Person means (i ) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by
the Board of Directors of such Person in the manner provided below; and (ii) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided that (i) the Company certifies to the Trustee that such designation complies with Section 4.07 hereof; and (ii) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.09 hereof and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act.
"U.S. Subsidiary" means any Subsidiary of the Company that is incorporated under the laws of the United States or any state thereof or the District of Columbia.
"Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the then outstanding aggregate principal amount of such Indebtedness into (ii) the sum of the total of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof by (B) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Wholly Owned Subsidiary of such Person which at the time of determination is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Restricted Subsidiary that is incorporated in a jurisdiction other than a State in the United States or the District of Columbia, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person.
B. SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- -------
"Acceleration Notice" 6.02
"Affiliate Transaction" 4.11
"Authentication Order" 2.02
"Blockage Period" 10.04
"Change of Control Offer" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"Default Notice" 10.04
"Event of Default" 6.01
"incur" 4.09
"Legal Defeasance" 8.02
"Net Proceeds Offer" 4.10
"Net Proceeds Offer Amount" 4.10
"Net Proceeds Offer Payment Date" 4.10
"Net Proceeds Offer Trigger Date" 4.10
"Offer Period" 3.09
"Paying Agent" 2.03
"Purchase Date" 3.09
"Refunding Capital Stock" 4.07
"Registrar" 2.03
"Restricted Payments" 4.07
"Retired Capital Stock" 4.07
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SECTION 1.03. Trust Indenture Act Definitions.
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.
C. SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
A. (1) A TERM HAS THE MEANING ASSIGNED TO IT;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
B. (5) PROVISIONS APPLY TO SUCCESSIVE EVENTS AND TRANSACTIONS; AND
(6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in the form of Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" or "Schedule of Exchanges of Interests in the Regulation S Temporary Global Note," as applicable, attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" or "Schedule of Exchanges of Interests in the Regulation S Temporary Global Note," as applicable, attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Distribution Compliance Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Distribution Compliance Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(g)(i) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Distribution Compliance Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Cedel Bank.
D. SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall authenticate Notes for original issue in aggregate principal amount not to exceed $200,000,000 (other than as provided in Section 2.07 hereof) in one or more series upon a written order of the Company in the form of any Officers' Certificate. Each such written order shall specify the amount of Notes to be authenticated, whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes and whether the Notes are to be issued as Definitive Notes or Global Notes or such other information as the Trustee shall reasonably request.
The Notes shall be issued only in fully registered form, without coupons and only in denominations of $1,000 and any integral multiple thereof. All Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.
E. SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes.
F. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest (including Additional Interest, if any) on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with
TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a).
G. SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 90 days after the date of such notice from the Depositary or (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee; provided that in no event shall the
Regulation S Temporary Global Note be exchanged by the Company for Definitive
Notes prior to (x) the expiration of the Distribution Compliance Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(1) (I) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE. BENEFICIAL INTERESTS IN ANY RESTRICTED GLOBAL NOTE MAY BE TRANSFERRED TO PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN THE SAME RESTRICTED GLOBAL NOTE IN ACCORDANCE WITH THE TRANSFER RESTRICTIONS SET FORTH IN THE PRIVATE PLACEMENT LEGEND; PROVIDED, HOWEVER, THAT PRIOR TO THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, TRANSFERS OF BENEFICIAL INTERESTS IN THE TEMPORARY REGULATION S GLOBAL NOTE MAY NOT BE MADE TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (OTHER THAN AN INITIAL PURCHASER). BENEFICIAL INTERESTS IN ANY UNRESTRICTED GLOBAL NOTE MAY BE TRANSFERRED TO PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. NO WRITTEN ORDERS OR INSTRUCTIONS SHALL BE REQUIRED TO BE DELIVERED TO THE REGISTRAR TO EFFECT THE TRANSFERS DESCRIBED IN THIS SECTION 2.06(B)(I).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Depositary either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) (A) IF THE TRANSFEREE WILL TAKE DELIVERY IN THE FORM OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE, THEN THE TRANSFEROR MUST DELIVER A CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1) THEREOF;
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(2) (IV) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL NOTE. A BENEFICIAL INTEREST IN ANY RESTRICTED GLOBAL NOTE MAY BE EXCHANGED BY ANY HOLDER THEREOF FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR TRANSFERRED TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE IF THE EXCHANGE OR TRANSFER COMPLIES WITH THE REQUIREMENTS OF SECTION 2.06(B)(II) ABOVE AND:
(A) (A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT AND THE HOLDER OF THE BENEFICIAL INTEREST TO BE TRANSFERRED, IN THE CASE OF AN EXCHANGE, OR THE TRANSFEREE, IN THE CASE OF A TRANSFER, CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL OR VIA THE DEPOSITARY'S BOOK-ENTRY SYSTEM THAT IT IS NOT (1) A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE DISTRIBUTION OF THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY;
(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(I) (1) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(A) THEREOF; OR
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(B) (A) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST FOR A RESTRICTED DEFINITIVE NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (2)(A) THEREOF;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(3) (II) NOTWITHSTANDING SECTIONS 2.06(C)(I)(A) AND (C)
HEREOF, A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY
GLOBAL NOTE MAY NOT BE EXCHANGED FOR A DEFINITIVE NOTE OR
TRANSFERRED TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM
OF A DEFINITIVE NOTE PRIOR TO (X) THE EXPIRATION OF THE
DISTRIBUTION COMPLIANCE PERIOD AND (Y) THE RECEIPT BY THE
REGISTRAR OF ANY CERTIFICATES REQUIRED PURSUANT TO RULE
903(C)(3)(II)(B) UNDER THE SECURITIES ACT, EXCEPT IN THE CASE
OF A TRANSFER PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OTHER THAN RULE 903 OR RULE
904.
(iii ) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) (A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT AND THE HOLDER OF SUCH BENEFICIAL INTEREST, IN THE CASE OF AN EX CHANGE, OR THE TRANSFEREE, IN THE CASE OF A TRANSFER, CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL THAT IT IS NOT (1) A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE DISTRIBUTION OF THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY;
(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(I) (1) IF THE HOLDER OF SUCH BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE PROPOSES TO EXCHANGE SUCH BENEFICIAL INTEREST FOR A DEFINITIVE NOTE THAT DOES NOT BEAR THE PRIVATE PLACEMENT LEGEND, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(B) THEREOF; OR
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(B) (A) IF THE HOLDER OF SUCH RESTRICTED DEFINITIVE NOTE PROPOSES TO EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (2)(B) THEREOF;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(I) (1) IF THE HOLDER OF SUCH DEFINITIVE NOTES PROPOSES TO EXCHANGE SUCH NOTES FOR A BENEFICIAL INTEREST IN THE UNRESTRICTED GLOBAL NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(C) THEREOF; OR
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(4) (III) UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES. A HOLDER OF AN UNRESTRICTED DEFINITIVE NOTE MAY EXCHANGE SUCH NOTE FOR A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR TRANSFER SUCH DEFINITIVE NOTES TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE AT ANY TIME. UPON RECEIPT OF A REQUEST FOR SUCH AN EXCHANGE OR TRANSFER, THE TRUSTEE SHALL CANCEL THE APPLICABLE UNRESTRICTED DEFINITIVE NOTE AND INCREASE OR CAUSE TO BE INCREASED THE AGGREGATE PRINCIPAL AMOUNT OF ONE OF THE UNRESTRICTED GLOBAL NOTES.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) (A) IF THE TRANSFER WILL BE MADE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, THEN THE TRANSFEROR MUST DELIVER A CERTIFICATE IN THE FORM OF EXHIBIT B HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1) THEREOF;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(5) (II) RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES.
ANY RESTRICTED DEFINITIVE NOTE MAY BE EXCHANGED BY THE HOLDER
THEREOF FOR AN UNRESTRICTED DEFINITIVE NOTE OR TRANSFERRED TO A
PERSON OR PERSONS WHO TAKE DELIVERY THEREOF IN THE FORM OF AN
UNRESTRICTED DEFINITIVE NOTE IF:
(A) (A) SUCH EXCHANGE OR TRANSFER IS EFFECTED PURSUANT TO THE EXCHANGE OFFER IN ACCORDANCE WITH THE REGISTRATION RIGHTS AGREEMENT AND THE HOLDER, IN THE CASE OF AN EXCHANGE, OR THE TRANSFEREE, IN THE CASE OF A TRANSFER, CERTIFIES IN THE APPLICABLE LETTER OF TRANSMITTAL THAT IT IS NOT (1) A BROKER-DEALER, (2) A PERSON PARTICIPATING IN THE DISTRIBUTION OF THE EXCHANGE NOTES OR (3) A PERSON WHO IS AN AFFILIATE (AS DEFINED IN RULE 144) OF THE COMPANY;
(B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(I) (1) IF THE HOLDER OF SUCH RESTRICTED DEFINITIVE NOTES PROPOSES TO EXCHANGE SUCH NOTES FOR AN UNRESTRICTED DEFINITIVE NOTE, A CERTIFICATE FROM SUCH HOLDER IN THE FORM OF EXHIBIT C HERETO, INCLUDING THE CERTIFICATIONS IN ITEM (1)(D) THEREOF; OR
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(6) (III) UNRESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES. A HOLDER OF UNRESTRICTED DEFINITIVE NOTES MAY TRANSFER SUCH NOTES TO A PERSON WHO TAKES DELIVERY THEREOF IN THE FORM OF AN UNRESTRICTED DEFINITIVE NOTE. UPON RECEIPT OF A REQUEST TO REGISTER SUCH A TRANSFER, THE REGISTRAR SHALL REGISTER THE UNRESTRICTED DEFINITIVE NOTES PURSUANT TO THE INSTRUCTIONS FROM THE HOLDER THEREOF.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(7) (I) PRIVATE PLACEMENT LEGEND.
(A) (A) EXCEPT AS PERMITTED BY SUBPARAGRAPH (B) BELOW, EACH GLOBAL NOTE AND EACH DEFINITIVE NOTE (AND ALL NOTES ISSUED IN EXCHANGE THEREFOR OR SUBSTITUTION THEREOF) SHALL BEAR THE LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(B) (B) NOTWITHSTANDING THE FOREGOING, ANY GLOBAL NOTE OR DEFINITIVE
NOTE ISSUED PURSUANT TO SUBPARAGRAPHS (B)(IV), (C)(III), (C)(IV),
(D)(II), (D)(III), (E)(II), (E)(III) OR (F) TO THIS SECTION 2.06
(AND ALL NOTES ISSUED IN EXCHANGE THEREFOR OR SUBSTITUTION THEREOF)
SHALL NOT BEAR THE PRIVATE PLACEMENT LEG END.
(8) (II) GLOBAL NOTE LEGEND. EACH GLOBAL NOTE SHALL BEAR A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(9) (III) REGULATION S TEMPORARY GLOBAL NOTE LEGEND. THE REGULATION S TEMPORARY GLOBAL NOTE SHALL BEAR A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount at maturity of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
2. (I) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(1) (I) TO PERMIT REGISTRATIONS OF TRANSFERS AND EXCHANGES, THE COMPANY SHALL EXECUTE AND THE TRUSTEE SHALL AUTHENTICATE GLOBAL NOTES AND DEFINITIVE NOTES UPON THE COMPANY'S ORDER OR AT THE REGISTRAR'S REQUEST.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening of
business 15 days before the day of the mailing of notice of redemption under
Section 3.03 hereof and ending at the close of business on such day, (B) to
register the transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
H. SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
I. SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.
J. SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall return canceled Notes to the Company. Certification of the destruction of all canceled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
K. SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
L. SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the redemption price and (iv) the CUSIP numbers of the Notes to be redeemed.
SECTION 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. Notwithstanding the foregoing, if less than all of the Notes are to be redeemed pursuant to Section 3.07(b) hereof, the Trustee shall select the Notes to be redeemed among the Holders of the Notes pro rata basis or on as nearly a pro rata basis as is practicable. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 45 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000. The provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
SECTION 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed, including CUSIP numbers, and shall state:
1. (A) THE REDEMPTION DATE;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
SECTION 3.05. Deposit of Redemption Price.
Prior to 10 a.m. Eastern Time on the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
M. SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered.
N. SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided in Section 3.07(b) hereof, the Notes shall not be redeemable at the Company's option prior to December 1, 2003. Thereafter, the Notes shall be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 45 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount thereof) set forth below plus accrued and unpaid interest and Additional Interest thereon, if any, to the applicable redemption date, if redeemed during the twelve month period beginning on December 1 of the years indicated below:
Percentage
of Principal
Year Amount
---- ------
2003 105.188%
2004 103.458%
2005 101.729%
2006 and thereafter 100.000%
|
(b) Notwithstanding the foregoing, prior to December 1, 2001, the Company may on any one or more occasions redeem up to 35% of the principal amount of Notes issued under this Indenture at a redemption price of 110.375% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount of Notes remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and provided further that such redemption shall occur within 120 days after the consummation of any such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
O. SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption payments with respect to the Notes.
P. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF NET PROCEEDS OFFER AMOUNT.
In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence a Net Proceeds Offer, it shall follow the procedures specified below.
The Net Proceeds Offer shall remain open for a period of 20 Business Days following its commencement or such longer period as may be required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the Net Proceeds Offer Amount except as provided in Section 3.02 hereof or, if less than the Net Proceeds Offer Amount has been tendered, all Notes tendered in response to the Net Proceeds Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Net Proceeds Offer.
Upon the commencement of a Net Proceeds Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer. The Net Proceeds Offer shall be made to all Holders. The notice, which shall govern the terms of the Net Proceeds Offer, shall state:
1. (A) THAT THE NET PROCEEDS OFFER IS BEING MADE PURSUANT TO THIS SECTION 3.09 AND SECTION 4.10 HEREOF AND THE LENGTH OF TIME THE NET PROCEEDS OFFER SHALL REMAIN OPEN;
(b) the Net Proceeds Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a portion of a Note purchased pursuant to a Net Proceeds Offer may only elect to have such Note purchased in integral multiples of $1,000;
(f) that Holders electing to have a Note purchased pursuant to any Net Proceeds Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (based on amounts tendered and with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary and, except as provided in Section 3.02 hereof, the Net Proceeds Offer Amount of Notes or portions thereof tendered pursuant to the Net Proceeds Offer, or if less than the Net Proceeds Offer Amount has been tendered, all Notes or portions thereof tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Net Proceeds Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
To the extent that the provisions of any securities laws or regulations conflict with this Section 3.09 or Section 4.10 hereof, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.09 or Section 4.10 hereof.
II. ARTICLE 4
COVENANTS
A. SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal amount, premium, if any, and interest and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes. Principal amount, premium, if any, and interest and Additional Interest, if any, shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal amount, premium, if any, and interest and Additional Interest, if any, then due. The Company shall pay all Additional Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest (without regard to any applicable grace period) at the same rate to the extent lawful.
B. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice
to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case, within the time periods specified in the SEC's rules and regulations. For so long as Holdings is a Guarantor, the Company may satisfy its obligations in this covenant by furnishing financial information relating to Holdings; provided that the same is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to Holdings, on the one hand, and the information relating to the Company and its Restricted Subsidiaries on a stand-alone basis, on the other hand. In addition, following consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company and the Guarantors shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of
his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. For purposes of this paragraph, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture.
(b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
C. SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
D. SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. Restricted Payments.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company's Capital Stock to holders of such Capital Stock; (2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any direct or indirect parent of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock; (3) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes; or (4) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a "Restricted
Payment"); if at the time of such Restricted Payment or immediately after giving
effect thereto: (i) a Default or an Event of Default shall have occurred and be
continuing; or (ii) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.09 hereof; or (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(other than Restricted Payments made pursuant to clauses (2)(i), (3), (4), (5),
(6), (7), (8), (9) and (10) of the following paragraph) shall exceed the sum,
without duplication, of: (w) 50% of the cumulative Consolidated Net Income (or
if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss)
of the Company earned subsequent to the beginning of the first fiscal quarter
commencing after the Issue Date and on or prior to the date the Restricted
Payment occurs (the "Reference Date") (treating such period as a single
accounting period); plus (x) 100% of the aggregate net cash proceeds (including
the fair market value of property other than cash that would constitute
Marketable Securities or a Permitted Business) received by the Company from any
Person (other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date and on or prior to the Reference Date of Qualified
Capital Stock of the Company; plus (y) without duplication of any amounts
included in clause (iii)(x) above, 100% of the aggregate net cash proceeds of
any equity contribution received by the Company from a holder of the Company's
Capital Stock (excluding, in the case of clauses (iii)(x) and (y), any net cash
proceeds from an Equity Offering to the extent used to redeem the Notes in
compliance with the provisions set forth under Section 3.07(b) hereof); plus (z)
100% of the aggregate net proceeds (including the fair market value of property
other than cash that would constitute Marketable Securities or a Permitted
Business) of any (A) sale or other disposition of any Investment (other than a
Permitted Investment) made by the Company and its Restricted Subsidiaries or (B)
dividend from, or the sale of the stock of, an Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit: (1) the payment of any
dividend or the consummation of any irrevocable redemption within 60 days after
the date of declaration of such dividend or notice of such redemption if the
dividend or payment of the redemption price, as the case may be, would have been
permitted on the date of declaration or notice; (2) if no Default or Event of
Default shall have occurred and be continuing or shall occur as a consequence
thereof, the acquisition of any shares of Capital Stock of the Company (the
"Retired Capital Stock") either (i) solely in exchange for shares of Qualified
Capital Stock of the Company (the "Refunding Capital Stock") or (ii) through the
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company and, in the case of subclause (i) of this clause (2), if immediately
prior to the retirement of the Retired Capital Stock the declaration and payment
of dividends thereon was permitted under clause (5) of this paragraph, the
declaration and payment of dividends on the Refunding Capital Stock in an
aggregate amount per year no greater than the aggregate amount of dividends per
annum that was declarable and payable on such Retired Capital Stock immediately
prior to such retirement; provided that at the time of the declaration of any
such dividends on the Refunding Capital Stock, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence thereof;
(3) if no Default or Event of Default shall have occurred and be continuing, the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Notes either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) if no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof, the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Capital Stock) issued after
the Issue Date (including, without limitation, the declaration and payment of
dividends on
Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this paragraph); provided that, at the time of such issuance, the Company, after giving effect to such issuance on a pro forma basis, would have had a Consolidated Fixed Charge Coverage Ratio of at least 2.0 to 1.0; (5) payments to Holdings for the purpose of permitting, and in an amount equal to the amount required to permit, Holdings to redeem or repurchase Holdings' common equity or options in respect thereof, in each case in connection with the repurchase provisions of employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that all such redemptions or repurchases pursuant to this clause (5) shall not exceed $2.0 million in any fiscal year (which amount shall be increased by the amount of any net cash proceeds received from the sale since the Issue Date of Capital Stock (other than Disqualified Capital Stock) to members of the Company's management team that have not otherwise been applied to the payment of Restricted Payments pursuant to the terms of clause (iii) of the immediately preceding paragraph and by the cash proceeds of any "key-man" life insurance policies which are used to make such redemptions or repurchases) since the Issue Date; provided, further, that the cancellation of Indebtedness owing to the Company from members of management of the Company or any of its Restricted Subsidiaries in connection with any repurchase of Capital Stock of Holdings (or warrants or options or rights to acquire such Capital Stock) will not be deemed to constitute a Restricted Payment under this Indenture; (6) the making of distributions, loans or advances to Holdings in an amount not to exceed $1.0 million per annum in order to permit Holdings to pay the ordinary operating expenses of Holdings (including, without limitation, directors' fees, indemnification obligations, professional fees and expenses); (7) payments to Holdings in respect of taxes pursuant to the terms of the Tax Allocation Agreement as in effect on the Issue Date and as amended from time to time pursuant to amendments that do not increase the amounts payable by the Company or any of its Restricted Subsidiaries thereunder; (8) repurchases of Capital Stock deemed to occur upon the exercise of stock options if such Capital Stock represents a portion of the exercise price thereof; (9) other Restricted Payments in an aggregate amount not to exceed $7.5 million; and (10) distributions to Holdings to fund the Transactions subsequent to the issuance of the Notes.
In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the first
paragraph of this Section 4.07, (a) amounts expended pursuant to clauses (1) and
(2) (ii) shall be included in such calculation, provided such expenditures
pursuant to clause (5) shall not be included to the extent of the cash proceeds
received by the Company from any "key-man" life insurance policies and (b)
amounts expended pursuant to clauses (2)(i), (3), (4), (5), (6), (7), (8), (9)
and (10) shall be excluded from such calculation.
E. SECTION 4.08. DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary of the Company to: (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) this Indenture; (3) non-assignment provisions of any contract or any lease of any Restricted Subsidiary of the Company entered into in the ordinary course of business; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so acquired; (5) the New Credit Facility; (6) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (7) restrictions on the transfer of assets subject to any Lien permitted under this Indenture imposed by the holder of such Lien; (8) restrictions imposed by any agreement to sell assets or Capital Stock permitted under this Indenture to any Person pending the closing of such sale; (9) any agreement or instrument governing Capital Stock of any Person that is acquired; (10) any Purchase Money Note or other Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity; (11) other Indebtedness or Permitted Subsidiary Preferred Stock outstanding on the Issue Date or permitted to be issued or incurred under this Indenture; provided that any such restrictions are ordinary and customary with respect to the type of Indebtedness being incurred or Preferred Stock being issued (under the relevant circumstances); (12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; and (13) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (l2) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors (evidenced by a Board Resolution) whose judgment shall be conclusively binding, not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
F. SECTION 4.09. INCURRENCE OF INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of any such Indebtedness, the Company and the Guarantors may incur Indebtedness (including, without limitation, Acquired Indebtedness) and Restricted Subsidiaries of the Company that are not Guarantors may incur Acquired Indebtedness, in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company would have been greater than 2.0 to 1.0.
SECTION 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors); (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; provided that the amount of: (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets; (b) any notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by
the Company or such Restricted Subsidiary into cash within 90 days of the
receipt thereof (to the extent of the cash received); and (c) any Designated
Noncash Consideration received by the Company or any of its Restricted
Subsidiaries in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Noncash Consideration received pursuant to
this clause (c) that is at that time outstanding, not to exceed 5% of Total
Assets at the time of the receipt of such Designated Noncash Consideration (with
the fair market value of each item of Designated Noncash Consideration being
measured at the time received and without giving effect to subsequent changes in
value), shall be deemed to be cash for the purposes of this provision or for
purposes of the second paragraph of this Section 4.10; and (iii) upon the
consummation of an Asset Sale, the Company shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (A) to prepay any Senior Debt or Indebtedness
of a Restricted Subsidiary that is not a Guarantor and, in the case of any such
Indebtedness under any revolving credit facility, effect a corresponding
reduction in the availability under such revolving credit facility (or effect a
permanent reduction in the availability under such revolving credit facility
regardless of the fact that no prepayment is required in order to do so (in
which case no prepayment should be required)), (B) to reinvest in Productive
Assets, or (C) a combination of prepayment and investment permitted by the
foregoing clauses (iii)(A) and (iii)(B). Pending the final application of any
such Net Cash Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce Indebtedness under a revolving credit facility, if any, or
otherwise invest such Net Cash Proceeds in Cash Equivalents. On the 366th day
after an Asset Sale or such earlier date, if any, as the Board of Directors of
the Company or of such Restricted Subsidiary determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A),
(iii)(B) and (iii)(C) of the preceding sentence (each, a "Net Proceeds Offer
Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been
applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each a
"Net Proceeds Offer Amount") shall be applied by the Company or such Restricted
Subsidiary to make an offer to purchase (the "Net Proceeds Offer ") on a date
(the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days
following the applicable Net Proceeds Offer Trigger Date, from all Holders on a
pro rata basis, the maximum amount of Notes that may be purchased with the Net
Proceeds Offer Amount at a price equal to 100% of the principal amount of the
Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the
date of purchase; provided, however, that if at any time any non-cash
consideration (including any Designated Noncash Consideration) received by the
Company or any Restricted Subsidiary of the Company, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this Section 4.10. Notwithstanding the foregoing, if
a Net Proceeds Offer Amount is less than $10.0 million, the application of the
Net Cash Proceeds constituting such Net Proceeds Offer Amount to a Net Proceeds
Offer may be deferred until such time as such Net Proceeds Offer Amount plus the
aggregate amount of all Net Proceeds Offer Amounts arising subsequent to the Net
Proceeds Offer Trigger Date relating to such initial Net Proceeds Offer Amount
from all Asset Sales by the Company and its Restricted Subsidiaries aggregates
at least $10.0 million, at which time the Company or such Restricted Subsidiary
shall apply all Net Cash Proceeds constituting all Net Proceeds Offer Amounts
that have been so deferred to make a Net Proceeds Offer (the first date the
aggregate of all such deferred Net Proceeds Offer Amounts is equal to $10.0
million or more shall be deemed to be a Net Proceeds Offer Trigger Date).
Notwithstanding the immediately preceding paragraph, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such
paragraph to the extent that: (i) at least 75% of the consideration for such Asset Sale constitutes Productive Assets, cash, Cash Equivalents and/or Marketable Securities; and (ii) such Asset Sale is for fair market value; provided that any consideration consisting of cash, Cash Equivalents and/or Marketable Securities received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the preceding paragraph.
Notice of each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in Section 3.09 hereof. To the extent that the aggregate amount of Notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use any remaining Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by this Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.10, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.10 by virtue thereof.
G. SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
1. (A) THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS RESTRICTED SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, ENTER INTO OR PERMIT TO OCCUR ANY TRANSACTION OR SERIES OF RELATED TRANSACTIONS (INCLUDING, WITHOUT LIMITATION, THE PURCHASE, SALE, LEASE OR EXCHANGE OF ANY PROPERTY OR THE RENDERING OF ANY SERVICE) WITH, OR FOR THE BENEFIT OF, ANY OF ITS AFFILIATES (AN "AFFILIATE TRANSACTION"), OTHER THAN AFFILIATE TRANSACTIONS ON TERMS THAT ARE NOT MATERIALLY LESS FAVORABLE THAN THOSE THAT MIGHT REASONABLY HAVE BEEN OBTAINED IN A COMPARABLE TRANSACTION AT SUCH TIME ON AN ARM'S-LENGTH BASIS FROM A PERSON THAT IS NOT AN AFFILIATE OF THE COMPANY; PROVIDED, HOWEVER, THAT FOR A TRANSACTION OR SERIES OF RELATED TRANSACTIONS WITH AN AGGREGATE VALUE OF $2.5 MILLION OR MORE, AT THE COMPANY'S OPTION, EITHER: (I) A MAJORITY OF THE DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY SHALL DETERMINE IN GOOD FAITH THAT SUCH AFFILIATE TRANSACTION IS ON TERMS THAT ARE NOT MATERIALLY LESS FAVORABLE THAN THOSE THAT MIGHT REASONABLY HAVE BEEN OBTAINED IN A COMPARABLE TRANSACTION AT SUCH TIME ON AN ARM'S-LENGTH BASIS FROM A PERSON THAT IS NOT AN AFFILIATE OF THE COMPANY OR (II) THE BOARD OF DIRECTORS OF THE COMPANY OR ANY SUCH RESTRICTED SUBSIDIARY PARTY TO SUCH AFFILIATE TRANSACTION SHALL HAVE RECEIVED AN OPINION FROM A NATIONALLY RECOGNIZED INVESTMENT BANKING, APPRAISAL OR ACCOUNTING FIRM THAT SUCH AFFILIATE TRANSACTION IS ON TERMS NOT MATERIALLY LESS FAVORABLE THAN THOSE THAT MIGHT REASONABLY HAVE BEEN OBTAINED IN A COMPARABLE TRANSACTION AT SUCH TIME ON AN ARM'S-LENGTH BASIS FROM A PERSON THAT IS NOT AN AFFILIATE OF THE COMPANY; AND PROVIDED, FURTHER, THAT FOR AN AFFILIATE TRANSACTION WITH AN AGGREGATE VALUE OF $10.0 MILLION OR MORE THE BOARD OF DIRECTORS OF THE COMPANY OR ANY SUCH RESTRICTED SUBSIDIARY PARTY TO SUCH AFFILIATE TRANSACTION SHALL HAVE RECEIVED AN OPINION FROM A NATIONALLY RECOGNIZED INVESTMENT BANKING, APPRAISAL OR ACCOUNTING FIRM THAT SUCH AFFILIATE TRANSACTION IS ON TERMS NOT MATERIALLY LESS FAVORABLE THAN THOSE THAT MIGHT REASONABLY HAVE BEEN OBTAINED IN A COMPARABLE TRANSACTION AT SUCH TIME ON AN ARM'S-LENGTH BASIS FROM A PERSON THAT IS NOT AN AFFILIATE OF THE COMPANY.
2. (B) THE RESTRICTIONS SET FORTH IN SECTION 4.11(A) HEREOF SHALL NOT APPLY
TO: (I) REASONABLE FEES AND COMPENSATION PAID TO, AND INDEMNITY PROVIDED
ON BEHALF OF, OFFICERS, DIRECTORS, EMPLOYEES OR CONSULTANTS OF THE COMPANY
OR ANY RESTRICTED SUBSIDIARY OF THE COMPANY AS DETERMINED IN GOOD FAITH BY
THE COMPANY'S BOARD OF DIRECTORS OR SENIOR MANAGEMENT; (II) TRANSACTIONS
EXCLUSIVELY BETWEEN OR AMONG THE COMPANY AND ANY OF ITS RESTRICTED
SUBSIDIARIES OR EXCLUSIVELY BETWEEN OR AMONG SUCH RESTRICTED SUBSIDIARIES,
PROVIDED SUCH TRANSACTIONS ARE NOT OTHERWISE PROHIBITED BY THIS INDENTURE;
(III) ANY AGREEMENT AS IN EFFECT AS OF THE ISSUE DATE OR ANY AMENDMENT
THERETO OR ANY TRANSACTION CONTEMPLATED THEREBY (INCLUDING PURSUANT TO ANY
AMENDMENT THERETO) IN ANY REPLACEMENT AGREEMENT THERETO SO LONG AS ANY
SUCH AMENDMENT OR REPLACEMENT AGREEMENT IS NOT MORE DISADVANTAGEOUS TO THE
HOLDERS IN ANY MATERIAL RESPECT THAN THE ORIGINAL AGREEMENT AS IN EFFECT
ON THE ISSUE DATE; (IV) RESTRICTED PAYMENTS OR PERMITTED INVESTMENTS
PERMITTED BY THIS INDENTURE; (V) TRANSACTIONS EFFECTED AS PART OF A
QUALIFIED SECURITIZATION TRANSACTION; (VI) THE PAYMENT OF CUSTOMARY ANNUAL
MANAGEMENT, CONSULTING AND ADVISORY FEES AND RELATED EXPENSES TO THE
PERMITTED HOLDERS AND THEIR AFFILIATES MADE PURSUANT TO ANY FINANCIAL
ADVISORY, FINANCING, UNDERWRITING OR PLACEMENT AGREEMENT OR IN RESPECT OF
OTHER INVESTMENT BANKING ACTIVITIES, INCLUDING, WITHOUT LIMITATION, IN
CONNECTION WITH ACQUISITIONS OR DIVESTITURES WHICH ARE APPROVED BY THE
BOARD OF DIRECTORS OF THE COMPANY OR SUCH RESTRICTED SUBSIDIARY IN GOOD
FAITH; (VII) PAYMENTS OR LOANS TO EMPLOYEES OR CONSULTANTS THAT ARE
APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY IN GOOD FAITH; (VIII)
SALES OF QUALIFIED CAPITAL STOCK; (IX) THE EXISTENCE OF, OR THE
PERFORMANCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF ITS
OBLIGATIONS UNDER THE TERMS OF, ANY STOCKHOLDERS AGREEMENT (INCLUDING ANY
REGISTRATION RIGHTS AGREEMENT OR PURCHASE AGREEMENT RELATED THERETO) TO
WHICH IT IS A PARTY AS OF THE ISSUE DATE AND ANY SIMILAR AGREEMENTS WHICH
IT MAY ENTER INTO THEREAFTER; PROVIDED, HOWEVER, THAT THE EXISTENCE OF, OR
THE PERFORMANCE BY THE COMPANY OR ANY OF ITS RESTRICTED SUBSIDIARIES OF
OBLIGATIONS UNDER, ANY FUTURE AMENDMENT TO ANY SUCH EXISTING AGREEMENT OR
UNDER ANY SIMILAR AGREEMENT ENTERED INTO AFTER
THE ISSUE DATE SHALL ONLY BE PERMITTED BY THIS CLAUSE (IX) TO THE EXTENT THAT THE TERMS OF ANY SUCH AMENDMENT OR NEW AGREEMENT ARE NOT DISADVANTAGEOUS TO THE HOLDERS OF NOTES IN ANY MATERIAL RESPECT; AND (X) TRANSACTIONS PERMITTED BY, AND COMPLYING WITH, THE PROVISIONS OF ARTICLE 5 HEREOF.
H. SECTION 4.12. LIENS.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets or any proceeds therefrom, of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, in each case to secure Indebtedness or trade payables, unless: (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens and (ii) in all other cases, the Notes are equally and ratably secured, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date, (B) Liens securing Senior Debt, (C) Liens securing the Notes, (D) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company, (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness that was secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; provided, however, that such Liens do not extend to or cover any categories of property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced, and (F) Permitted Liens.
SECTION 4.13. Conduct of Business.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any businesses a majority of whose revenues are not derived from businesses that are the same or reasonably similar, ancillary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
I. SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes.
J. SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
1. (A) IF A CHANGE OF CONTROL OCCURS, EACH HOLDER WILL HAVE THE RIGHT TO REQUIRE THAT THE COMPANY PURCHASE ALL OR A PORTION OF SUCH HOLDER'S NOTES PURSUANT TO THE OFFER DESCRIBED BELOW (THE "CHANGE OF CONTROL OFFER"), AT A PURCHASE PRICE EQUAL TO 101% OF THE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED INTEREST TO THE DATE OF PURCHASE. WITHIN 30 DAYS FOLLOWING THE DATE UPON WHICH THE CHANGE OF CONTROL OCCURRED, THE COMPANY MUST SEND, BY FIRST CLASS MAIL, A NOTICE TO EACH HOLDER, WHICH NOTICE SHALL GOVERN THE TERMS OF THE CHANGE OF CONTROL OFFER. SUCH NOTICE SHALL STATE, AMONG OTHER THINGS, THE PURCHASE DATE, WHICH MUST BE NO EARLIER THAN 30 DAYS NOR LATER THAN 60 DAYS FROM THE DATE SUCH NOTICE IS MAILED, OTHER THAN AS MAY BE REQUIRED BY LAW (THE "CHANGE OF CONTROL PAYMENT DATE").
(b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the applicable Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
Prior to the mailing of the notice referred to in Section 4.15(a) above, but in any event within 30 days following any Change of Control, the Company shall: (i) repay in full all Indebtedness under the New Credit Facility and all other Senior Debt the terms of which require repayment upon a Change of Control; or (ii) obtain the requisite consents under the New Credit Facility and all such other Senior Debt to permit the repurchase of the Notes as provided below. The Company's failure to comply with the covenant described in the immediately preceding sentence shall constitute an Event of Default described in clause (c) and not in clause (b) under "Events of Default" below.
(c) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the Company complies with the provisions of any such securities laws or regulations, the Company shall not be deemed to have breached its obligations under this Section 4.15.
(d) Notwithstanding anything to the contrary in this Section 4.15, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.15 hereof and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
K. SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
The Company shall not, and shall not permit any Restricted Subsidiary that is a Guarantor to, incur or suffer to exist Indebtedness that is senior in right of payment to the Notes or such Guarantor's Guarantee, as the case may be, and subordinate in right of payment to any other Indebtedness of the Company or such Guarantor, as the case may be. SECTION 4.17. Additional Guarantees.
The Company shall not create or acquire another Domestic Restricted Subsidiary unless such Domestic Restricted Subsidiary executes and delivers a supplemental indenture to this Indenture, in form and substance reasonably satisfactory to the Trustee, providing for a Guarantee by such Restricted Subsidiary.
SECTION 4.18. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company will not permit any of its Restricted Subsidiaries to issue any Preferred Stock (other than to the Company or to a Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company, other than Permitted Subsidiary Preferred Stock. The provisions of this Section 4.18 will not apply to any of the Guarantors.
III. ARTICLE 5
SUCCESSORS
A. SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless (i) either: (a) the Company shall be the surviving or continuing corporation; or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity"): (x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and (y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, this Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed; (ii) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company and except in the case of a merger entered into solely for the purpose of reincorporating the Company in another jurisdiction, immediately after
giving effect to such transaction and the assumption contemplated by clause
(1)(b)(y) above (including giving effect to any Indebtedness and Acquired
Indebtedness incurred in connection with or in respect of such transaction), the
Company or such Surviving Entity, as the case may be, shall be able to incur at
least $1.00 of additional Indebtedness pursuant to Section 4.09 hereof; (iii)
except in the case of a merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company and except in the case of a merger entered
into solely for the purpose of reincorporating the Company in another
jurisdiction, immediately after giving effect to such transaction and the
assumption contemplated by clause (1)(b)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred
and any Lien granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred or be continuing; and (iv) the
Company or the Surviving Entity shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. However, transfer of assets between or among the Company and its Restricted Subsidiaries will not be subject to the foregoing covenants.
B. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger, or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under this Indenture and the Notes with the same effect as if such surviving entity had been named as such that, in the event of a conveyance, lease or transfer, the conveyor, lessor or transferor will be released from the provisions of this Indenture.
IV. ARTICLE 6
DEFAULTS AND REMEDIES
A. SECTION 6.01. EVENTS OF DEFAULT.
"Event of Defaults" are:
(a) the failure to pay interest on any Notes when the same becomes due and payable if the default continues for a period of 30 days, whether or not such payment shall be prohibited by Article 10 hereof;
(b) the failure to pay the principal on any Notes when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer on the date specified for such payment in the applicable offer to purchase), whether or not such payment shall be prohibited by Article 10 hereof;
(c) a default in the observance or performance of any other covenant or agreement contained herein if the default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to Section 5.01 hereof, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);
(d) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company (other than a Securitization Entity), which failure continues for at least 20 days, or the acceleration of the final stated maturity of any such Indebtedness, which acceleration remains uncured and unrescinded for at least 20 days, if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has passed), aggregates $5.0 million or more at any time;
(e) one or more judgments in an aggregate amount in excess of $5.0 million shall have been rendered against the Company or any of its Significant Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable;
(f) the Company or any of its Significant Subsidiaries pursuant to or within the meaning of Bankruptcy Law:
(1) (I) COMMENCES A VOLUNTARY CASE,
(ii) consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a custodian of it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors, or
(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(2) (I) IS FOR RELIEF AGAINST THE COMPANY OR ANY OF ITS SIGNIFICANT SUBSIDIARIES;
(ii) appoints a custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of the property of the Company or any of its Significant Subsidiaries; or
(iii) orders the liquidation of the Company or any of its Significant Subsidiaries; and the order or decree remains unstayed and in effect for 60 consecutive days.
B. SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (f) or (g) of Section 6.01 hereof with respect to the Company) occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the principal of and accrued interest on
all the Notes to be due and payable immediately by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice"), and the same (i)
shall become immediately due and payable or (ii) if there are any amounts
outstanding under the New Credit Facility, shall become immediately due and
payable upon the first to occur of an acceleration under the New Credit Facility
or five Business Days after receipt by the Company and the Representative under
the New Credit Facility of such Acceleration Notice but only if such Event of
Default is then continuing. If an Event of Default specified in clause (f) or
(g) of Section 6.01 hereof with respect to the Company occurs and is continuing,
then all unpaid principal of, and premium, if any, and accrued and unpaid
interest on all the outstanding Notes shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances; and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clause (f) or (g) of Section 6.01 hereof, the Trustee shall have received an
Officers' Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
C. SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Additional Interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
D. SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Additional Interest, if any, or
interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount at maturity of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.
E. SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if:
1. (A) THE HOLDER OF A NOTE GIVES TO THE TRUSTEE WRITTEN NOTICE OF A CONTINUING EVENT OF DEFAULT;
(b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.
F. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Additional Interest, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
G. SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal amount of, premium and Additional Interest, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
H. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for principal amount, premium and Additional Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal amount, premium and Additional Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.
V. ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) (I) THE DUTIES OF THE TRUSTEE SHALL BE DETERMINED SOLELY BY THE EXPRESS PROVISIONS OF THIS INDENTURE AND THE TRUSTEE NEED PERFORM ONLY THOSE DUTIES THAT ARE SPECIFICALLY SET FORTH IN THIS INDENTURE AND NO OTHERS, AND NO IMPLIED COVENANTS OR OBLIGATIONS SHALL BE READ INTO THIS INDENTURE AGAINST THE TRUSTEE; AND
(ii ) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
2. (C) THE TRUSTEE MAY NOT BE RELIEVED FROM LIABILITIES FOR ITS OWN NEGLIGENT ACTION, ITS OWN NEGLIGENT FAILURE TO ACT, OR ITS OWN WILLFUL MISCONDUCT, EXCEPT THAT:
(1) (I) THIS PARAGRAPH DOES NOT LIMIT THE EFFECT OF PARAGRAPH (B) OF THIS SECTION;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.
3. (D) WHETHER OR NOT THEREIN EXPRESSLY SO PROVIDED, EVERY PROVISION OF THIS INDENTURE THAT IN ANY WAY RELATES TO THE TRUSTEE IS SUBJECT TO PARAGRAPHS (A), (B), (C), (E) AND (F) OF THIS SECTION.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
4. (C) THE TRUSTEE MAY ACT THROUGH ITS ATTORNEYS AND AGENTS AND SHALL NOT BE RESPONSIBLE FOR THE MISCONDUCT OR NEGLIGENCE OF ANY AGENT APPOINTED WITH DUE CARE.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
B. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
1. (A) THE TRUSTEE SHALL NOT BE DEEMED TO HAVE NOTICE OF ANY DEFAULT OR EVENT OF DEFAULT UNLESS A RESPONSIBLE OFFICER OF THE TRUSTEE HAS ACTUAL KNOWLEDGE THEREOF OR UNLESS WRITTEN NOTICE OF ANY EVENT WHICH IS IN FACT SUCH A DEFAULT IS RECEIVED BY THE TRUSTEE AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE, AND SUCH NOTICE REFERENCES THE NOTES AND THIS INDENTURE.
(b) If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 30 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes.
C. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange.
D. SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company and the Guarantors shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company and the Guarantors or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company and the Guarantors promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company and the Guarantors need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(f) or (g) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable.
SECTION 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
1. (A) THE TRUSTEE FAILS TO COMPLY WITH SECTION 7.10 HEREOF;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
E. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
F. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
VI. ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal amount of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) and 6.01(e) hereof shall not constitute Events of Default.
A. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
1. (A) THE COMPANY MUST IRREVOCABLY DEPOSIT WITH THE TRUSTEE, IN TRUST, FOR THE BENEFIT OF THE HOLDERS, CASH IN UNITED STATES DOLLARS, NON-CALLABLE GOVERNMENT SECURITIES, OR A COMBINATION THEREOF, IN SUCH AMOUNTS AS WILL BE SUFFICIENT, IN THE OPINION OF A NATIONALLY RECOGNIZED FIRM OF INDEPENDENT PUBLIC ACCOUNTANTS, TO PAY THE PRINCIPAL AMOUNT AT MATURITY OF, PREMIUM AND ADDITIONAL INTEREST, IF ANY, AND INTEREST ON THE OUTSTANDING NOTES ON THE STATED DATE FOR PAYMENT THEREOF OR ON THE APPLICABLE REDEMPTION DATE, AS THE CASE MAY BE;
(b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article 8 concurrently with such incurrence and the grant of a Lien to secure such Indebtedness) or insofar as Sections 6.01(f) or 6.01(g) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under this Indenture (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing
such borrowing) or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that (A) the trust funds will not be subject to any rights of holders of Senior Debt including, without limitation, those arising under this Indenture, and (B) after the 90th day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company;
(h) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and
(i) the Company shall have paid or duly provided for payment of all amounts then due to the Trustee pursuant to Section 7.07 hereof.
Notwithstanding the foregoing, the Opinion of Counsel required by clause (b) above with respect to a Legal Defeasance need not be delivered if all Notes not therefor delivered to the Trustee for cancellation (A) have become due and payable, or (B) will become due and payable on the maturity date within one year under arrangements satisfactory to the Trustee for giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
B. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO
BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal amount, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in this Indenture) as to all outstanding Notes when (i) either (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, pursuant to an optional redemption notice or otherwise, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (ii) the Company has paid all other sums payable under this Indenture by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.
SECTION 8.07. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
C. SECTION 8.08. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
D. SECTION 8.09. SURVIVAL.
The Trustee's rights under this Article 8 shall survive termination of this Indenture.
VII. ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
A. SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Guarantees or the Notes without the consent of any Holder of a Note:
1. (A) TO CURE ANY AMBIGUITY, DEFECT OR INCONSISTENCY;
(b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's obligations to the Holders of the Notes by a successor to the Company or a Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;
(f) to provide for the issuance of Notes issued after the Issue Date in accordance with the limitations set forth in this Indenture; or
(g) to allow any Guarantor to execute a supplemental indenture and/or a Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, this Indenture (including Sections 3.09, 4.10 and 4.15 hereof), the Guarantees and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
2. (A) REDUCE THE PRINCIPAL AMOUNT OF NOTES WHOSE HOLDERS MUST CONSENT TO AN AMENDMENT, SUPPLEMENT OR WAIVER;
(b) reduce the principal of or have the effect of changing the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes, other than provisions relating to Sections 3.09, 4.10 or 4.15 hereof;
(c) reduce the rate of or change or have the effect of changing the time for payment of interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount at maturity of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration;
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note, other than a payment required by Section 3.09 or 4.10 hereof;
(h) after the Company's obligation to purchase Notes arises thereunder, amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or modify any of the provisions or definitions with respect thereto after a Change of Control has occurred;
(i) modify or change any provision of this Indenture or the related definitions affecting the subordination or ranking of the Notes in a manner which adversely affects the Holders; or
(j) make any change in the foregoing amendment and waiver provisions.
B. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect.
C. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
D. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.
VIII. ARTICLE 10
SUBORDINATION
A. SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, (i) that all Notes shall be issued subject to the provisions of this Article 10, and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Notes by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt, including, without limitation, the Company's obligations under the New Credit Facility and (ii) that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Debt, and that each holder of Senior Debt whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired Senior Debt in reliance upon the covenants and provisions contained in this Indenture and the Notes.
SECTION 10.02. Intentionally Omitted.
SECTION 10.03. Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Notes or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under this Indenture if received by them, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment has not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder when such payment or distribution is prohibited by Section 10.03(a) hereof, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article Five hereof and as long as permitted under the terms of the Senior Debt shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 10.03 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article 5 hereof.
SECTION 10.04. Default on Designated Senior Debt.
1. (A) IF ANY DEFAULT OCCURS AND IS CONTINUING IN THE PAYMENT WHEN DUE, WHETHER AT MATURITY, UPON ANY REDEMPTION, BY DECLARATION OR OTHERWISE, OF ANY PRINCIPAL OF, INTEREST ON, UNPAID DRAWINGS FOR LETTERS OF CREDIT ISSUED IN RESPECT OF, OR REGULARLY ACCRUING FEES WITH RESPECT TO, ANY DESIGNATED SENIOR DEBT, NO PAYMENT OF ANY KIND OR CHARACTER SHALL BE MADE BY OR ON BEHALF OF THE COMPANY OR ANY OTHER PERSON ON ITS OR THEIR BEHALF WITH RESPECT TO ANY OBLIGATIONS ON THE NOTES OR TO ACQUIRE ANY OF THE NOTES FOR CASH OR PROPERTY OR OTHERWISE. IN ADDITION, IF ANY OTHER EVENT OF DEFAULT OCCURS AND IS CONTINUING WITH RESPECT TO ANY DESIGNATED SENIOR DEBT, AS SUCH EVENT OF DEFAULT IS DEFINED IN THE INSTRUMENT CREATING OR EVIDENCING SUCH DESIGNATED SENIOR DEBT, PERMITTING THE HOLDERS OF SUCH DESIGNATED SENIOR DEBT THEN OUTSTANDING TO ACCELERATE THE MATURITY THEREOF AND IF THE REPRESENTATIVE FOR THE RESPECTIVE ISSUE OF DESIGNATED SENIOR DEBT GIVES NOTICE OF THE EVENT OF DEFAULT TO THE TRUSTEE (A "DEFAULT NOTICE"), THEN, UNLESS AND UNTIL ALL EVENTS OF DEFAULT HAVE BEEN CURED OR WAIVED OR HAVE CEASED TO EXIST OR THE TRUSTEE RECEIVES NOTICE THEREOF FROM THE REPRESENTATIVE FOR THE RESPECTIVE ISSUE OF DESIGNATED SENIOR DEBT TERMINATING THE BLOCKAGE PERIOD (AS DEFINED BELOW), DURING THE 180 DAYS AFTER THE DELIVERY OF SUCH DEFAULT NOTICE (THE "BLOCKAGE PERIOD"), NEITHER THE COMPANY NOR ANY OTHER PERSON ON ITS BEHALF SHALL (X) MAKE ANY PAYMENT OF ANY KIND OR CHARACTER WITH RESPECT TO ANY OBLIGATIONS ON THE NOTES OR (Y) ACQUIRE ANY OF THE NOTES FOR CASH OR PROPERTY OR OTHERWISE. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT WILL A BLOCKAGE PERIOD EXTEND BEYOND 180 DAYS FROM THE DATE THE PAYMENT ON THE NOTES WAS DUE AND ONLY ONE SUCH BLOCKAGE PERIOD MAY BE COMMENCED WITHIN ANY 360 CONSECUTIVE DAYS. NO EVENT OF DEFAULT WHICH EXISTED OR WAS CONTINUING ON THE DATE OF THE COMMENCEMENT OF ANY BLOCKAGE PERIOD WITH RESPECT TO THE DESIGNATED SENIOR DEBT SHALL BE, OR BE MADE, THE BASIS FOR COMMENCEMENT OF A SECOND BLOCKAGE PERIOD BY THE REPRESENTATIVE OF SUCH DESIGNATED SENIOR DEBT WHETHER OR NOT WITHIN A PERIOD OF 360 CONSECUTIVE DAYS, UNLESS SUCH EVENT OF DEFAULT SHALL HAVE BEEN CURED OR WAIVED FOR A PERIOD OF NOT LESS THAN 90 CONSECUTIVE DAYS (IT BEING ACKNOWLEDGED THAT ANY SUBSEQUENT ACTION, OR ANY BREACH OF ANY FINANCIAL COVENANTS FOR A PERIOD
COMMENCING AFTER THE DATE OF COMMENCEMENT OF SUCH BLOCKAGE PERIOD THAT, IN EITHER CASE, WOULD GIVE RISE TO AN EVENT OF DEFAULT PURSUANT TO ANY PROVISIONS UNDER WHICH AN EVENT OF DEFAULT PREVIOUSLY EXISTED OR WAS CONTINUING SHALL CONSTITUTE A NEW EVENT OF DEFAULT FOR THIS PURPOSE).
2. (B) IN THE EVENT THAT, NOTWITHSTANDING THE FOREGOING, ANY PAYMENT SHALL BE
RECEIVED BY THE TRUSTEE OR ANY HOLDER WHEN SUCH PAYMENT IS PROHIBITED BY
SECTION 10.04(A) HEREOF, SUCH PAYMENT SHALL BE HELD IN TRUST FOR THE
BENEFIT OF, AND SHALL BE PAID OVER OR DELIVERED TO, THE HOLDERS OF SENIOR
DEBT (PRO RATA TO SUCH HOLDERS ON THE BASIS OF THE RESPECTIVE AMOUNT OF
SENIOR DEBT HELD BY SUCH HOLDERS) OR THEIR RESPECTIVE REPRESENTATIVES, AS
THEIR RESPECTIVE INTERESTS MAY APPEAR. THE TRUSTEE SHALL BE ENTITLED TO
RELY ON INFORMATION REGARDING AMOUNTS THEN DUE AND OWING ON THE SENIOR
DEBT, IF ANY, RECEIVED FROM THE HOLDERS OF SENIOR DEBT (OR THEIR
REPRESENTATIVES) OR, IF SUCH INFORMATION IS NOT RECEIVED FROM SUCH HOLDERS
OR THEIR REPRESENTATIVES, FROM THE COMPANY AND ONLY AMOUNTS INCLUDED IN
THE INFORMATION PROVIDED TO THE TRUSTEE SHALL BE PAID TO THE HOLDERS OF
SENIOR DEBT.
Nothing contained in this Article 10 shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 hereof or to pursue any rights or remedies hereunder; provided that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes.
B. SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration.
C. SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when such payment is prohibited by Section 10.03 or 10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which such Senior Debt may have been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in cash or Cash Equivalents in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee.
D. SECTION 10.07. NOTICE BY COMPANY.
The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article 10 (although the failure to give any such notice shall not affect the subordination provision of this Article 10). Regardless of anything to the contrary contained in this Article 10 or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing from the Company, or from a holder of Senior Debt or a Representative therefor, together with proof satisfactory to the Trustee of such holding of Senior Debt or of the authority of such Representative, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume that no such facts exist.
E. SECTION 10.08. SUBROGATION.
1. SUBJECT TO THE PAYMENT IN FULL IN CASH OR CASH EQUIVALENTS OF ALL SENIOR DEBT, THE HOLDERS OF THE NOTES SHALL BE SUBROGATED TO THE RIGHTS OF THE HOLDERS OF SENIOR DEBT TO RECEIVE PAYMENTS OR DISTRIBUTIONS OF CASH, PROPERTY OR SECURITIES OF THE COMPANY APPLICABLE TO THE SENIOR DEBT UNTIL THE NOTES SHALL BE PAID IN FULL; AND, FOR THE PURPOSES OF SUCH SUBROGATION, NO SUCH PAYMENTS OR DISTRIBUTIONS TO THE HOLDERS OF THE SENIOR DEBT BY OR ON BEHALF OF THE COMPANY OR BY OR ON BEHALF OF THE HOLDERS BY VIRTUE OF THIS ARTICLE 10 WHICH OTHERWISE WOULD HAVE BEEN MADE TO THE HOLDERS SHALL, AS BETWEEN THE COMPANY AND THE HOLDERS OF THE NOTES, BE DEEMED TO BE A PAYMENT BY THE COMPANY TO OR ON ACCOUNT OF THE SENIOR DEBT, IT BEING UNDERSTOOD THAT THE PROVISIONS OF THIS ARTICLE 10 ARE AND ARE INTENDED SOLELY FOR THE PURPOSE OF DEFINING THE RELATIVE RIGHTS OF THE HOLDERS OF THE NOTES, ON THE ONE HAND, AND THE HOLDERS OF THE SENIOR DEBT, ON THE OTHER HAND.
F. SECTION 10.09. RELATIVE RIGHTS.
Nothing contained in this Article 10 or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Debt in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets or securities of the Company referred to in this Article 10, the Trustee, subject to the provisions of Sections 7.01 and 7.02 hereof, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any liquidation, dissolution, winding-up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this
Article 10. Nothing in this Article 10 shall apply to the claims of, or payments to, the Trustee in its capacity as such under or pursuant to Section 7.07 hereof. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 10, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
G. SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
1. (A) NO RIGHT OF ANY PRESENT OR FUTURE HOLDER OF ANY SENIOR DEBT TO ENFORCE SUBORDINATION AS HEREIN PROVIDED SHALL AT ANY TIME IN ANY WAY BE PREJUDICED OR IMPAIRED BY ANY ACT OR FAILURE TO ACT ON THE PART OF THE COMPANY OR BY ANY ACT OR FAILURE TO ACT BY ANY SUCH HOLDER, OR BY ANY NON-COMPLIANCE BY THE COMPANY WITH THE TERMS, PROVISIONS AND COVENANTS OF THIS INDENTURE, REGARDLESS OF ANY KNOWLEDGE THEREOF ANY SUCH HOLDER MAY HAVE OR BE OTHERWISE CHARGED WITH.
2. (B) WITHOUT LIMITING THE GENERALITY OF SUBSECTION (A) OF THIS SECTION 10.10, THE HOLDERS OF SENIOR DEBT MAY, AT ANY TIME AND FROM TIME TO TIME, WITHOUT THE CONSENT OF OR NOTICE TO THE TRUSTEE OR THE HOLDERS OF THE NOTES, WITHOUT INCURRING RESPONSIBILITY TO THE HOLDERS OF THE NOTES AND WITHOUT IMPAIRING OR RELEASING THE SUBORDINATION PROVIDED IN THIS ARTICLE 10 OR THE OBLIGATIONS HEREUNDER OF THE HOLDERS OF THE NOTES TO THE HOLDERS OF SENIOR DEBT, DO ANY ONE OR MORE OF THE FOLLOWING: (1) CHANGE THE MANNER, PLACE, TERMS OR TIME OF PAYMENT OF, OR RENEW OR ALTER, SENIOR DEBT OR ANY INSTRUMENT EVIDENCING THE SAME OR ANY AGREEMENT UNDER WHICH SENIOR DEBT IS OUTSTANDING; (2) SELL, EXCHANGE, RELEASE OR OTHERWISE DEAL WITH ANY PROPERTY PLEDGED, MORTGAGED OR OTHERWISE SECURING SENIOR DEBT; (3) RELEASE ANY PERSON LIABLE IN ANY MANNER FOR THE COLLECTION OR PAYMENT OF SENIOR DEBT; AND (4) EXERCISE OR REFRAIN FROM EXERCISING ANY RIGHTS AGAINST THE COMPANY AND ANY OTHER PERSON.
H. SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10.
I. SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10 (although the receipt of
such payment shall otherwise be subject to the applicable provisions of this
Article 10). Only the Company or a Representative may give the notice. Nothing
in this Article 10 shall impair the claims of, or payments to, the Trustee in
its capacity as such under or pursuant to Section 7.07 hereof. Nothing in this
Section 10.12 is intended to or shall relieve any Holder of Notes from the
obligations imposed under Section 10.06 hereof with respect to other
distributions received in violation of the provisions hereof.
The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights.
J. SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of the Notes by such Holder's acceptance thereof authorizes and expressly directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article 10, and appoints the Trustee such Holder's attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company tending towards liquidation or reorganization of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of such Holder's Notes in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Senior Debt or their Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding.
K. SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 (and the definitions used herein) shall not be amended or modified without the written consent of the majority of the lenders under the New Credit Facility.
IX. ARTICLE 11
GUARANTEES
A. SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or pursuant to Section 11.06 hereof.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee.
B. SECTION 11.02. SUBORDINATION OF GUARANTEE.
The Obligations of each Guarantor under its Guarantee pursuant to this Article 11 shall be junior and subordinated to the Senior Debt of such Guarantor on the same basis as the Notes are junior and subordinated to the Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article 10 hereof and the holders of Senior Debt shall have the same rights and remedies provided for in Article 10 hereof.
C. SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor under its Guarantee and this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent transfer or conveyance.
D. SECTION 11.04. EXECUTION AND DELIVERY OF GUARANTEE.
To evidence its Guarantee set forth in Section 11.01 hereof, each Guarantor hereby agrees that a notation of such Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by its President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Guarantee set forth in Section 11.01 hereof shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee.
If an Officer whose signature is on this Indenture or on the Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Indenture, if required by Section 4.17 hereof, the Company shall cause such Subsidiaries to execute supplemental indentures to this Indenture and Guarantees in accordance with Section 4.17 hereof and this Article 11, to the extent applicable.
E. SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person whether or not affiliated with such Guarantor unless:
(a) subject to the other provisions of this Section the Person formed by or surviving any such consolidation or merger (if other than a Guarantor or the Company) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture, the Registration Rights Agreement and the Guarantee on the terms set forth herein or therein;
(b) immediately after giving effect to such transaction, no Default or Event of Default exists; and
(c) the Company would be permitted, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09 hereof.
In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.
F. SECTION 11.06. RELEASES FOLLOWING CERTAIN EVENTS.
In the event of a sale or other disposition of all of the assets of
any Guarantor (other than Holdings), by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor (other than Holdings), then such Guarantor (in the event of a sale or
other disposition, by way of merger, consolidation or otherwise, of all of the
capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) will be released and relieved of any obligations under
its Guarantee; provided that the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the applicable provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee shall execute any documents reasonably required
in order to evidence the release of any Guarantor (other than Holdings) from its
obligations under its Guarantee.
Any Guarantor not released from its obligations under its Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 11.
X. ARTICLE 12
MISCELLANEOUS
A. SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
B. SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company and/or any Guarantor:
TransDigm Inc.
8233 Imperial Drive
Waco, TX 76712
Facsimile No.: (254) 741-5402
Attention: Peter Radekevich
with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Facsimile No.: (212) 751-4864
Attention: Kirk Davenport
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Telecopier No.: (860) 244-1889
Attention: Corporate Trust Administration
The Company, any Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c).
C. SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
D. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has or they have made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.
SECTION 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
E. SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Notes, the Guarantees, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12 .09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
F. SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
G. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
[Indenture signature pages(s) follow]
[Indenture signature pages(s)]
Dated as of December 3, 1998
TRANSDIGM INC.
By: /s/ Peter Radekevich -------------------------------------- Name: Peter Radekevich Title: Chief Financial Officer |
Guarantors:
TRANSDIGM HOLDING COMPANY
By: /s/ Peter Radekevich -------------------------------------- Name: Peter Radekevich Title: Chief Financial Officer |
MARATHON POWER TECHNOLOGIES COMPANY
By: /s/ Peter Radekevich -------------------------------------- Name: Peter Radekevich Title: Chief Financial Officer |
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By: /s/ Michael M. Hopkins -------------------------------------- Name: Michael M. Hopkins Title: Vice President |
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
Dated as of December 3, 1998
Among
TRANSDIGM INC.
and
THE GUARANTORS NAMED HEREIN,
as Issuers,
and
THE INITIAL PURCHASERS NAMED HEREIN,
10 3/8% Senior Subordinated Notes due 2008
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of December 3, 1998, among TRANSDIGM INC., a Delaware corporation (the "Company"), as issuer, and the other entities listed on the signature page hereto, as guarantors (the "Guarantors" and, together with the Company, the "Issuers"), and the Initial Purchasers named herein, as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement, dated as of November 24, 1998, among the Issuers and the Initial Purchasers (the "Purchase Agreement"), which provides for, among other things, the sale by the Company to the Initial Purchasers of $125,000,000 aggregate principal amount of the Company's 10 3/8% Senior Subordinated Notes due 2008 (the "Notes"), guaranteed by the Guarantors (the "Guarantees"). The Notes and the Guarantees are collectively referred to herein as the "Securities". In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers have agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and any subsequent holder or holders of the Securities. The execution and delivery of this Agreement is a condition to the Initial Purchasers' obligation to purchase the Securities under the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
Additional Interest: See Section 4 hereof.
Advice: See the last paragraph of Section 5 hereof.
Applicable Period: See Section 2 hereof.
Company: See the introductory paragraphs hereto.
Effectiveness Date: The 150th day after the Issue Date; provided, however, that with respect to any Shelf Registration, the Effectiveness Date shall be the 150th day after the delivery of a Shelf Notice as required pursuant to Section 2(c) hereof.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Offer Registration Statement: See Section 2 hereof.
Filing Date: (A) If no Exchange Offer Registration Statement has been filed by the Issuers pursuant to this Agreement, the 60th day after the Issue Date; and (B) with respect to a Shelf Registration Statement, the 60th day after the delivery of a Shelf Notice as required pursuant to Section 2(c) hereof.
Guarantees: See the introductory paragraphs hereto.
Guarantors: See the introductory paragraphs hereto.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of December 3, 1998, by and among the Issuers and State Street Bank and Trust Company, as trustee, pursuant to which the Securities are being issued, as the same may be amended or supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(m) hereof.
Issue Date: December 3, 1998, the date of original issuance of the Notes.
Issuers: See the introductory paragraphs hereto.
NASD: See Section 5(r) hereof.
Notes: See the introductory paragraphs hereto.
Offering Memorandum: The final offering memorandum of the Company dated November 24, 1998, in respect of the offering of the Securities.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 hereof.
Prospectus: The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereof.
Records: See Section 5(m) hereof.
Registrable Notes: Each Security upon its original issuance and at all times subsequent thereto, each Exchange Note (and the related Guarantee) as to which Section 2(c)(iv) hereof is applicable upon original issuance and at all times subsequent thereto and each Private Exchange Note (and the related Guarantee) upon original issuance thereof and at all times subsequent thereto, until (i) a Registration Statement (other than, with respect only to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the Exchange Offer Registration Statement) covering such Security, Exchange Note or Private Exchange Note has been declared effective by the SEC and such Security, Exchange Note or such Private Exchange Note (and the related Guarantees), as the case may be, has been disposed of in accordance with such effective Registration Statement, (ii) such Security has been exchanged pursuant to the Exchange Offer for an Exchange Note or Exchange Notes (and the related Guarantees) that may be resold without restriction under state and federal securities laws, (iii) such Security, Exchange Note or Private Exchange Note (and the related Guarantees), as the case may be, ceases to be outstanding for
purposes of the Indenture or (iv) such Security, Exchange Note or Private Exchange Note (and the related Guarantees), as the case may be, may be resold without restriction pursuant to Rule 144 (or any similar provision then in force) under the Securities Act.
Registration Statement: Any registration statement of the Issuers that covers any of the Notes, the Exchange Notes or the Private Exchange Notes (and the related Guarantees) filed with the SEC under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of the issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraphs hereto.
Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and the trustee (if any) under any indenture governing the Exchange Notes and Private Exchange Notes (and the related Guarantees).
Underwritten registration or underwritten offering: A registration in which securities of one or more of the Issuers are sold to an underwriter for reoffering to the public.
2. EXCHANGE OFFER
To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Issuers shall file with the SEC, no
later than the Filing Date, a Registration Statement (the "Exchange Offer
Registration Statement") on an appropriate registration form with respect to a
registered offer (the "Exchange Offer") to exchange any and all of the
Registrable Notes for a like aggregate principal amount of notes of the Company,
guaranteed by the Guarantors, that are identical in all material respects to the
Securities (the "Exchange Notes"), except that (i) the Exchange Notes shall
contain no restrictive legend thereon and (ii) interest thereon shall accrue
from the last date on which interest was paid on the Notes or, if no such
interest has been paid, from the Issue Date, and which are entitled to the
benefits of the Indenture or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are necessary to comply with the TIA) and
which, in either case, has been qualified under the TIA. The Exchange Offer
shall comply with all applicable tender offer rules and regulations under the
Exchange Act and other applicable law. The Issuers shall use their reasonable
best efforts to (x) cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 20 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 185th day
after the Issue Date. If, after the Exchange Offer Registration Statement is
initially declared effective by the SEC, the Exchange Offer or the issuance of
the Exchange Notes thereunder is interfered with by any stop order, injunction
or other order or requirement of the SEC or any other governmental agency or
court, the Exchange Offer Registration Statement shall be deemed not to have
become effective for purposes of this Agreement during the period of such
interference, until the Exchange Offer may legally resume.
Each Holder that participates in the Exchange Offer will be required, as a condition to its participation in the Exchange Offer, to represent to the Issuers in writing (which may be contained in the applicable letter of transmittal) that: (i) any Exchange Notes to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the consummation of the Exchange Offer such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes in violation of the provisions of the Securities Act, (iii) such Holder is not an affiliate of the Company within the meaning of the Securities Act (iv) if such Holder is not a broker-dealer, such Holder is not engaged in, and does not intend to engage in, the distribution of Exchange Notes, (v) if such Holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Notes that were acquired as a result of market-making or other trading activities, such Holder will deliver a prospectus in connection with any resale of such Exchange Notes and (vi) the Holder is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. Such Holder will also be required to make such other representations as may be necessary under applicable SEC rules, regulations or interpretations to render available the use of Form S-4 or any other appropriate form under the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply solely with
respect to Registrable Notes that are Private Exchange Notes, Exchange Notes as
to which Section 2(c)(iv) is applicable and Exchange Notes held by Participating
Broker-Dealers (as defined), and the Issuers shall have no further obligation to
register Registrable Notes (other than Private Exchange Notes and other than in
respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 hereof.
No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement.
The Issuers shall include within the Prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies represent the prevailing views of the staff of the SEC. Such "Plan of Distribution" section shall also expressly permit, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent permitted by applicable policies and regulations of the SEC, all Participating Broker-Dealers, and include a statement describing the means by which Participating Broker-Dealers may resell the Exchange Notes in compliance with the Securities Act.
The Issuers shall use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as is necessary to comply with applicable law in connection with any resale of the Exchange Notes covered thereby, provided, however, that such period shall not be required to exceed 180 days, or such longer period if extended pursuant to the last sentence of Section 5 (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial Purchasers hold any Notes acquired by them that have the status of an unsold allotment in the initial distribution, the Issuers upon the request of the Initial Purchasers shall simultaneously with the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to the Initial Purchasers, in exchange (the "Private Exchange") for such Notes held by the Initial Purchasers, a like principal amount of notes (the "Private Exchange Notes") of the Issuers, guaranteed by the Guarantors, that are identical in all material respects to the Exchange Notes except for the placement of a restrictive legend on such Private Exchange Notes. The Private Exchange Notes shall be issued pursuant to the same indenture as the Exchange Notes and bear the same CUSIP number as the Exchange Notes.
In connection with the Exchange Offer, the Issuers shall:
mail, or cause to be mailed, to each Holder of record entitled to participate in the Exchange Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;
use their best efforts to keep the Exchange Offer open for not less than 20 days after the date that notice of the Exchange Offer is mailed to Holders (or longer if required by applicable law);
utilize the services of a depositary for the Exchange Offer with an address in the Borough of Manhattan, The City of New York;
permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Exchange Offer shall remain open; and
otherwise comply in all material respects with all applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the Private Exchange, if any, the Issuers shall:
accept for exchange all Registrable Notes validly tendered and not validly withdrawn pursuant to the Exchange Offer and the Private Exchange, if any;
deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and
cause the Trustee to authenticate and deliver promptly to each Holder of Securities, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Securities of such Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than that (i) the Exchange Offer or the Private Exchange, as the case may be, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) no action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair the ability of the Issuers to proceed with the Exchange Offer or the Private Exchange, (iii) all governmental approvals shall have been obtained, which approvals the Issuers deem necessary for the consummation of the Exchange Offer or the Private Exchange, (iv) there has not been any material change, or development involving a prospective material change, in the business or financial affairs of the Issuers which, in the reasonable judgment of the Issuers, would materially impair the Issuers' ability to consummate the Exchange Offer or the Private Exchange, and (v) there has not been proposed, adopted or enacted any law, statute, rule or regulation which, in the reasonable judgment of the Issuers, would materially impair the Issuers' ability to consummate the Exchange Offer or the Private Exchange
or have a material adverse effect on the Issuers if the Exchange Offer or the Private Exchange was consummated. In the event that the Issuers are unable to consummate the Exchange Offer or the Private Exchange due to any event listed in clauses (i) through (v) above, the Issuers shall not be deemed to have breached any covenant under this Section 2.
The Exchange Notes and the Private Exchange Notes shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in either case, has been qualified under the TIA or is exempt from such qualification and shall provide that the Exchange Notes shall not be subject to the transfer restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the Exchange Notes, the Private Exchange Notes and the Securities shall vote and consent together on all matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Securities will have the right to vote or consent as a separate class on any matter.
If (i) because of any change in law or in currently prevailing interpretations of the staff of the SEC, the Issuers are not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not consummated within 185 days of the Issue Date, (iii) the holder of Private Exchange Notes so requests in writing to the Issuers within 60 days after the consummation of the Exchange Offer, or (iv) in the case of any Holder that participates in the Exchange Offer, such Holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an affiliate of one of the Issuers within the meaning of the Securities Act), then in the case of each of clauses (i) to and including (iv) of this sentence, the Issuers shall promptly deliver to the Holders and the Trustee written notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant to Section 3 hereof.
3. SHELF REGISTRATION
If at any time a Shelf Notice is delivered as contemplated by
Section 2(c) hereof, then:
Shelf Registration. The Issuers shall file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is applicable (the "Initial Shelf Registration"). The Issuers shall use their best efforts to file with the SEC the Initial Shelf Registration on or before the applicable Filing Date. The Initial Shelf Registration shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). The Issuers shall not permit any securities other than the Registrable Notes to be included in the Initial Shelf Registration or any Subsequent Shelf Registration (as defined below).
The Issuers shall, subject to applicable law or applicable interpretation of the staff of the SEC, use their reasonable best efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial
Shelf Registration continuously effective under the Securities Act [until the
date which is two years from the Issue Date or such shorter period ending when
(i) all Registrable Notes covered by the Initial Shelf Registration have been
sold in the manner set forth and as contemplated in the Initial Shelf
Registration or cease to be outstanding or (ii) a Subsequent Shelf Registration
covering all of the Registrable Notes covered by and not sold] under the Initial
Shelf Registration or an earlier Subsequent Shelf Registration has been declared
effective under the Securities Act (the "Effectiveness Period"), provided,
however, that the Effectiveness Period in respect of the Initial Shelf
Registration shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174 under
the Securities Act and as otherwise provided herein.
No holder of Registrable Notes may include any of its Registrable Notes in any Shelf Registration Statement pursuant to this Agreement unless and until such holder furnishes to the Company in writing, within 15 business days after receipt of a request therefor, such information concerning such Holder required to be included in any Shelf Registration Statement or Prospectus or preliminary prospectus included therein. No holder of Registrable Notes shall be entitled to Additional Interest pursuant to Section 4 hereof unless and until such holder shall have provided all such information. Each holder of Registrable Notes as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make information previously furnished to the Company by such Holder not materially misleading.
Subsequent Shelf Registrations. If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Issuers shall use their reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Initial Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement pursuant to Rule 415 covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed, the Issuers shall use their best efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such subsequent Shelf Registration continuously effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration or any Subsequent Shelf Registration was previously continuously effective. As used herein the term "Shelf Registration" means the Initial Shelf Registration and any Subsequent Shelf Registration.
Supplements and Amendments. The Issuers shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or by any underwriter of such Registrable Notes.
4. ADDITIONAL INTEREST
The Issuers and the Initial Purchasers agree that the Holders will suffer damages if the Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers agree to pay, as liquidated damages, additional interest on the Notes ("Additional Interest") under the circumstances and to the extent set forth below (each of which shall be given independent effect):
if (A) neither the Exchange Offer Registration Statement nor the Initial Shelf Registration has been filed on or prior to the applicable Filing Date or (B) notwithstanding that the Issuers have consummated or will consummate the Exchange Offer, the Issuers are required to file a Shelf Registration and such Shelf Registration is not filed on or prior to the Filing Date applicable thereto, then, commencing on the day after any such Filing Date, Additional Interest shall accrue on the principal amount of the Securities at a rate of 0.50% per annum for the first 90 days immediately following each such Filing Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
if (A) neither the Exchange Offer Registration Statement nor the Initial Shelf Registration is declared effective by the SEC on or prior to the relevant Effectiveness Date or (B) notwithstanding that the Issuers have consummated or will consummate the Exchange Offer, the Issuers are required to file a Shelf Registration and such Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Date in respect of such Shelf Registration, then, commencing on the day after such Effectiveness Date, Additional Interest shall accrue on the principal amount of the Securities at a rate of 0.50% per annum for the first 90 days immediately following the day after such Effectiveness Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
if (A) the Issuers have not exchanged Exchange Notes for all Securities validly tendered in accordance with the terms of the Exchange Offer on or prior to the 185th day after the Issue Date or (B) if applicable, a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period, then Additional Interest shall accrue on the principal amount of the Securities at a rate of 0.50% per annum for the first 90 days commencing on the (x) 186th day, as the case may be, after such effective date, in the case of (A) above, or (y) the day such Shelf Registration ceases to be effective in the case of (B) above, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not accrue under more than one of the foregoing clauses (i)-(iii) at any one time and at no time shall the aggregate amount of Additional Interest exceed 1.00% per annum; provided, further, however, that (1) upon the filing of the applicable Exchange Offer Registration Statement or the applicable Shelf Registration
Statement as required hereunder (in the case of clause (i) above of this Section
4), (2) upon the effectiveness of the Exchange Offer Registration Statement or
the applicable Shelf Registration Statement as required hereunder (in the case
of clause (ii) of this Section 4), or (3) upon the exchange of the applicable
Exchange Notes for all Securities tendered (in the case of clause (iii)(A) of
this Section 4), or upon the effectiveness of the applicable Shelf Registration
Statement which had ceased to remain effective (in the case of (iii)(B) of this
Section 4), Additional Interest on the Notes in respect of which such events
relate as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
The Issuers shall notify the Trustee within three business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an "Event Date"). Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in cash semiannually on each June 1 and December 1, (to the holders of record on the May 15 and November 15 immediately preceding such dates), commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Registrable Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360.
Registration Procedures
In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit the sale of the securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Issuers hereunder each of the Issuers shall:
Prepare and file with the SEC prior to the applicable Filing Date, a Registration Statement or Registration Statements as prescribed by Sections 2 or 3 hereof, and use their reasonable best efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that, if (1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Issuers shall furnish to and afford the Holders of the Registrable Notes included in such Registration Statement or each such Participating Broker-Dealer, as the case may be, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five days prior to such filing, or such later date as is reasonable under the circumstances). The Issuers shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate principal amount of the Registrable Notes included in such Registration Statement, or any such Participating Broker-Dealer, as the case may be, their counsel, or the managing underwriters, if any, shall reasonably object on a timely basis.
Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration Statement or Exchange Offer Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to each of them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus. The Issuers shall be deemed not to have used their reasonable best efforts to keep a Registration Statement effective during the Effectiveness Period or the Applicable Period, as the case may be, relating thereto if any Issuer voluntarily takes any action that would result in selling Holders of the Registrable Notes covered thereby or Participating Broker-Dealers seeking to sell Exchange Notes not being able to sell such Registrable Notes or such Exchange Notes during that period unless such action is required by applicable law or permitted by this Agreement.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto from whom the Issuers have received
written notice that it will be a Participating Broker-Dealer in the Exchange
Offer, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly (but in any event within two business days), and
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request in writing, obtain, at the
sole expense of the Issuers, one conformed copy of such Registration Statement
or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registrable Notes or resales
of Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any underwriting
agreement) contemplated by Section 5(l) hereof cease to be true and correct in
all material respects, (iv) of the receipt by any Issuer of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or the
Exchange Notes
to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the Issuers' determination that a post-effective amendment to a Registration Statement would be appropriate.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued, to use its reasonable best efforts to obtain the withdrawal of any such order at the earliest possible moment.
If a Shelf Registration is filed pursuant to Section 3 and if requested by the managing underwriter or underwriters (if any), the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering or any Participating Broker-Dealer, (i) as promptly as practicable incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters (if any), such Holders, any Participating Broker-Dealer or counsel for any of them reasonably request to be included therein, (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after an Issuer has received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment, and (iii) supplement or make amendments to such Registration Statement.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish to each selling Holder of Registrable Notes and to each such Participating Broker-Dealer who so requests and to their respective counsel and each managing underwriter, if any, at the sole expense of the Issuers, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules, and, if requested in writing, all documents incorporated or deemed to be incorporated therein by reference and all exhibits.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the Issuers, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and if
requested in writing, any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Issuers hereby consent to the use of such Prospectus and each
amendment or supplement thereto (provided the manner of such use complies with
any limitations resulting from any applicable state securities "Blue Sky" laws
as provided in writing to such Holders by the Company and subject to the
provisions of this Agreement) each of the selling Holders of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.
Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Offer Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the managing underwriter or underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer, or the managing underwriter or underwriters reasonably request in writing; provided, however, that where Exchange Notes held by Participating Broker-Dealers or Registrable Notes are offered other than through an underwritten offering, the Issuers agree to cause their counsel to perform Blue Sky investigations and file registrations and qualifications required to be filed pursuant to this Section 5(h), keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; provided, however, that no Issuer shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject.
If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Registrable Notes to be in such
denominations and registered in such names as the managing underwriter or underwriters, if any, or selling Holders may reasonably request.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole expense of the Issuers, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not contain an 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, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Issuers shall not be required to amend or supplement a Registration Statement, any related Prospectus or any document incorporated therein by reference, in the event that, and for a period not to exceed an aggregate of 60 days in any calendar year if, (i) an event occurs and is continuing as a result of which the Shelf Registration would, in the Issuers' good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) (a) the Issuers determine in their good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Issuers or (b) the disclosure otherwise relates to a pending material business transaction that has not yet been publicly disclosed.
Prior to the effective date of the first Registration Statement relating to the Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Notes.
In connection with any underwritten offering of Registrable Notes pursuant to a Shelf Registration, enter into an underwriting agreement as is customary in underwritten offerings of debt securities similar to the Securities in form and substance reasonably satisfactory to the Issuers and take all such other actions as are reasonably requested by the managing underwriter or underwriters in order to expedite or facilitate the registration or the disposition of such Registrable Notes and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters with respect to the business of the Issuers and the subsidiaries of the Issuers (including any acquired business, properties or entity, if applicable) and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Securities, and confirm the same in writing if and when requested in form and substance reasonably satisfactory to the
Issuers; (ii) upon the request of Holders of 10% of the Registrable Notes, obtain the written opinions of counsel to the Issuers and written updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions reasonably requested in underwritten offerings and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) upon the request of Holders of 10% of the Registrable Notes, use its reasonable best efforts to obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the independent public accountants of the Issuers (and, if necessary, any other independent public accountants of the Issuers, any subsidiary of the Issuers or of any business acquired by the Issuers for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of debt securities similar to the Securities and such other matters as reasonably requested by the managing underwriter or underwriters as permitted by the Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable to the sellers and underwriters, if any, than those set forth in Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement and the managing underwriter or underwriters or agents, if any). The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder.
If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Issuers and
subsidiaries of the Issuers (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Issuers
and any of their subsidiaries to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement and
Prospectus. The foregoing inspection and information gathering shall be
coordinated on behalf of the other parties by one counsel designated by such
parties as described in Section 6(b) hereof. Each Inspector shall agree in
writing that it will keep the Records confidential and that it will not disclose
any of the Records that the Issuers determine, in good faith, to be confidential
(i) the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction, or (ii) the information in such Records
has been made generally available to the public; provided, however, that prior
notice shall be provided as soon as practicable to the Issuers of the potential
disclosure of any information by such Inspector pursuant to clause (i) of this
sentence to permit
the Issuers to obtain a protective order or take other appropriate action to prevent the disclosure of such information at the Company's sole expense (or waive the provisions of this paragraph (m)) and that such Inspector shall take such actions as are reasonably necessary to protect the confidentiality of such information (if practicable) to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of the Holder or any Inspector.
Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a) hereof, as the case may be, to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable Notes; and in connection therewith, cooperate with the trustee under any such indenture and the Holders of the Registrable Notes to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner.
Comply with all applicable rules and regulations of the SEC and make generally available to its securityholders with regard to any applicable Registration Statement, a consolidated earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 60 days after the end of any fiscal quarter (or 120 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Issuers after the effective date of a Registration Statement, which statements shall cover said 12-month periods.
Upon consummation of the Exchange Offer or a Private Exchange, obtain an opinion of counsel to the Issuers, in a form customary for underwritten transactions, addressed to the Trustee for the benefit of all Holders of Registrable Notes participating in the Exchange Offer or the Private Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes, as the case may be, the related Guarantee and the related indenture constitute legal, valid and binding obligations of the Issuers, enforceable against them in accordance with their respective terms, subject to customary exceptions and qualifications.
If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Registrable Notes by Holders to the Issuers (or to such other Person as directed by the Issuers) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be, the Issuers shall mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are being cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be; in no event shall such Registrable Notes be marked as paid or otherwise satisfied.
Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD").
Use their reasonable best efforts to take all other steps reasonably necessary to effect the registration of the Registrable Notes covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which any registration is being effected to furnish to the Issuers such information regarding such seller and the distribution of such Registrable Notes as the Issuers may, from time to time, reasonably request. The Issuers may exclude from such registration the Registrable Notes of any seller so long as such seller fails to furnish such information within a reasonable time after receiving such request. Each seller as to which any Shelf Registration is being effected agrees to furnish promptly to the Issuers all information required to be disclosed in order to make the information previously furnished to the Issuers by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon actual receipt of any notice from the Issuers of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof, or until it is advised in writing (the "Advice") by the Issuers that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto. In the event that the Issuers shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof or (y) the Advice.
5. REGISTRATION EXPENSES
All fees and expenses incident to the performance of or compliance with this Agreement by the Issuers (other than any underwriting discounts or commissions) shall be borne by the Issuers including, without limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with an underwritten offering and (b) reasonable fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers, (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(l)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by the Issuers, (viii) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (ix) the
expense of any annual audit, (x) any fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and the obtaining of a rating of the securities, in each case, if applicable,
and (xi) the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, indentures and any other
documents necessary in order to comply with this Agreement.
The Issuers shall (i) reimburse the Holders of the Registrable Notes being registered in a Shelf Registration or the reasonable fees and disbursements of not more than one counsel (in addition to appropriate local counsel) chosen by the Holders of a majority in aggregate principal amount of the Registrable Notes to be included in such Registration Statement and (ii) reimburse reasonable out-of-pocket expenses (other than legal expenses and other sale commissions or similar costs) of Holders of Registrable Notes incurred in connection with the registration and sale of Registrable Notes pursuant to a Shelf Registration or in connection with exchange of the Registrable Notes in connection with the Exchange Offer. In addition, the Issuers shall reimburse the Initial Purchasers for the reasonable fees and expenses of one counsel in connection with the Exchange Offer, which shall be Cahill Gordon & Reindel, and shall not be required to pay any other legal expenses in connection therewith.
6. INDEMNIFICATION
Each of the Issuers, jointly and severally, agrees to indemnify and hold harmless each Holder of Registrable Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, the affiliates, officers, directors, representatives, employees and agents of each such Person, and each Person, if any, who controls any such Person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from and against any and all losses, claims, damages, judgments, liabilities and expenses (including, without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Issuers shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Participant furnished to the Issuers in writing by such Participant expressly for use therein and with respect to any preliminary Prospectus, to the extent that any such loss, claim, damage or liability arises solely from the fact that any Participant sold Notes to a person to whom there was not sent or given a copy of the Prospectus (as amended or supplemented) at or prior to the written confirmation of such sale if the Issuers shall have previously furnished copies thereof to the Participant in accordance herewith and the Prospectus (as amended or supplemented) would have corrected any such untrue statement or omission.
Each Participant agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, their respective affiliates, officers, directors,
representatives, employees and agents of each Issuer and each Person who
controls each Issuer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent (but on a several, and not
joint, basis) as the foregoing indemnity from the Issuers to each Participant,
but only with reference to information relating to such Participant furnished to
the Issuers in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such Person (the "Indemnified Person") shall promptly notify the Persons against whom such indemnity may be sought (the "Indemnifying Persons") in writing, and the Indemnifying Persons, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may reasonably designate in such proceeding and shall pay the reasonable fees and expenses actually incurred by such counsel related to such proceeding; provided, however, that the failure to so notify the Indemnifying Persons will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent such failure results in the forfeiture by the Indemnifying Person of substantial rights and defenses and the Indemnifying Person was not otherwise aware of such action or claim. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Persons and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons shall have failed within a reasonable period of time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both
any Indemnifying Person and the Indemnified Person 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 Persons shall not, in connection with such proceeding or separate but substantially similar related proceeding in the same jurisdiction arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed promptly as they are incurred. Any such separate firm for the Participants and such control Persons of Participants shall be designated in writing by Participants who sold a majority in interest of Registrable Notes and Exchange Notes sold by all such Participants and shall be reasonably acceptable to the Issuers, and any such separate firm for the Issuers, their affiliates, officers, directors, representatives, employees and agents and such control Persons of such Issuer shall be designated in writing by such Issuer and shall be reasonably acceptable to the Holders.
The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff for which the Indemnified Person is entitled to indemnification pursuant to this Agreement, each Indemnifying Person agrees to indemnify and hold harmless each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Person (which consent shall not be unreasonably withheld or delayed), effect any settlement or compromise of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party, or indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional written release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of such Indemnified Person.
If the indemnification provided for in the first and second paragraphs of this Section 7 is for any reason unavailable to, or insufficient to hold harmless, an Indemnified Person in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers on the one hand or such Participant or such other Indemnified Person, as the case may be, on the other, the parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances.
The parties agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Participants 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 the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages, judgments, liabilities and expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall a Participant be required to contribute any amount in excess of the amount by which proceeds received by such Participant from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of any damages that such Participant has otherwise been required to pay or has paid 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.
Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Issuers, their directors, officers, employees or agents or any
person controlling an Issuer, and (ii) any termination of this Agreement.
The indemnity and contribution agreements contained in this Section 7 will be in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above.
7. RULES 144 AND 144A
Each of the Issuers covenants and agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and, for so long as any Registrable Notes remain outstanding, and if such Issuer is not required to file such reports, such Issuer will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such information of the type specified in Sections 13 and 15(d) of the Exchange Act. Each of the Issuers further covenants and agrees, for so long as any Registrable Notes remain outstanding, to make available to any Holder or beneficial owner of Registrable Notes in connection with any sale thereof and any prospective purchaser of such Registrable Notes from such Holder or beneficial owner the information
required by Rule 144A(d)(4) and 144(c) under the Securities Act in order to permit resales of such Registrable Notes pursuant to Rule 144A and Rule 144(k).
Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering and shall be reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
8. MISCELLANEOUS
No Inconsistent Agreements. The Issuers have not, as of the date hereof, and the Issuers shall not, after the date of this Agreement, enter into any agreement with respect to any of their securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' other issued and outstanding securities under any such agreements. The Issuers will not enter into any agreement with respect to any of their securities which will grant to any Person piggy-back registration rights with respect to any Registration Statement.
Adjustments Affecting Registrable Notes. The Issuers shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a registration undertaken pursuant to this Agreement.
Additional Amounts of Notes. The Notes are limited in aggregate principal amount to $200,000,000, of which $125,000,000 will be issued on the date hereof. Additional amounts of Notes may be issued in one or more series from time to time under the Indenture (collectively "Additional Notes") prior to the filing of any Registration Statement. The Issuers shall provide the registration rights set forth under this Agreement to the Initial Purchasers and any subsequent holder or holders of such Additional Notes and notwithstanding anything contained herein may include such Additional Notes in any Registration Statement filed hereunder.
Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, otherwise than with the prior written consent of (I) the Issuers and (II)(A) the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes and (B) in circumstances that would adversely affect the Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers; provided, however, that Section 7 and this Section 10(c) may not be amended, modified or supplemented without the prior written consent of each Holder and each Participating Broker-Dealer (including any person who was a Holder or Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant to any Registration Statement) affected by any such amendment, modification or supplement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being sold pursuant to such Registration Statement.
Notices. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, next-day air courier or facsimile:
if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer, as the case may be, set forth on the records of the registrar under the Indenture.
if to the Issuers, at the address as follows:
TransDigm Inc.
8233 Imperial Drive
Waco, TX 76712
Facsimile No.: (254) 741-5402
Attention: Chief Financial Officer
with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Facsimile No.: (212) 751-4864
Attention: Kirk Davenport
All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier; and when transmission is confirmed, if sent by facsimile.
Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address and in the manner specified in such Indenture.
Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, the Holders and the Participating Broker-Dealers; provided, however, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Notes in violation of the terms of the Purchase Agreement or the Indenture.
Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
Securities Held by the Issuers or Their Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by the Issuers or their affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
Third-Party Beneficiaries. Holders of Registrable Notes and Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this Agreement may be enforced by such Persons.
Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understandings, correspondence, conversations and memoranda between the Holders on the one hand and the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby.
WITNESS the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.
TRANSDIGM INC.,
as Issuer
By: /s/ Peter Radekevich
----------------------------------
Name: Peter Radekevich
Title: Chief Financial Officer
|
TRANSDIGM HOLDING COMPANY,
as Guarantor
By: /s/ Peter Radekevich
----------------------------------
Name: Peter Radekevich
Title: Chief Financial Officer
|
MARATHON POWER TECHNOLOGIES COMPANY,
as Guarantor
By: /s/ Peter Radekevich
----------------------------------
Name: Peter Radekevich
Title: Chief Financial Officer
|
The foregoing Agreement is hereby confirmed and accepted as of the date first above written.
BT ALEX. BROWN INCORPORATED,
as Initial Purchaser
By: /s/ Robert Lipps
--------------------------
Name: Robert Lipps
Title: Principal
|
CREDIT SUISSE FIRST BOSTON CORPORATION,
as Initial Purchaser
By: /s/ M. W. Kennelley
--------------------------
Name: M. W. Kennelley
Title: Managing Director
|
Exhibit 4.5
TRANSDIGM HOLDING COMPANY
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
INDENTURE
Dated as of December 3, 1998
$20,000,000 12% Pay-in-Kind Notes due 2009
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
--------------- -----------------
310 (a)(1). . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(i)(b). . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(ii)(c) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(iii)(c). . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(iv)(c) . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . 7.07
(v)(c). . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(vi)(d) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 4.03; 11.02
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(vii)(e). . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . NA
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.05, 11.02
(A)(c). . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence). . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(B)(c). . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a). . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
------------------------
N.A. means not applicable.
|
* This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. OTHER DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS. . . . . . . . . . . . . . . 22
SECTION 1.04. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . 22
ARTICLE 2 THE NOTES
SECTION 2.01. FORM AND DATING. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.02. EXECUTION AND AUTHENTICATION.. . . . . . . . . . . . . . . . 23
SECTION 2.03. REGISTRAR AND PAYING AGENT.. . . . . . . . . . . . . . . . . 24
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. . . . . . . . . . . . . 24
SECTION 2.05. HOLDER LISTS.. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.06. TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . . . 25
SECTION 2.07. REPLACEMENT NOTES. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.08. OUTSTANDING NOTES. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.09. TREASURY NOTES.. . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.10. TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11. CANCELLATION.. . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.12. DEFAULTED INTEREST.. . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.13. CUSIP NUMBERS. . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 3 REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.. . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. . . . . . . . . . . . . . 31
SECTION 3.03. NOTICE OF REDEMPTION.. . . . . . . . . . . . . . . . . . . . 31
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.. . . . . . . . . . . . . . . 32
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . . . 32
SECTION 3.06. NOTES REDEEMED IN PART.. . . . . . . . . . . . . . . . . . . 32
SECTION 3.07. OPTIONAL REDEMPTION. . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.08. MANDATORY REDEMPTION.. . . . . . . . . . . . . . . . . . . . 33
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF NET PROCEEDS OFFER
AMOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 4 COVENANTS
SECTION 4.01. PAYMENT OF NOTES.. . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . . . 36
SECTION 4.03. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.04. COMPLIANCE CERTIFICATE.. . . . . . . . . . . . . . . . . . . 37
SECTION 4.05. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.. . . . . . . . . . . . . . . 37
SECTION 4.07. RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.. . . . . . . . . . . . . . . . . . 40
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SECTION 4.09. INCURRENCE OF INDEBTEDNESS.. . . . . . . . . . . . . . . . . 41
SECTION 4.10. ASSET SALES. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.. . . . . . . . . . . . . . . . 43
SECTION 4.12. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.13. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.14. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.. . . . . . . . . 45
SECTION 4.16. ADDITIONAL INDEBTEDNESS. . . . . . . . . . . . . . . . . . . 46
SECTION 4.17. NO SENIOR SUBORDINATED DEBT. . . . . . . . . . . . . . . . . 46
SECTION 4.18. RESTRICTION ON PREFERRED STOCK OF CERTAIN SUBSIDIARIES.. . . 47
SECTION 4.19. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF OPCO.. 47
ARTICLE 5 SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.. . . . . . . . . . 47
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . . 48
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.02. ACCELERATION.. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.03. OTHER REMEDIES.. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.04. WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . . . 50
SECTION 6.05. CONTROL BY MAJORITY. . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.06. LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. . . . . . . . 51
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.. . . . . . . . . . . . . . . . . 52
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.. . . . . . . . . . . . . . 52
SECTION 6.10. PRIORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.11. UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . . . 53
ARTICLE 7 TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.02. RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.. . . . . . . . . . . . . . . . 55
SECTION 7.04. TRUSTEE'S DISCLAIMER.. . . . . . . . . . . . . . . . . . . . 55
SECTION 7.05. NOTICE OF DEFAULTS.. . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.. . . . . . . . . 55
SECTION 7.07. COMPENSATION AND INDEMNITY.. . . . . . . . . . . . . . . . . 56
SECTION 7.08. REPLACEMENT OF TRUSTEE.. . . . . . . . . . . . . . . . . . . 56
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.. . . . . . . . . . . . . . 57
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. . . . . . . . . . . . . . . . 57
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. . . . . . 58
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.. . 58
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.. . . . . . . . . . . . . . . 58
SECTION 8.03. COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . 59
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.. . . . . . . . . 59
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.. . . . . . . . . . . . . . 61
SECTION 8.06. SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . 61
SECTION 8.07. REPAYMENT TO COMPANY.. . . . . . . . . . . . . . . . . . . . 61
SECTION 8.08. REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.09. SURVIVAL.. . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. . . . . . . . . . . . . 62
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.. . . . . . . . . . . . . . 63
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. . . . . . . . . . . . . 64
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. . . . . . . . . . . . . . 65
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.. . . . . . . . . . . . . . 65
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . . . . 65
ARTICLE 10 SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE. . . . . . . . . . . . . . . . . . 65
SECTION 10.02. INTENTIONALLY OMITTED.. . . . . . . . . . . . . . . . . . . 66
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY. . . . . . . . . . . . 66
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.. . . . . . . . . . . . . 67
SECTION 10.05. ACCELERATION OF NOTES.. . . . . . . . . . . . . . . . . . . 68
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.. . . . . . . . . . . . 68
SECTION 10.07. NOTICE BY COMPANY.. . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.08. SUBROGATION.. . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.09. RELATIVE RIGHTS.. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. . . . . . . . 70
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. . . . . . . . . . 70
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT. . . . . . . . . . . . . 70
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.. . . . . . . . . . . 71
SECTION 10.14. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 11 MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS. . . . . . . . . . . . . . . . 71
SECTION 11.02. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. . . . . 73
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.. . . . . . . 73
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.. . . . . . . . . . . . . . . . 73
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.08. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.. . . . . . . 74
SECTION 11.10. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.11. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.12. COUNTERPART ORIGINALS.. . . . . . . . . . . . . . . . . . . 74
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC. . . . . . . . . . . . . . 74
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EXHIBITS
--------
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
|
INDENTURE dated as of December 3, 1998 among TransDigm Holding Company, a Delaware corporation (the "COMPANY"), and State Street Bank and Trust Company, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Subsidiaries or that is assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation.
"ADDITIONAL INTEREST" means all additional interest then owing pursuant to Section 4 of the Registration Rights Agreement.
"ADDITIONAL NOTES" means Notes issued as interest, substantially in the form of Exhibit A hereto.
"AFFILIATE" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Securitization Entity makes an Investment in connection with a Qualified Securitization Transaction shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such investment.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ALL OR SUBSTANTIALLY ALL" shall have the meaning given such phrase in the Revised Model Business Corporation Act.
"ASSET ACQUISITION" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; PROVIDED, HOWEVER, that Asset Sales or other dispositions shall not include (i) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $1.2 million, (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted by Section 5.01 hereof or any disposition that constitutes a Change of Control, (iii) the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (iv) disposals or replacements of obsolete equipment in the ordinary course of business, (v) the sale, lease, conveyance, disposition or other transfer by the Company or any Restricted Subsidiary of assets or property to one or more Restricted Subsidiaries in connection with Investments permitted by Section 4.07 hereof or pursuant to any Permitted Investment, and (vi) sales of accounts receivable, equipment and related assets (including contract rights) of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the fair market value thereof, including cash in an amount at least equal to 75% of the fair market value thereof as determined in accordance with GAAP. For the purposes of clause (vi) of this paragraph, Purchase Money Notes shall be deemed to be cash.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL STOCK" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock, of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means: (i) 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 thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's; (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250.0 million; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above.
"CHANGE OF CONTROL" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), other than to the Permitted Holders or their Related Parties or any Permitted Group; (ii) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of this Indenture); (iii) any Person or Group (other than the Permitted Holders or their Related Parties or any Permitted Group) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Company at a time when the Permitted Holders and their Related Parties in the aggregate own a lesser percentage of the aggregate ordinary voting power represented by such issued and outstanding Capital Stock; or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors.
"COMMON STOCK" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.
"COMPANY" means TransDigm Holding Company, and any and all successors thereto.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of such Person's (i) Consolidated Net Income; and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes and foreign withholding taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period; (B) Consolidated Interest Expense; (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period (other than normal accruals in the ordinary course of business), all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP; and (D) any cash charges resulting from the Transactions that are incurred prior to the six month anniversary of the Issue Date.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the four
full fiscal quarters (the "Four-Quarter Period") ending prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio for which financial statements are available (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the
Four-Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "Consolidated EBITDA" and "Consolidated
Fixed Charges" shall be calculated after giving effect on a pro forma basis
for the period of such calculation to (i) the incurrence or repayment of any
Indebtedness or the issuance of any Designated Preferred Stock of such Person
or any of its Restricted Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any incurrence
or repayment of other Indebtedness or the issuance or redemption of other
Preferred Stock (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business
for working capital purposes pursuant to revolving credit facilities,
occurring during the Four-Quarter Period or at any time subsequent to the
last day of the Four-Quarter Period and on or prior to the Transaction Date,
as if such incurrence or repayment or issuance or redemption, as the case may
be (and the application of the proceeds thereof), had occurred on the first
day of the Four-Quarter Period; and (ii) any Asset Sales or other
dispositions or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
such Person or one of its Restricted Subsidiaries (including any Person who
becomes a Restricted Subsidiary as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness and
also including any Consolidated EBITDA (including any pro forma expense and
cost reductions and other operating improvements that have occurred or are
reasonably expected to occur, all as determined in accordance with Regulation
S-X promulgated under the Securities Act) attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale or other disposition
and without regard to clause (iv) of the definition of Consolidated Net
Income) occurring during the Four-Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction
Date, as if such Asset Sale or other disposition or Asset Acquisition
(including the incurrence or assumption of any such Acquired Indebtedness)
occurred on the first day of the Four-Quarter Period. If such Person or any
of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness
of a third Person, the preceding sentence shall give effect to the incurrence
of such guaranteed Indebtedness as if such Person or any Restricted
Subsidiary of such Person had directly incurred or otherwise assumed such
other Indebtedness that was so guaranteed.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio": (i) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and (ii) notwithstanding clause (i) of this paragraph, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense; plus (ii) the product of (x) the amount of all cash dividend payments on any series of Preferred Stock of such Person times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal; plus (iii) the
product of (x) the amount of all dividend payments on any series of Permitted Subsidiary Preferred Stock times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local income tax rate of such Person, expressed as a decimal; PROVIDED that with respect to any series of Preferred Stock that was not paid cash dividends during such period but that is eligible to be paid cash dividends during any period prior to the maturity date of the Notes, cash dividends shall be deemed to have been paid with respect to such series of Preferred Stock during such period for purposes of this clause (iii).
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any period, the sum of, without duplication, (i) the aggregate of all cash and non-cash interest expense with respect to all outstanding Indebtedness of such Person and its Restricted Subsidiaries, including the net costs associated with Interest Swap Obligations, for such period determined on a consolidated basis in conformity with GAAP, but excluding amortization or write-off of debt issuance costs, (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; and (iii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP and without any deduction in respect of Preferred Stock dividends; PROVIDED that there shall be excluded therefrom, (i) gains and losses from Asset Sales (without regard to the $1.2 million limitation set forth in the definition thereof) and the related tax effects according to GAAP, (ii) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP, (iii) all extraordinary, unusual or nonrecurring charges, gains and losses (including, without limitation, all restructuring costs and any expense or charge related to the repurchase of Capital Stock or warrants or options to purchase Capital Stock), and the related tax effects according to GAAP, (iv) the net income (or loss) of any Person acquired in a pooling of interests transaction accrued prior to the date it becomes a Restricted Subsidiary of the Company or is merged or consolidated with or into the Company or any Restricted Subsidiary of the Company, (v) the net loss of any Person, other than a Restricted Subsidiary of the Company, (vi) the net income of any Person, other than a Restricted Subsidiary of the Company, except to the extent of cash dividends or distributions paid to the Company or a Restricted Subsidiary of the Company by such Person, (vii) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets, (viii) any non-cash compensation charges, including any arising from existing stock options resulting from any merger or recapitalization transaction and (ix) for purposes of Section 4.07 only, all cash and noncash interest expense with respect to the Notes and any Indebtedness incurred pursuant to the terms of clause (xvii) of the definition of Permitted Indebtedness. For purposes of clause (iii)(w) of the first paragraph of Section 4.07 hereof, Consolidated Net Income shall be reduced by any cash dividends paid with respect to any series of Designated Preferred Stock.
"CONSOLIDATED NONCASH CHARGES" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash charges and expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges that require an accrual of or a reserve for cash payments for any future period other than accruals or reserves associated with mandatory repurchases of equity securities).
"CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Issue Date; or (ii) was nominated for election or elected to such Board of Directors by any of the Permitted Holders or with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company.
"CREDIT FACILITIES" means one or more debt facilities (including, without limitation, the New Credit Facility) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) and/or letters of credit or banker's acceptances.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values.
"DEFAULT" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officer's Certificate executed by the principal executive officer and the principal financial officer of the Company or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Noncash Consideration will cease to be considered to be outstanding once it has been sold for cash or Cash Equivalents. At the time of receipt of any Designated Noncash Consideration, the Company shall deliver an Officer's Certificate to the Trustee which shall state the fair market value of such Designated Noncash Consideration and shall state the basis of such valuation, which shall be a report of a nationally recognized investment banking, appraisal or accounting firm with respect to the receipt in one or a series of related transactions of Designated Noncash Consideration with a fair market value in excess of $12.0 million.
"DESIGNATED PREFERRED STOCK" means Preferred Stock that is so
designated as Designated Preferred Stock, pursuant to an Officer's
Certificate executed by the principal executive officer and the principal
financial officer of the Company, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in clause
(iii)(x) of the first paragraph of Section 4.07 hereof.
"DESIGNATED SENIOR DEBT" means (i) Indebtedness under or in respect of the New Credit Facility and (ii) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"DISQUALIFIED CAPITAL STOCK" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event which would
constitute a Change of Control), matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control) on or prior to the final maturity date of the Notes.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.
"EXCHANGE NOTES" means the 12% pay-in-kind Notes due 2009 to be issued in exchange for the Initial Notes and Additional Notes pursuant to the Registration Rights Agreement.
"EXCHANGE OFFER" has the meaning set forth in the Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in the Registration Rights Agreement.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.
"FOUR-QUARTER PERIOD" has the meaning specified in the definition of Consolidated Fixed Charge Coverage Ratio.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect from time to time.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations guaranteed by, the United States of America, and for the payment of which the United States pledges its full faith and credit.
"HEDGING AGREEMENT" means any agreement with respect to the hedging of price risk associated with the purchase of commodities used in the business of the Company and its Restricted Subsidiaries, so long as any such agreement has been entered into in the ordinary course of business and not for purposes of speculation.
"HOLDER" means a Person in whose name a Note is registered.
"INDEBTEDNESS" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all Obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
Obligations under any title retention agreement (but excluding trade accounts
payable and other accrued liabilities arising in the ordinary course of
business), (v) all Obliga-
tions for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) which are secured by any Lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under currency agreements and interest swap agreements of such Person, and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. For the purposes of calculating the amount of Indebtedness of a Securitization Entity outstanding as of any date, the face or notional amount of any interest in receivables or equipment that is outstanding as of such date shall be deemed to be Indebtedness but any such interests held by Affiliates of such Securitization Entity shall be excluded for purposes of such calculation.
"INDENTURE" means this Indenture, as amended or supplemented from time to time.
"INITIAL NOTES" means the 12% pay-in-kind Notes due 2009 of the Company issued on the Issue Date.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is not also a QIB.
"INTEREST PAYMENT DATE" shall have the meaning set forth in the Notes.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock
of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Restricted Subsidiary is no longer a Restricted Subsidiary of the Company (or, in the case of a Restricted Subsidiary that is not Wholly Owned Restricted Subsidiary of the Company, such Restricted Subsidiary has a minority interest that is held by an Affiliate of the Company that is not a Restricted Subsidiary of the Company), the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of.
"ISSUE DATE" means the date hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.
"LIEN" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).
"MARKETABLE SECURITIES" means publicly traded debt or equity securities that are listed for trading on a national securities exchange and that were issued by a corporation whose debt securities are rated in one of the three highest rating categories by either S&P or Moody's.
"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (i) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions); (ii) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements; and (iii) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale.
"NEW CREDIT FACILITY" means the Credit Agreement dated as of the Issue Date among the Company, Opco, the lenders party thereto in their capacities as lenders thereunder and Bankers Trust Company, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise
modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
"NOTES" means, collectively, the Initial Notes, any Additional Notes, the Unrestricted Notes and the Exchange Notes each substantially in the form of Exhibit A hereto, treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
"OFFERING" means the offering of the Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
"OFFICER's CERTIFICATE" means a certificate signed on behalf of the Company by an Officer of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Sections 11.04 and 11.05 hereof.
"OPCO" means TransDigm Inc., a wholly owned subsidiary of the Company.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably acceptable to the Trustee that meets the requirements of Sections 11.04 and 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.
"PERMITTED BUSINESS" means any business (including stock or assets) that derives a majority of its revenues from the business engaged in by the Company and its Restricted Subsidiaries on the Issue Date and/or activities that are reasonably similar, ancillary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
"PERMITTED GROUP" means any group of investors that is deemed to be a "person" (as such term is used in Section 13(d)(3) of the Exchange Act) by virtue of the Stockholders Agreements, as the same may be amended, modified or supplemented from time to time, provided that no single Person (together with its Affiliates), other than the Permitted Holders and their Related Parties, is the "beneficial owner" (as such term is used in Section 13(d) of the Exchange Act), directly or indirectly, of more than 50% of the voting power of the issued and outstanding Capital Stock of the Company that is "beneficially owned" (as defined above) by such group of investors.
"PERMITTED HOLDERS" means Odyssey Investment Partners Fund, LP, its Affiliates and any general or limited partners of Odyssey Investment Partners Fund, L.P.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the following:
(i) Indebtedness of the Company and any of its Restricted Subsidiaries under the Notes and under the Senior Subordinated Notes issued on the date hereof of Opco;
(ii) Indebtedness of the Company or any of its Restricted Subsidiaries incurred pursuant to one or more Credit Facilities in an aggregate principal amount at any time outstanding not to exceed $250.0 million, less: (A) the aggregate amount of Indebtedness of Securitization Entities at the time outstanding, less (B) the amount of all mandatory principal payments actually made by the Company or any such Restricted Subsidiary since the Issue Date with the Net Cash Proceeds of an Asset Sale in respect of term loans under a Credit Facility (excluding any such payments to the extent refinanced at the time of payment), and (C) further reduced by any repayments of revolving credit borrowings under a Credit Facility with the Net Cash Proceeds of an Asset Sale that are accompanied by a corresponding commitment reduction thereunder; PROVIDED that the amount of Indebtedness permitted to be incurred pursuant to the Credit Facilities in accordance with this clause (ii) shall be in addition to any Indebtedness permitted to be incurred pursuant to the Credit Facilities in reliance on, and in accordance with, clauses (vii), (xiii) and (xiv) below;
(iii) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions therein;
(iv) Interest Swap Obligations of the Company or any of its Restricted Subsidiaries covering Indebtedness of the Company or any of its Restricted Subsidiaries; PROVIDED that any Indebtedness to which any such Interest Swap Obligations correspond is otherwise permitted to be incurred under this Indenture; and PROVIDED, FURTHER, that such Interest Swap Obligations are entered into, in the judgment of the Company, to protect the Company or any of its Restricted Subsidiaries from fluctuation in interest rates on its outstanding Indebtedness;
(v) Indebtedness of the Company or any Restricted Subsidiary under Hedging Agreements and Currency Agreements;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any such Restricted Subsidiaries; PROVIDED, HOWEVER, that: (a) if
the Company is the obligor on such Indebtedness and the payee is a
Restricted Subsidiary (other than any Indebtedness of the Company to a
Restricted Subsidiary incurred in connection with a guarantee or other
support of Indebtedness under a Credit Facility of such Restricted
Subsidiary), such Indebtedness is expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes and
(b) (1) any subsequent issuance or transfer of Capital Stock that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary thereof and (2) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary thereof (other than by way of
granting a Lien permitted under this Indenture or in connection with the
exercise of remedies by a secured creditor) shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be, that was not permitted
by this clause (vi);
(vii) Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any person owning such assets) in an aggregate principal amount outstanding not to exceed $6.0 million;
(viii) Refinancing Indebtedness of the Company or any Restricted Subsidiary;
(ix) guarantees by the Company and its Restricted Subsidiaries of each other's Indebtedness; PROVIDED that such Indebtedness is permitted to be incurred under this Indenture;
(x) Indebtedness arising from agreements of the Company or a Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price, earn out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Restricted Subsidiary of the Company, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; PROVIDED that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;
(xi) obligations in respect of performance and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business;
(xii) the incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Subsidiary of the Company (except for Standard Securitization Undertakings);
(xiii) Indebtedness incurred by the Company or any of its Restricted Subsidiaries in connection with the acquisition of a Permitted Business which Indebtedness is incurred on or prior to September 30, 1999; PROVIDED that on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof and the use of proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio of the Company would be greater than the greater of (x) the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to the incurrence of such Indebtedness and (y) the Consolidated Fixed Charge Coverage Ratio of the Company on the Issue Date;
(xiv) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount that does not exceed $35.0 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under a Credit Facility);
(xv) Indebtedness of the Company or any Restricted Subsidiary arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that such Indebtedness is extinguished within five business days of incurrence;
(xvi) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, issued in the ordinary course of business of the Company or such Restricted Subsidiary, including, without limitation, in order to provide security for workers' compensation claims or payment obligations in connection with self-insurance or similar requirements in the ordinary course of business and other Indebtedness with respect to workers' compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or any Restricted Subsidiary of the Company in the ordinary course of business; and
(xvii) the incurrence of Indebtedness of the Company in connection with the redemption or repurchase from management employees of the Company or any of its Restricted Subsidiaries of the Company's common equity or options in respect thereof; PROVIDED, that such Indebtedness is expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes.
For purposes of determining compliance with Section 4.09 hereof, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in clauses (i) through
(xvii) above or is entitled to be incurred pursuant to the Consolidated Fixed
Charge Coverage Ratio provisions of Section 4.09 hereof, the Company shall,
in its sole discretion, classify (or later reclassify) such item of
Indebtedness in any manner that complies with such Section. Accrual of
interest, accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with
the same terms, and the payment of dividends on Disqualified Capital Stock in
the form of additional shares of the same class of Disqualified Capital Stock
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Capital Stock for purposes of Section 4.09 hereof.
"PERMITTED INVESTMENTS" means: (i) Investments by the Company or any Restricted Subsidiary of the Company in any Restricted Subsidiary of the Company (other than a Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) (whether existing on the Issue Date or created thereafter) or any Person (including by means of any transfer of cash or other property) if as a result of such Investment such Person shall become a Restricted Subsidiary of the Company (other than a Restricted Subsidiary of the Company in which an Affiliate of the Company that is not a Restricted Subsidiary of the Company holds a minority interest) or that will merge with or consolidate into the Company or a Restricted Subsidiary of the Company and Investments in the Company by any Restricted Subsidiary of the Company; (ii) investments in cash and Cash Equivalents; (iii) loans and advances to employees and officers of the Company and its Restricted Subsidiaries for bona fide business purposes in an aggregate principal amount not to exceed $6.0 million at any one time outstanding; (iv) Currency Agreements, Hedging Agreements and Interest Swap Obligations entered into in the ordinary course of business and otherwise in compliance with this Indenture; (v) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in good faith settlement of delinquent obligations of such trade creditors or customers; (vi) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.10 hereof; (vii) Investments existing on the Issue Date; (viii) accounts receivable created or acquired in the ordinary course of business; (ix) guarantees by the Company or a Restricted Subsidiary of the Company permitted to be incurred under this Indenture; (x) additional
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (x) that are at that time
outstanding, not to exceed $15.0 million (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value); (xi) any Investment by the Company or a
Subsidiary of the Company in a Securitization Entity or any Investment by a
Securitization Entity in any other Person in connection with a Qualified
Securitization Transaction; PROVIDED that any Investment in a Securitization
Entity is in the form of a Purchase Money Note or an equity interest; and
(xii) Investments the payment for which consists exclusively of Qualified
Capital Stock of the Company.
"PERMITTED LIENS" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;
(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
(4) judgment Liens not giving rise to an Event of Default;
(5) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(6) any interest or title of a lessor under any Capitalized Lease Obligation;
(7) purchase money Liens to finance property or assets of the Company or any Restricted Subsidiary of the Company acquired, constructed or improved in the ordinary course of business; PROVIDED, HOWEVER, that (A) the related purchase money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired and (B) the Lien securing such Indebtedness shall be created within 90 days of such acquisition;
(8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created
for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;
(10) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;
(11) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under this Indenture;
(12) Liens securing Indebtedness under Currency Agreements and Hedging Agreements;
(13) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary with respect to obligations that do not in the aggregate exceed $6.0 million at any one time outstanding;
(14) Liens on assets transferred to a Securitization Entity or on assets of a Securitization Entity, in either case incurred in connection with a Qualified Securitization Transaction;
(15) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;
(16) Liens arising from filing Uniform Commercial Code financing statements regarding leases;
(17) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods;
(18) Liens securing Acquired Indebtedness incurred in compliance with Section 4.09 hereof;
(19) Liens placed upon assets of a Restricted Subsidiary of the Company to secure Indebtedness of such Restricted Subsidiary that is otherwise permitted under this Indenture; and
(20) Liens existing on the Issue Date, together with any Liens securing Indebtedness incurred in reliance on clause (viii) of the definition of Permitted Indebtedness in order to refinance the Indebtedness secured by Liens existing on the Issue Date; PROVIDED that the Liens securing the refinancing Indebtedness shall not extend to property other than that pledged under the Liens securing the Indebtedness being refinanced.
"PERMITTED SUBSIDIARY PREFERRED STOCK" means any series of Preferred Stock of a Restricted Subsidiary of the Company that constitutes Qualified Capital Stock and has a fixed dividend
rate, the liquidation value of all series of which, when combined with the aggregate amount of Indebtedness of the Company and its Restricted Subsidiaries incurred pursuant to clause (xiv) of the definition of Permitted Indebtedness, does not exceed $6.0 million.
"PERSON" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 2.06(c)(i) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
"PRODUCTIVE ASSETS" means assets (including Capital Stock) that are used or usable by the Company and its Restricted Subsidiaries in Permitted Businesses.
"PURCHASE MONEY NOTE" means a promissory note of a Securitization Entity evidencing a line of credit, which may be irrevocable, from the Company or any Restricted Subsidiary of the Company in connection with a Qualified Securitization Transaction, which note shall be repaid from cash available to the Securitization Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables or newly acquired equipment.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified Capital Stock.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (i) a Securitization Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries); and (ii) any other Person (in the case of a transfer by a Securitization Entity), or may grant a security interest in any accounts receivable or equipment (whether now existing or arising or acquired in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable and equipment, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable and equipment, proceeds of such accounts receivable and equipment and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with assets securitization transactions involving accounts receivable and equipment.
"RECAPITALIZATION" means the recapitalization of the Company consummated on the Issue Date.
"REFINANCE" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Refinancing, modification, replacement, restatement, refunding, deferral, extension, substitution, supplement, reissuance or resale of existing or future Indebtedness (other than intercompany Indebtedness), including any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such existing or future Indebtedness as in effect at the time of issuance thereof ("Required Premiums") and fees in connection therewith; PROVIDED that any such event shall not (i) directly or indirectly result in an increase in the aggregate principal amount of Permitted Indebtedness (except to the extent such increase is a result of a simultaneous incurrence of additional Indebtedness (A) to pay Required Premiums and related fees or (B) otherwise permitted to be incurred under this Indenture) of the Company and its Restricted Subsidiaries; and (ii) create Indebtedness with a Weighted Average Life to Maturity at the time such Indebtedness is incurred that is less than the Weighted Average Life to Maturity at such time of the Indebtedness being refinanced, modified, replaced, renewed, restated, refunded, deferred, extended, substituted, supplemented, reissued or resold.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the Issue Date by and among the Company and the other parties on the signature pages thereto.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"RELATED PARTY" with respect to any Permitted Holder means (i)(A) any spouse, sibling, parent or child of such Permitted Holder; or (B) the estate of any Permitted Holder during any period in which such estate holds Capital Stock of the Company for the benefit of any Person referred to in clause (i)(A) or (ii) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning an interest of more than 50% of which consist of, or the sole managing partner or managing member of which is, one or more Permitted Holders and/or such other Persons referred to in the immediately preceding clause (i).
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; PROVIDED that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt in respect of any Designated Senior Debt.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"RESTRICTED NOTE" means a Note bearing the Private Placement Legend.
"RESTRICTED SUBSIDIARY" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard & Poor's.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION ENTITY" means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable or equipment and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (i) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (A) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings; (B) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings; or (C) subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings; (ii) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity; and (iii) to which neither the Company nor any Restricted Subsidiary of the Company has any obligations to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution of the Company giving effect to such designation and an Officer's Certificate certifying that such designation complied with foregoing conditions.
"SENIOR DEBT" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company under, or in respect of, any Credit Facility, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any such Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company under the New Credit Facility, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (including all guarantees of the foregoing obligations), and also (y) all Interest Swap Obligations (and guarantees thereof) related to Indebtedness incurred under any Credit Facilities (to be evidenced as such by an Officer's Certificate to be delivered to the Trustee upon incurrence of such Indebtedness), in each case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, "Senior Debt" shall not include (i) that portion of any such Indebtedness incurred in violation of Section 4.09 hereof (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (i) if the holder(s) of such obligation or their representative and the Trustee shall have received an Officer's Certificate of the Company to the effect that the incurrence of such Indebtedness does not (or in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of this Indenture), and (ii) any such Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company.
"SENIOR SUBORDINATED NOTES" means Opco's Senior Subordinated Notes due 2008.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY," with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a "significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the Securities Act.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable or equipment transaction.
"STATED MATURITY" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
"STOCKHOLDERS AGREEMENTS" means those certain stockholders agreements entered into in connection with the Recapitalization.
"SUBSIDIARY," with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA.
"TOTAL ASSETS" means the total consolidated assets of the Company and its Restricted Subsidiaries, as set forth on the Company's most recent consolidated balance sheet.
"TRUSTEE" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.
"UNRESTRICTED NOTE" means one or more Notes that do not bear and are not required to bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" of any Person means (i ) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided in Section 4.07 hereof; and (ii) any Subsidiary of an Unrestricted Subsidiary.
"U.S. SUBSIDIARY" means any Subsidiary of the Company that is incorporated under the laws of the United States or any state thereof or the District of Columbia.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the then outstanding aggregate principal amount of such Indebtedness into (ii) the sum of the total of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof by (B) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means any Wholly Owned Subsidiary of such Person which at the time of determination is a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Restricted Subsidiary that is incorporated in a jurisdiction other than a State in the United States or the District of Columbia, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Term Defined in
---- Section
----------
"ACCELERATION NOTICE". . . . . . . . . . . . . . . . . . . 6.02
"AFFILIATE TRANSACTION". . . . . . . . . . . . . . . . . . 4.11
"AUTHENTICATION ORDER" . . . . . . . . . . . . . . . . . . 2.02
"BLOCKAGE PERIOD". . . . . . . . . . . . . . . . . . . . . 10.04
"CHANGE OF CONTROL OFFER". . . . . . . . . . . . . . . . . 4.15
"CHANGE OF CONTROL PAYMENT DATE" . . . . . . . . . . . . . 4.15
"COVENANT DEFEASANCE". . . . . . . . . . . . . . . . . . . 8.03
"DEFAULT NOTICE" . . . . . . . . . . . . . . . . . . . . . 10.04
"EVENT OF DEFAULT" . . . . . . . . . . . . . . . . . . . . 6.01
"INCUR". . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"LEGAL DEFEASANCE" . . . . . . . . . . . . . . . . . . . . 8.02
"NET PROCEEDS OFFER" . . . . . . . . . . . . . . . . . . . 4.10
"NET PROCEEDS OFFER AMOUNT". . . . . . . . . . . . . . . . 4.10
"NET PROCEEDS OFFER PAYMENT DATE". . . . . . . . . . . . . 4.10
"NET PROCEEDS OFFER TRIGGER DATE". . . . . . . . . . . . . 4.10
"OFFER PERIOD" . . . . . . . . . . . . . . . . . . . . . . 3.09
"PAYING AGENT" . . . . . . . . . . . . . . . . . . . . . . 2.03
"PURCHASE DATE". . . . . . . . . . . . . . . . . . . . . . 3.09
"REFUNDING CAPITAL STOCK". . . . . . . . . . . . . . . . . 4.07
"REGISTRAR". . . . . . . . . . . . . . . . . . . . . . . . 2.03
"RESTRICTED PAYMENTS". . . . . . . . . . . . . . . . . . . 4.07
"RETIRED CAPITAL STOCK". . . . . . . . . . . . . . . . . . 4.07
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SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS.
Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "institutional trustee" means the Trustee; and
"OBLIGOR" on the Notes means the Company and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof, except that Additional Notes may be in other denominations.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "AUTHENTICATION ORDER") authenticate (i) Initial Notes for original
issue on the Issue Date in aggregate principal amount not to exceed $20,000,000
(except as provided in Section 2.07 hereof) in one or more series, (ii)
Additional Notes issued from time to time to pay interest pursuant to paragraph
1 of the Notes and (iii) Unrestricted Notes from time to time only in exchange
therefor, in each case upon a written order of the Company in the form of an
Officer's Certificate. Each such written order shall specify the amount of
Notes to be authenticated, whether the Notes are to be Initial Notes or
Unrestricted Notes and such other information as the Trustee shall reasonably
request.
The Authentication Order shall be based upon a Board Resolution of the Company to similar effect filed with the Trustee and shall specify the amount of such Notes to be authenticated and the date on which the original issue of such Notes is to be authenticated. The Authentication Order shall also provide instructions concerning registration, amounts for each Holder and delivery. The aggregate principal amount of Notes outstanding at any time may not exceed $20,000,000 except as provided in Section 2.07 hereof and except as provided in clause (ii) of the immediately preceding paragraph.
The Notes shall be issued only in fully registered form, without coupons and only in denominations of $1,000 and any integral multiple thereof, except that Additional Notes, Exchange Notes and Notes issued upon transfer, exchange or replacement may be issued in other denominations. All Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("REGISTRAR") and an office or agency where Notes may be presented for payment ("PAYING AGENT"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "REGISTRAR" includes any co-registrar and the term "PAYING AGENT" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints the Trustee to act as the Registrar and Paying Agent.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest (including Additional
Interest, if any) on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Upon request by a Holder of Notes and such Holder's compliance with the provisions of this Section 2.06(a), the Registrar shall register the transfer or exchange of Notes (in whole or in part). Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(a).
(i) RESTRICTED NOTES TO RESTRICTED NOTES. Any Restricted Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(ii) RESTRICTED NOTES TO UNRESTRICTED NOTES. Any Restricted Note may be exchanged by the Holder thereof for an Unrestricted Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Note if:
(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; or
(C) the Registrar receives the following:
(1) if the Holder of such Restricted Notes proposes to exchange such Notes for an Unrestricted Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1) thereof; or
(2) if the Holder of such Restricted Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) UNRESTRICTED NOTES TO UNRESTRICTED NOTES. A Holder of Unrestricted Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Notes pursuant to the instructions from the Holder thereof.
(b) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate Notes in an aggregate principal amount equal to the principal amount of the Restricted Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Notes so accepted Notes in the appropriate principal amount.
(c) LEGENDS. The following legends shall appear on the face of all Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (B) below, each Note
(and all Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR
(7) UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR"), (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY THEREOF OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS
SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE
AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any Note issued pursuant to subpararaphs (a)(ii), (a)(iii) or (b) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) ORIGINAL ISSUE DISCOUNT LEGEND. Each Note shall bear a legend in substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; CONTACT PETER RADEKEVICH AT TRANSDIGM HOLDING COMPANY AT 254-741-5422 TO DETERMINE FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT AND THE YIELD TO MATURITY."
(d) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a Holder of a Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the mailing of notice of redemption under Section 3.03 hereof and ending at the close of business on such day, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (c) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall return canceled Notes to the Company. Certification of the destruction of all canceled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest in the manner provided in paragraph 1 of the Note, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, PROVIDED that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; PROVIDED that any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer's Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the redemption price and (iv) the CUSIP numbers, if any, of the Notes to be redeemed.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a PRO RATA basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount to be redeemed. The provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a
new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officer's Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
Prior to 10 a.m. New York City time on the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Notes will be redeemable, in whole or in part, upon not less than 30 nor more than 60 days' prior notice, at the option of the Company at any time up to and including December 3, 2003 at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest to the applicable redemption date.
(b) At any time from December 4, 2003 to December 2, 2005, the Company may, at its option, redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' prior notice at a redemption price equal to the present value of the sum of all the remaining interest, premium and principal payments that would become due on the Notes as if the Notes were to remain outstanding and be redeemed on the seventh anniversary of the Issue Date, computed using a discount rate equal to the Treasury Rate plus 50 basis points to the date of redemption.
"TREASURY RATE" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the seventh anniversary of the Issue Date; PROVIDED that if the period from the redemption date to the seventh anniversary of the Issue Date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.
(c) Commencing on December 3, 2005, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest to the applicable redemption date, if redeemed during the twelve month period beginning on the December 3 of the years indicated below:
PERCENTAGE
OF PRINCIPAL
YEAR AMOUNT
---- ------------
2005.................................... 106.0%
2006.................................... 104.0%
2007.................................... 102.0%
2008 and thereafter..................... 100.0%
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(d) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF NET PROCEEDS OFFER AMOUNT.
In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence a Net Proceeds Offer, it shall follow the procedures specified below.
The Net Proceeds Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "OFFER PERIOD"). No later than five Business Days after the termination of the Offer Period (the "PURCHASE DATE"), the Company shall purchase the Net Proceeds Offer Amount or, if less than the Net Proceeds Offer Amount has been tendered, all Notes tendered in response to the Net Proceeds Offer. Payment for any Notes so purchased shall be made in the same manner as cash interest payments are made.
If the Purchase Date is on or after an interest record date and on or before the related Interest Payment Date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Net Proceeds Offer.
Upon the commencement of a Net Proceeds Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer. The Net Proceeds Offer shall be made to all Holders. The notice, which shall govern the terms of the Net Proceeds Offer, shall state:
(a) that the Net Proceeds Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Net
Proceeds Offer shall remain open;
(b) the Net Proceeds Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any Net Proceeds Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;
(f) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of
the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a PRO RATA basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. on the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a PRO RATA basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Net Proceeds Offer, or if less than the Net Proceeds Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officer's Certificate stating that such Notes were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Net Proceeds Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.
To the extent that the provisions of any securities laws or regulations conflict with this Section 3.09 or Section 4.10 hereof, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.09 or Section 4.10 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal amount, premium, if any, and interest and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes. Principal amount, premium, if any, and interest and Additional Interest, if any, shall be considered paid in cash on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal amount, premium, if
any, and interest and Additional Interest, if any, then due. Amounts paid in Additional Notes shall be considered paid on the date due if the Additional Notes are executed and authenticated as set forth in Section 2.02 hereof and delivered to the person entitled thereto (or held by the Trustee or the authenticating agent in custody for such person) on or prior to such date. The Company shall pay all Additional Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest (without regard to any applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants, (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods specified in the SEC's rules and regulations and (iii) any other
information provided to the holders of the Senior Subordinated Notes pursuant to
Section 4.03 of the indenture relating to the Senior Subordinated Notes. In
addition, following consummation of the Exchange Offer, whether or not required
by the rules and regulations of the SEC, the Company shall file a copy of all
such information and reports with the SEC for public availability within the
time periods specified in the SEC's rules and regulations (unless the SEC will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all times
comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officer's Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. For purposes of this paragraph, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture.
(b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officer's Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock; (2) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
direct or indirect parent of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock; (3) make any
principal payment on, purchase, defease, redeem, prepay, decrease or otherwise
acquire or retire for value, prior to any scheduled final maturity, scheduled
repayment or scheduled sinking fund payment, any Indebtedness of the Company
that is subordinate or junior in right of payment to the Notes; or (4) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (1), (2), (3) and (4) being referred to as a "RESTRICTED
PAYMENT"); if at the time of such Restricted Payment or immediately after giving
effect thereto: (i) a Default or an Event of Default shall have occurred and be
continuing; or (ii) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.09 hereof; or (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(other than Restricted Payments made pursuant to clauses (2)(i), (3), (4), (5),
(6), (7), (8) and (9) of the following paragraph) shall exceed the sum, without
duplication, of: (w) 50% of the cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of
the Company earned subsequent to the beginning of the first fiscal quarter
commencing after the Issue Date and on or prior to the date the Restricted
Payment occurs (the "REFERENCE DATE") (treating such period as a single
accounting period); PLUS (x) 100% of the aggregate net cash proceeds (including
the fair market value of property other than cash that would constitute
Marketable Securities or a Permitted Business) received by the Company from any
Person (other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date and on or prior to the Reference Date of Qualified
Capital Stock of the Company; PLUS (y) without duplication of any amounts
included in clause (iii)(x) above, 100% of the aggregate net cash proceeds of
any equity contribution received by the Company from a holder of the Company's
Capital Stock (excluding, in the case of clauses (iii)(x) and (y), any net cash
proceeds used
to redeem the Senior Subordinated Notes in compliance with the provisions set forth under Section 3.07(b) in the indenture relating thereto); PLUS (z) 100% of the aggregate net proceeds (including the fair market value of property other than cash that would constitute Marketable Securities or a Permitted Business) of any (A) sale or other disposition of any Investment (other than a Permitted Investment) made by the Company and its Restricted Subsidiaries or (B) dividend from, or the sale of the stock of, an Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit: (1) the payment of any
dividend or the consummation of any irrevocable redemption within 60 days after
the date of declaration of such dividend or notice of such redemption if the
dividend or payment of the redemption price, as the case may be, would have been
permitted on the date of declaration or notice; (2) if no Default or Event of
Default shall have occurred and be continuing or shall occur as a consequence
thereof, the acquisition of any shares of Capital Stock of the Company (the
"RETIRED CAPITAL STOCK") either (i) solely in exchange for shares of Qualified
Capital Stock of the Company (the "REFUNDING CAPITAL STOCK") or (ii) through the
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company and, in the case of subclause (i) of this clause (2), if immediately
prior to the retirement of the Retired Capital Stock the declaration and payment
of dividends thereon was permitted under clause (5) of this paragraph, the
declaration and payment of dividends on the Refunding Capital Stock in an
aggregate amount per year no greater than the aggregate amount of dividends per
annum that was declarable and payable on such Retired Capital Stock immediately
prior to such retirement; PROVIDED that at the time of the declaration of any
such dividends on the Refunding Capital Stock, no Default or Event of Default
shall have occurred and be continuing or would occur as a consequence thereof;
(3) if no Default or Event of Default shall have occurred and be continuing, the
acquisition of any Permitted Company Debt (as defined in Section 4.16 hereof)
that is subordinate or junior in right of payment to the Notes either (i) solely
in exchange for shares of Qualified Capital Stock of the Company, or (ii)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Company) of (A) shares of Qualified
Capital Stock of the Company or (B) Refinancing Indebtedness; (4) if no Default
or Event of Default shall have occurred and be continuing or would occur as a
consequence thereof, the declaration and payment of dividends to holders of any
class or series of Designated Preferred Stock (other than Disqualified Capital
Stock) issued after the Issue Date (including, without limitation, the
declaration and payment of dividends on Refunding Capital Stock in excess of the
dividends declarable and payable thereon pursuant to clause (2) of this
paragraph); PROVIDED that, at the time of such issuance, the Company, after
giving effect to such issuance on a pro forma basis, would have had a
Consolidated Fixed Charge Coverage Ratio of at least 1.4 to 1.0; (5) payments
for the redemption or repurchase of the Company's common equity or options in
respect thereof, in each case in connection with the repurchase provisions of
employee stock option or stock purchase agreements or other agreements to
compensate management employees of the Company or any of its Restricted
Subsidiaries; PROVIDED that all such redemptions or repurchases pursuant to this
clause (5) shall not exceed $2.4 million in any fiscal year (which amount shall
be increased by the amount of any net cash proceeds received from the sale since
the Issue Date of Capital Stock (other than Disqualified Capital Stock) to
members of the Company's management team that have not otherwise been applied to
the payment of Restricted Payments pursuant to the terms of clause (iii) of the
immediately preceding paragraph and by the cash proceeds of any "key-man" life
insurance policies which are used to make such redemptions or repurchases) since
the Issue Date; PROVIDED, FURTHER, that the cancellation of Indebtedness owing
to the Company or its Restricted Subsidiaries from members of management of the
Company or any of its Restricted Subsidiaries in connection with any repurchase
of Capital Stock of the Company (or warrants or options or rights to ac-
quire such Capital Stock) will not be deemed to constitute a Restricted Payment under this Indenture; (6) repurchases of Capital Stock deemed to occur upon the exercise of stock options if such Capital Stock represents a portion of the exercise price thereof; (7) other Restricted Payments in an aggregate amount not to exceed $9.0 million; (8) Restricted Payments made in connection with the funding of the Transactions subsequent to the issuance of the Notes and (9) Indebtedness incurred pursuant to clause (xvii) of the definition of "Permitted Indebtedness".
In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the first
paragraph of this Section 4.07, amounts expended pursuant to clauses (1) and (2)
(ii) shall be included in such calculation, PROVIDED amounts expended pursuant
to clauses (2)(i), (3), (4), (5), (6), (7), (8) and (9) shall be excluded from
such calculation.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries shall not make any Restricted Payments to Odyssey Investment Partners, Fund, L.P. or any of its Affiliates until (a) such time as the initial holders of the Initial Notes shall not own any Notes or (b) if earlier and if solely as a result of (and immediately following) one or more sales of Notes made by such initial holders at such initial holders' option (other than sales made in connection with a Net Proceeds Offer), such time as such initial holders shall, in the aggregate, own less than $5.0 million in principal amount of Notes. For purposes of this paragraph, "initial holders" means KIA IV-TD, LLC (as transferee of Kelso Investment Associates IV, L.P.) and Kelso Equity Partners II, L.P.
The Board of Directors may designate any Subsidiary (other than Opco)
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company or any other Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED that
(i) the Company certifies to the Trustee that such designation complies with
this Section 4.07; and (ii) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.09
hereof and (y) immediately before and immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officer's Certificate
certifying that such designation complied with the foregoing provisions.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary of the Company to: (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Com-
pany or any other Restricted Subsidiary of the Company, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable law;
(2) this Indenture; (3) non-assignment provisions of any contract or any lease
of any Restricted Subsidiary of the Company entered into in the ordinary course
of business; (4) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired; (5) the Senior Subordinated Notes and the New Credit
Facility; (6) agreements existing on the Issue Date to the extent and in the
manner such agreements are in effect on the Issue Date; (7) restrictions on the
transfer of assets subject to any Lien permitted under this Indenture imposed by
the holder of such Lien; (8) restrictions imposed by any agreement to sell
assets or Capital Stock permitted under this Indenture to any Person pending the
closing of such sale; (9) any agreement or instrument governing Capital Stock of
any Person that is acquired; (10) any Purchase Money Note or other Indebtedness
or other contractual requirements of a Securitization Entity in connection with
a Qualified Securitization Transaction; provided that such restrictions apply
only to such Securitization Entity; (11) other Indebtedness on the Issue Date or
permitted to be issued or incurred under this Indenture; PROVIDED that any such
restrictions are ordinary and customary with respect to the type of Indebtedness
being incurred (under the relevant circumstances); (12) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business; and (13) any encumbrances or restrictions
imposed by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (1) through (l2) above;
PROVIDED that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the Company's Board of Directors (evidenced by a Board Resolution)
whose judgment shall be conclusively binding, not materially more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "INCUR") any Indebtedness (other than Permitted Indebtedness); PROVIDED, HOWEVER, that if no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries may incur Indebtedness (including, without limitation, Acquired Indebtedness), in each case if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company would have been greater than 1.4 to 1.0.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by the Company's Board of Directors); (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; PROVIDED that the amount of: (a) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or any such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Notes) that are assumed by the transferee of any
such assets; (b) any notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash within 90 days of the receipt
thereof (to the extent of the cash received); and (c) any Designated Noncash
Consideration received by the Company or any of its Restricted Subsidiaries in
such Asset Sale having an aggregate fair market value, taken together with all
other Designated Noncash Consideration received pursuant to this clause (c) that
is at that time outstanding, not to exceed 5% of Total Assets at the time of the
receipt of such Designated Noncash Consideration (with the fair market value of
each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value), shall be
deemed to be cash for the purposes of this provision or for purposes of the
second paragraph of this Section 4.10; and (iii) upon the consummation of an
Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within 399 days of
receipt thereof either (A) to prepay any Senior Debt or Indebtedness of a
Restricted Subsidiary and, in the case of any such Indebtedness under any
revolving credit facility, effect a corresponding reduction in the availability
under such revolving credit facility (or effect a permanent reduction in the
availability under such revolving credit facility regardless of the fact that no
prepayment is required in order to do so (in which case no prepayment should be
required)), (B) to reinvest in Productive Assets, or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). Pending the final application of any such Net Cash Proceeds, the
Company or such Restricted Subsidiary may temporarily reduce Indebtedness under
a revolving credit facility, if any, or otherwise invest such Net Cash Proceeds
in Cash Equivalents. On the 400th day after an Asset Sale or such earlier date,
if any, as the Board of Directors of the Company or of such Restricted
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the preceding
sentence (each, a "NET PROCEEDS OFFER TRIGGER DATE"), such aggregate amount of
Net Cash Proceeds which have not been applied on or before such Net Proceeds
Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of
the next preceding sentence (each a "NET PROCEEDS OFFER AMOUNT") shall be
applied by the Company or such Restricted Subsidiary to make an offer to
purchase (the "NET PROCEEDS OFFER") on a date (the "NET PROCEEDS OFFER PAYMENT
DATE") not less than 30 nor more than 60 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a PRO RATA basis, the maximum
amount of Notes that may be purchased with the Net Proceeds Offer Amount at a
price equal to 100% of the principal amount of the Notes to be purchased, plus
accrued and unpaid interest thereon, if any, to the date of purchase; PROVIDED,
HOWEVER, that if at any time any non-cash consideration (including any
Designated Noncash Consideration) received by the Company or any Restricted
Subsidiary of the Company, as the case may be, in connection with any Asset Sale
is converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any such non-cash consideration), then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this Section 4.10.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than $12.0
million, the application of the Net Cash Proceeds constituting such Net Proceeds
Offer Amount to a Net Proceeds Offer may be deferred until such time as such Net
Proceeds Offer Amount plus the aggregate amount of all Net Proceeds Offer
Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating to
such initial Net Proceeds Offer Amount from all Asset Sales by the Company and
its Restricted Subsidiaries aggregates at least $12.0 million, at which time the
Company or such Restricted Subsidiary shall apply all Net Cash Proceeds
constituting all Net Proceeds Offer Amounts that have been so deferred to make a
Net Proceeds Offer (the first date the ag-
gregate of all such deferred Net Proceeds Offer Amounts is equal to $12.0 million or more shall be deemed to be a Net Proceeds Offer Trigger Date).
Notwithstanding the immediately preceding paragraph, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to the extent that: (i) at least 75% of the consideration for such Asset Sale constitutes Productive Assets, cash, Cash Equivalents and/or Marketable Securities; and (ii) such Asset Sale is for fair market value; PROVIDED that any consideration consisting of cash, Cash Equivalents and/or Marketable Securities received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the preceding paragraph.
Notice of each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 30 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in Section 3.09 hereof. To the extent that the aggregate amount of Notes tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use any remaining Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by this Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.10, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.10 by virtue thereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
(a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to occur any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (an "AFFILIATE TRANSACTION"), other than Affiliate Transactions on terms that are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company; PROVIDED, HOWEVER, that for a transaction or series of related transactions with an aggregate value of $2.5 million or more, at the Company's option, either: (i) a majority of the disinterested members of the Board of Directors of the Company shall determine in good faith that such Affiliate Transaction is on terms that are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or (ii) the Board of Directors of the Company or any such Restricted Subsidiary party to such Affiliate Transaction shall have received an opinion from a nationally recognized investment banking, appraisal or accounting firm that such Affiliate Transaction is on terms not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company; and PROVIDED, FURTHER, that for an Affiliate Transaction with an aggregate value of $10.0 million or more the Board of Directors of the Company or any such Restricted Subsidiary party to such Affiliate Transaction shall have received an opinion from a nationally recognized
investment banking, appraisal or accounting firm that such Affiliate Transaction is on terms not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company.
(b) The restrictions set forth in Section 4.11(a) hereof shall not apply to: (i) reasonable fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by this Indenture; (iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date; (iv) Restricted Payments or Permitted Investments permitted by this Indenture; (v) transactions effected as part of a Qualified Securitization Transaction; (vi) the payment of customary annual management, consulting and advisory fees and related expenses to the Permitted Holders and their Affiliates made pursuant to any financial advisory, financing, underwriting or placement agreement or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures which are approved by the Board of Directors of the Company or such Restricted Subsidiary in good faith; (vii) payments or loans to employees or consultants that are approved by the Board of Directors of the Company in good faith; (viii) sales of Qualified Capital Stock; (ix) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (ix) to the extent that the terms of any such amendment or new agreement are not disadvantageous to the Holders of Notes in any material respect; and (x) transactions permitted by, and complying with, the provisions of Article 5 hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets, or any proceeds therefrom, of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, in each case to secure Indebtedness or trade payables, unless: (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens and (ii) in all other cases, the Notes are equally and ratably secured, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date, (B) Liens securing Credit Facilities, including, without limitation, the New Credit Facility, (C) Liens securing the Notes, (D) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company, (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness that was secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; PROVIDED, HOWEVER, that such Liens do not
extend to or cover any categories of property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced, (F) Permitted Liens and (G) Liens securing Indebtedness of any Restricted Subsidiary.
SECTION 4.13. CONDUCT OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any businesses a majority of whose revenues are not derived from businesses that are the same or reasonably similar, ancillary or related to, or a reasonable extension, development or expansion of, the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) If a Change of Control occurs, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "CHANGE OF CONTROL OFFER"), at a purchase price equal to 101% of the principal amount thereof plus accrued interest to the date of purchase. Within 30 days following the date upon which the Change of Control occurred, the Company must send, by first class mail, a notice to each Holder, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the "CHANGE OF CONTROL PAYMENT DATE").
(b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the applicable Trustee the Notes so accepted together with an Officer's Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; PROVIDED that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
Prior to the mailing of the notice referred to above, but in any event within 30 days following any Change of Control, the Company covenants to: (i) repay in full all Indebtedness under all Credit Facilities (including the New Credit Facility) the terms of which require repayment upon a Change of Control; or (ii) obtain the requisite consents under all Credit Facilities (including the New Credit Facility) to permit the repurchase of the Notes as provided below. The Company's failure to comply with the covenant described in the immediately preceding sentence shall constitute an Event of Default described in clause (c) and not in clause (b) under "Events of Default" below.
(c) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the Company complies with the provisions of any such securities laws or regulations, the Company shall not be deemed to have breached its obligations under this Section 4.15.
(d) Notwithstanding anything to the contrary in this Section 4.15, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 hereof and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.16. ADDITIONAL INDEBTEDNESS.
The Company shall not make any principal payments on, purchase, defease, redeem, prepay or otherwise acquire or retire for value, any Excluded Company Debt other than Permitted Company Debt prior to the repurchase of the Notes.
"EXCLUDED COMPANY DEBT" shall mean any Indebtedness (including, for the avoidance of doubt, Permitted Indebtedness) of the Company under which the Company is the primary obligor.
"PERMITTED COMPANY DEBT" shall mean: (a) Indebtedness of the Company pursuant to one or more Credit Facilities; (b) guarantees by the Company of the Indebtedness of any of its Restricted Subsidiaries, PROVIDED that the Indebtedness of such Restricted Subsidiaries is permitted to be incurred under the Indenture; (c) Indebtedness of the Company under which the Company becomes the primary obligor following a default upon any of the preceding Indebtedness of any of its Restricted Subsidiaries that the Company guaranteed in compliance with clause (b); (d) Non-Permanent Indebtedness incurred by the Company in connection with the acquisition of any business, Person or assets; or (e) Indebtedness incurred pursuant to clause (xvii) of the definition of "Permitted Indebtedness" to the extent such payments are permitted by Section 4.07 hereof.
"NON-PERMANENT INDEBTEDNESS" shall mean (a) Indebtedness under which the Company is the primary obligor represented by bridge notes and bridge loans or other similar instruments; and (b) any Indebtedness that is intended to be temporary at the time of its incurrence; PROVIDED that any Indebtedness issued in exchange for or in connection with the refinancing of the Indebtedness described in clauses (a) and (b) shall be deemed not to be Non-Permanent Indebtedness.
SECTION 4.17. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, the Company shall not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt and senior in any respect in right of payment to the Notes.
SECTION 4.18. RESTRICTION ON PREFERRED STOCK OF CERTAIN SUBSIDIARIES.
The Company shall not permit any of its non-domestic Restricted Subsidiaries to issue any preferred stock, or permit any Person to own or hold an interest in any preferred stock of any such Subsidiary, except for preferred stock issued to the Company or a Wholly Owned Subsidiary of the Company.
SECTION 4.19. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF OPCO.
The Company (i) shall not transfer, convey, sell, lease or otherwise dispose of any Capital Stock of Opco to any Person (other than as collateral security for its obligations in respect to any Senior Debt) and (ii) will not permit Opco to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Company's Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless (i) either: (a) the Company shall be the surviving or continuing corporation; or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "SURVIVING ENTITY"): (x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and (y) shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, this Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed; (ii) except in the case of (A) a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company (B) a merger entered into solely for the purpose of reincorporating the Company in another jurisdiction, or (C) the merger of Phase II Acquisition Corp. with and into the Company, immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including giving effect to any Indebtedness and Ac-
quired Indebtedness incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness pursuant to Section 4.09 hereof; (iii) except in the case of (A) a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company (B) a merger entered into solely for the purpose of reincorporating the Company in another jurisdiction, or (C) the merger of Phase II Acquisition Corp. with and into the Company, immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied; PROVIDED that no such Officer's Certificate or Opinion of Counsel need be delivered in connection with the merger of Phase II Acquisition Corp. with and into the Company.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. However, transfer of assets between or among the Company and its Restricted Subsidiaries will not be subject to the foregoing covenants.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger, or any transfer, of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such, conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such surviving entity had been named as such and that, in the event of conveyance, lease or transfer, the conveyor, lessor or transferor will be released from the provisions of this Indenture.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
"Event of Defaults" are:
(a) after the fifth anniversary of the Issue Date, the failure to pay cash interest on any Notes on any Interest Payment Date occurring after the fifth anniversary of the Issue Date in accordance with the terms of the Notes, if the default continues for a period of 30 days;
(b) after the fifth anniversary of the Issue Date, the failure to pay the principal on any Notes when such principal becomes due and payable at maturity, upon redemption or otherwise whether or not such payment shall be prohibited by Article 10 hereof;
(c) a default in the observance or performance of any other covenant or agreement contained herein (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer on the date specified for such payment in the applicable offer to purchase, during the period that such failure would not constitute a default pursuant to clause (b) above) if the default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to Section 5.01 hereof, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);
(d) after the fifth anniversary of the Issue Date, the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any of its Significant Subsidiaries which failure continues for at least 20 days, or a default under any Indebtedness of the Company or any of its Significant Subsidiaries which default, by the terms of such Indebtedness, results in the acceleration of such Indebtedness prior to its final stated maturity, which acceleration remains uncured and unrescinded for at least 20 days, if the aggregate principal amount of such Indebtedness is $10.0 million or more at or the time of default;
(e) the Company or any of its Significant Subsidiaries:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a custodian of it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors, or
(f) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case;
(ii) appoints a custodian of the Company or any of its Significant Subsidiaries for all or substantially all of the property of the Company or any of its Significant Subsidiaries; or
(iii) orders the liquidation of the Company or any of its Significant Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (e) or (f) of Section 6.01 hereof with respect to the Company) occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the principal of and accrued interest on
all the Notes to be due and payable immediately by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "ACCELERATION NOTICE"), and the same (i)
shall become immediately due and payable or (ii) if there are any amounts
outstanding under the New Credit Facility , shall become immediately due and
payable upon the first to occur of an acceleration under the New Credit Facility
or five Business Days after receipt by the Company and the Representative under
the New Credit Facility of such Acceleration Notice but only if such Event of
Default is then continuing. If an Event of Default specified in clause (e) or
(f) above with respect to the Company occurs and is continuing, then all unpaid
principal of, and premium, if any, and accrued and unpaid interest on all the
outstanding Notes shall IPSO FACTO become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances; and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clause (e) or (f) of Section 6.01 hereof, the Trustee shall have received an
Officer's Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest and Additional Interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an ex-
isting Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Additional Interest, if any, or interest on, the Notes (including in connection with an offer to purchase) (PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal amount at maturity of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Additional Interest, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal amount of, premium and Additional Interest, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
SECOND: to Holders of Notes for amounts due and unpaid on the Notes for principal amount, premium and Additional Interest, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal amount, premium and Additional Interest, if any and interest, respectively; and
THIRD: to the Company or to such party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(c), (e) and (f) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
(a) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
(b) If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 30 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(f) or (g) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the
then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, PROVIDED all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officer's Certificate, at any time after December 1, 2003 but before December 1, 2005, elect to have either Section 8.02 or 8.03 hereof applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal amount of, premium, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Section 6.01(d) and hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably elect pursuant to Section 3.07
hereof to redeem the Notes on December 3, 2005 and must irrevocably deposit
with the Trustee, in trust, for the benefit of the Holders, cash in United
States dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal amount of, premium and Additional Interest, if any, and interest
on the outstanding Notes at December 3, 2005 pursuant to the terms of
Section 3.07 hereof;
(b) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article 8 concurrently with such incurrence and the grant of a Lien to secure such Indebtedness) or insofar as Sections 6.01(e) or 6.01(f) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel (which may be subject to customary exceptions) to the effect that (A) the trust funds will not be subject to any rights of holders of Senior Debt including, without limitation, those arising under this Indenture, and (B) after the 90th day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company;
(h) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and
(i) the Company shall have paid or duly provided for payment of all amounts then due to the Trustee pursuant to Section 7.07 hereof.
Notwithstanding the foregoing, the Opinion of Counsel required by clause (b) above with respect to a Legal Defeasance need not be delivered if all Notes not therefor delivered to the Trustee for cancellation (A) have become due and payable, or (B) will become due and payable on the maturity date within one year under arrangements satisfactory to the Trustee for giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal amount, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. SATISFACTION AND DISCHARGE
This Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in this Indenture) as to all outstanding notes when (i) either (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, pursuant to an optional redemption notice or otherwise, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (ii) the Company has paid all other sums payable under this Indenture by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.
SECTION 8.07. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal, premium, if any, or interest on any Note and re-
maining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.08. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; PROVIDED, HOWEVER, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
SECTION 8.09. SURVIVAL.
The Trustee's rights under this Article 8 shall survive termination of this Indenture.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations to the Holders of the Notes by a successor to the Company pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or
(f) to provide for the issuance of Notes issued after the Issue Date in accordance with the limitations set forth in this Indenture as of the date hereof.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, this Indenture (including Sections 3.09, 4.10 and 4.15 hereof) and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amend-
ment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount at maturity of Notes whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or have the effect of changing the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes, other than provisions relating to Sections 3.09, 4.10 or 4.15 hereof;
(c) reduce the rate of or change or have the effect of changing the time for payment of interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount at maturity of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note, other than a payment required by Section 3.09 or 4.10;
(h) after the Company's obligation to purchase Notes arises thereunder, amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or modify any of the provisions or definitions with respect thereto after a Change of Control has occurred;
(i) modify or change any provision of this Indenture or the related definitions affecting the subordination or ranking of the Notes in a manner which adversely affects the Holders; or
(j) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes shall be issued subject to the provisions of this Article 10, and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Notes by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt, including, without limitation, the Company's obligations under the New Credit Facility; that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Debt, and that each holder of Senior Debt whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Senior Debt in reliance upon the covenants and provisions contained in this Indenture and the Notes.
SECTION 10.02. INTENTIONALLY OMITTED.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
(a) Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Notes or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under this Indenture if received by them, directly to the holders of Senior Debt (PRO RATA to such holders on the basis of the respective amounts of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment has not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder when such payment or distribution is prohibited by Section 10.03(a) hereof, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (PRO RATA to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article Five hereof and as long as permitted under the terms of the Senior Debt shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 10.03 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article 5 hereof.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) If any default occurs and is continuing in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Designated Senior Debt, no payment of any kind or character shall be made by or on behalf of the Company or any other Person on its or their behalf with respect to any Obligations on the Notes or to acquire any of the Notes for cash or property or otherwise. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Debt, as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt, permitting the holders of such Designated Senior Debt then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Designated Senior Debt gives notice of the event of default to the Trustee (a "DEFAULT NOTICE"), then, unless and until all events of default have been cured or waived or have ceased to exist or the Trustee receives notice thereof from the Representative for the respective issue of Designated Senior Debt terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "BLOCKAGE PERIOD"), neither the Company nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 10.04(a) hereof, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (PRO RATA to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, as their respective interests may appear. The Trustee shall be entitled to rely on information regarding amounts then due and owing on the Senior Debt, if any, received from the holders of Senior Debt (or their Representatives) or, if such information is not received from such holders or their Representatives, from the Company and only amounts included in the information provided to the Trustee shall be paid to the holders of Senior Debt.
Nothing contained in this Article 10 shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; PROVIDED that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when such payment is prohibited by Section 10.03 or 10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Debt as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Debt remaining unpaid to the extent necessary to pay such Obligations in full in cash or Cash Equivalents in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article 10 (although the failure to give any such notice shall not affect the subordination provisions of this Article 10). Regardless of anything to the contrary contained in this Article 10 or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing from the Company, or from a holder of Senior Debt or a Representative therefor, together with proof satisfactory to the Trustee of such holding of Senior Debt or of the authority of such Representative, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume that no such facts exist.
SECTION 10.08. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all Senior Debt, the Holders of the Notes shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Debt until the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Debt by or on behalf of the Company or by or on behalf of the Holders by virtue of this Article 10 which otherwise would have been made to the Holders shall, as between the Company and the Holders of the Notes, be deemed to be a payment by the Company to or on account of the Senior Debt, it being understood that the provisions of this Article 10 are and are intended solely for the purpose of defining the relative rights of the Holders of the Notes, on the one hand, and the holders of the Senior Debt, on the other hand.
SECTION 10.09. RELATIVE RIGHTS.
Nothing contained in this Article 10 or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Debt in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets or securities of the Company referred to in this Article 10, the Trustee, subject to the provisions of Sections 7.01 and 7.02 hereof, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any liquidation, dissolution, winding-up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. Nothing in this Article 10 shall apply to the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 10, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
(a) No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section 10.10, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Notes, without incurring responsibility to the Holders of the Notes and without impairing or releasing the subordination provided in this Article 10 or the obligations hereunder of the Holders of the Notes to the holders of Senior Debt, do any one or more of the following: (1) change the manner, place, terms or time of payment of, or renew or alter, Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (3) release any Person liable in any manner for the collection or payment of Senior Debt; and (4) exercise or refrain from exercising any rights against the Company and any other Person.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10 (although the receipt of
such payment shall otherwise be subject to the applicable provisions of this
Article 10). Only the Company or a Representative may give the notice. Nothing
in this Article 10 shall impair the claims of, or payments to, the Trustee under
or pursuant to Section 7.07 hereof. Nothing in this Section 10.12 is intended
to or shall relieve any Holder of Notes from the obligations imposed under
Section 10.06 with respect to other distributions received in violation of the
provisions hereof.
The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of the Notes by such Holder's acceptance thereof authorizes and expressly directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article 10, and appoints the Trustee such Holder's attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company tending towards liquidation or reorganization of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of such Holder's Notes in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Senior Debt or their Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without the written consent of the majority of the lenders under the New Credit Facility.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
TransDigm Holding Company
8233 Imperial Drive
Waco, TX 76712
Facsimile No.: (254) 741-5402
Attention: Peter Radekevich
with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Facsimile No.: (212) 751-4864
Attention: Kirk Davenport
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, CT 06103
Telecopier No.: (860) 244-1889
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officer's Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has or they have made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11 .09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
[INDENTURE SIGNATURE PAGES(S) FOLLOW]
[INDENTURE SIGNATURE PAGES(S)]
Dated as of December 3, 1998
TRANSDIGM HOLDING COMPANY
By: /s/ Peter B. Radekevich ----------------------------- Name: Peter B. Radekevich Title: Chief Financial Officer |
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Michael M. Hopkins ----------------------------- Name: Michael M. Hopkins Title: Vice President |
Exhibit 4.7
REGISTRATION RIGHTS AGREEMENT
Dated as of December 3, 1998
Among
TRANSDIGM HOLDING COMPANY
and
KELSO INVESTMENT ASSOCIATES IV, L.P.
and
KELSO EQUITY PARTNERS II, L.P.
12% Pay-in-Kind Notes due 2009
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (THIS "AGREEMENT") is dated as of December 3, 1998, among TRANSDIGM HOLDING COMPANY, a Delaware corporation (the "COMPANY"), as issuer, and KELSO INVESTMENT ASSOCIATES IV, L.P. ("KIA IV") and KELSO EQUITY PARTNERS II, L.P. ("KEP II" and, together with KIA IV, "KELSO").
This Agreement is entered into in connection with the Merger Agreement, dated as of August 3, 1998, as amended November 9, 1998, among the Company and Phase II Acquisition Corp. (the "MERGER AGREEMENT"), which provides for, among other things, the issuance by the Company to Kelso of $20,000,000 aggregate principal amount of the Company's % Pay-in-Kind Notes due 2009. In connection with the Merger Agreement, the Company has agreed to provide the registration rights set forth in this Agreement for the benefit of Kelso and any subsequent holder or holders of the Notes (as defined below).
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
ADDITIONAL INTEREST: See Section 4 hereof.
ADDITIONAL NOTES: Any notes issued as interest on the Notes in accordance with the terms of the Indenture.
ADVICE: See the last paragraph of Section 5 hereof.
APPLICABLE PERIOD: See Section 2 hereof.
COMPANY: See the introductory paragraphs hereto.
EFFECTIVENESS DATE: The day three years and 150 days after the Issue Date; PROVIDED, HOWEVER, that with respect to any Shelf Registration, the Effectiveness Date shall be the 150th day after the delivery of a Shelf Notice as required pursuant to Section 2(c) hereof.
EFFECTIVENESS PERIOD: See Section 3 hereof.
EVENT DATE: See Section 4 hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
EXCHANGE NOTES: See Section 2 hereof.
EXCHANGE OFFER: See Section 2 hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2 hereof.
FILING DATE: (A) If no Exchange Offer Registration Statement has been
filed by the Company pursuant to this Agreement, the day three years and 60 days
after the Issue Date; and (B) with respect to a Shelf Registration Statement,
the 60th day after the delivery of a Shelf Notice as required pursuant to
Section 2(c) hereof.
HOLDER: Any holder of a Registrable Note or Registrable Notes.
INDEMNIFIED PERSON: See Section 7(c) hereof.
INDEMNIFYING PERSON: See Section 7(c) hereof.
INDENTURE: The Indenture, dated as of December 3, 1998, by and among the Company and State Street Bank and Trust Company, as trustee, pursuant to which the Notes are being issued, as the same may be amended or supplemented from time to time in accordance with the terms thereof.
INITIAL SHELF REGISTRATION: See Section 3(a) hereof.
INSPECTORS: See Section 5(m) hereof.
INITIAL NOTES: $20,000,000 in aggregate principal amount of the Company's pay-in-kind Notes due 2009.
ISSUE DATE: December 3, 1998, the date of original issuance of the Notes.
KELSO: See the introductory paragraphs hereto.
NASD: See Section 5(r) hereof.
NOTES: The Additional Notes and the Initial Notes.
PARTICIPANT: See Section 7(a) hereof.
PARTICIPATING BROKER-DEALER: See Section 2 hereof.
PERSON: An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm or other legal entity.
PROSPECTUS: The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
PURCHASE AGREEMENT: See the introductory paragraphs hereof.
RECORDS: See Section 5(m) hereof.
REGISTRABLE NOTES: Each Note upon its original issuance and at all
times subsequent thereto and each Exchange Note as to which Section 2(c)(iii)
(if any) or 2(c)(iv) hereof is applicable upon original issuance and at all
times subsequent thereto, until (i) a Registration Statement (other than, with
respect only to any Exchange Note as to which Section 2(c)(iii)(if any) or
2(c)(iv) hereof is applicable, the Exchange Offer Registration Statement)
covering such Note or Exchange Note has been declared effective by the SEC and
such Note or Exchange Note, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Note has been
exchanged pursuant to the Exchange Offer for an Exchange Note or Exchange Notes
that may be resold without restriction under state and federal securities laws,
(iii) such Note or Exchange Note, as the case may be, ceases to be outstanding
for purposes of the Indenture or (iv) such Note or Exchange Note, as the case
may be, may be resold without restriction pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act.
REGISTRATION STATEMENT: Any registration statement of the Company that covers any of the Notes or the Exchange Notes filed with the SEC under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
RULE 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of the issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act.
RULE 144A: Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.
RULE 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2 hereof.
SHELF REGISTRATION: See Section 3(b) hereof.
SUBSEQUENT SHELF REGISTRATION: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture and the trustee (if any) under any indenture governing the Exchange Notes .
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in which securities of the Company are sold to an underwriter for reoffering to the public.
2. EXCHANGE OFFER
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall file with the SEC, no
later than the Filing Date, a Registration Statement (the "EXCHANGE OFFER
REGISTRATION STATEMENT") on an appropriate registration form with respect to a
registered offer (the "EXCHANGE OFFER") to exchange any and all of the
Registrable Notes for a like aggregate principal amount of notes of the Company
that are identical in all material respects to the Initial Notes (the "EXCHANGE
NOTES"), except that (i) the Exchange Notes shall contain no restrictive legend
thereon and (ii) interest thereon shall accrue from the last date on which
interest in the form of Additional Notes was paid on the Initial Notes or, if no
such interest has been paid, from the Issue Date, and which are entitled to the
benefits of the Indenture or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are necessary to comply with the TIA) and
which, in either case, has been qualified under the TIA. The Exchange Offer
shall comply with all applicable tender offer rules and regulations under the
Exchange Act and other applicable law. The Company shall use its reasonable
best efforts to (x) cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 20 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the day three
years and 185 days after the Issue Date. If, after the Exchange Offer
Registration Statement is initially declared effective by the SEC, the Exchange
Offer or the issuance of the Exchange Notes thereunder is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, the Exchange Offer Registration Statement shall be
deemed not to have become effective for purposes of this Agreement during the
period of such interference, until the Exchange Offer may legally resume.
Each Holder that participates in the Exchange Offer will be required, as a condition to its participation in the Exchange Offer, to represent to the Company in writing (which may be contained in the applicable letter of transmittal) that: (i) any Exchange Notes to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the consummation of the Exchange Offer such Holder will have no arrangement or understanding
with any Person to participate in the distribution of the Exchange Notes in violation of the provisions of the Securities Act, (iii) such Holder is not an affiliate of the Company within the meaning of the Securities Act, (iv) such Holder is not engaged in, and does not intend to engage in, the distribution of Exchange Notes and (v) the Holder is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. Such Holder will also be required to make such other representations as may be necessary under applicable SEC rules, regulations or interpretations to render available the use of Form S-4 or any other appropriate form under the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply solely with
respect to Exchange Notes as to which Section 2(c)(iii) or (iv) is applicable
and Exchange Notes held by Participating Broker-Dealers (as defined), and the
Company shall have no further obligation to register Registrable Notes other
than in respect of any Exchange Notes as to which clause 2(c)(iii) hereof
applies) pursuant to Section 3 hereof.
No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Participating Broker Dealers, if any, which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a "PARTICIPATING BROKER-DEALER"), whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies represent the prevailing views of the staff of the SEC. Such "Plan of Distribution" section shall also expressly permit, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent permitted by applicable policies and regulations of the SEC, all Participating Broker-Dealers, and include a statement describing the means by which Participating Broker-Dealers may resell the Exchange Notes in compliance with the Securities Act.
The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as is necessary to comply with applicable law in connection with any resale of the Exchange Notes covered thereby, PROVIDED, HOWEVER, that such period shall not be required to exceed 180 days, or such longer period if extended pursuant to the last sentence of Section 5 (the "APPLICABLE PERIOD").
In connection with the Exchange Offer, the Company shall:
(1) mail, or cause to be mailed, to each Holder of record entitled to participate in the Exchange Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;
(2) use its best efforts to keep the Exchange Offer open for not less than 20 days after the date that notice of the Exchange Offer is mailed to Holders (or longer if required by applicable law);
(3) utilize the services of a depositary for the Exchange Offer with an address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Notes at any time prior to the close of business, New York time, on the last business day on which the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer, the Company shall:
(1) accept for exchange all Registrable Notes validly tendered and not validly withdrawn pursuant to the Exchange Offer;
(2) deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each Holder of Notes or Exchange Notes, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange.
The Exchange Offer shall not be subject to any conditions, other than that (i) the Exchange Offer does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) no action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair the ability of the Company to proceed with the Exchange Offer, (iii) all governmental approvals shall have been obtained, which approvals the Company deems necessary for the consummation of the Exchange Offer, (iv) there has not been any material change, or development involving a prospective material change, in the business or financial affairs of the Company which, in the reasonable judgment of the Company, would materially impair the Company's ability to consummate the Exchange Offer, and (v) there has not been proposed, adopted or enacted any law, statute, rule or regulation which, in the reasonable judgment of the Company, would materially impair the Company's ability to consummate the Exchange Offer or have a material adverse effect on the Company if the Exchange Offer was consummated. In the event that the Company is unable to consummate the Exchange Offer due to any event listed in clauses (i) through (v) above, the Company shall not be deemed to have breached any covenant under this Section 2.
The Exchange Notes shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in either case, has been qualified under the TIA or is exempt from such qualification and shall provide that the Exchange Notes shall not be subject to the transfer restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the Exchange Notes and the Notes shall vote and consent together on all matters as one class and that none of the Exchange Notes or the Notes will have the right to vote or consent as a separate class on any matter.
(c) If (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Company is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated within three
years and 185 days of the Issue Date, (iii) Kelso so requests in writing to the
Company within 60 days after the consummation of the Exchange Offer, or (iv) in
the case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Company within the meaning of
the Securities Act), then in the case of each of clauses (i) to and including
(iv) of this sentence, the Company shall promptly deliver to the Holders and the
Trustee written notice thereof (the "SHELF NOTICE") and shall file a Shelf
Registration pursuant to Section 3 hereof.
3. SHELF REGISTRATION
If at any time a Shelf Notice is delivered as contemplated by Section 2(c) hereof, then:
(a) SHELF REGISTRATION. The Company shall file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange Offer and Exchange Notes as to which Section 2(c)(iii) or 2(c)(iv) is applicable (the "INITIAL SHELF REGISTRATION"). The Company shall use its best efforts to file with the SEC the Initial Shelf Registration on or before the applicable Filing Date. The Initial Shelf Registration shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). The Company shall not permit any securities other than the Registrable Notes to be included in the Initial Shelf Registration or any Subsequent Shelf Registration (as defined below).
The Company shall, subject to applicable law or applicable interpretation of the staff of the SEC, use its reasonable best efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial Shelf Registration continuously effective under the Securities Act until the date which is five years from the Issue Date or such shorter period ending when (i) all Registrable Notes covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration or cease to be outstanding or (ii) a Subsequent Shelf Registration covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration has been declared effective under
the Securities Act (the "EFFECTIVENESS PERIOD"), PROVIDED, HOWEVER, that the Effectiveness Period in respect of the Initial Shelf Registration shall be extended to the extent required to permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 under the Securities Act and as otherwise provided herein.
No holder of Registrable Notes may include any of its Registrable Notes in any Shelf Registration Statement pursuant to this Agreement unless and until such holder furnishes to the Company in writing, within 15 business days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary prospectus included therein. No holder of Registrable Notes shall be entitled to Additional Interest pursuant to Section 4 hereof unless and until such holder shall have provided all such reasonably requested information. Each holder of Registrable Notes as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make information previously furnished to the Company by such Holder not materially misleading.
(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Company shall use its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Initial Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement pursuant to Rule 415 covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration (each, a "SUBSEQUENT SHELF REGISTRATION"). If a Subsequent Shelf Registration is filed, the Company shall use its reasonable best efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such subsequent Shelf Registration continuously effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration or any Subsequent Shelf Registration was previously continuously effective. As used herein the term "SHELF REGISTRATION" means the Initial Shelf Registration and any Subsequent Shelf Registration.
(c) SUPPLEMENTS AND AMENDMENTS. The Company shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or by any underwriter of such Registrable Notes.
4. ADDITIONAL INTEREST
(a) The Company and Kelso agree that the Holders will suffer damages if the Company fails to fulfill its obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay, as liquidated damages, additional interest on the Notes ("ADDITIONAL INTEREST") under the circumstances and to the extent set forth below (each of which shall be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor the Initial Shelf Registration has been filed on or prior to the applicable Filing Date or (B) notwithstanding that the Company has consummated or will consummate the Exchange Offer, the Company is required to file a Shelf Registration and such Shelf Registration is not filed on or prior to the Filing Date applicable thereto, then, commencing on the day after any such Filing Date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following each such Filing Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor the Initial Shelf Registration is declared effective by the SEC on or prior to the relevant Effectiveness Date or (B) notwithstanding that the Company has consummated or will consummate the Exchange Offer, the Company is required to file a Shelf Registration and such Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Date in respect of such Shelf Registration, then, commencing on the day after such Effectiveness Date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following the day after such Effectiveness Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or
(iii) if (A) the Company has not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the day three years and 185 days after the Issue Date or (B) if applicable, a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period (other than after such time as all Notes have been disposed of thereunder), then Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days commencing on the (x) day three years and 186 days, as the case may be, after such effective date, in the case of (A) above, or (y) the day such Shelf Registration ceases to be effective in the case of (B) above, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each such subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes may not accrue under more than one of the foregoing clauses (i)-(iii) at any one time and at no time shall the aggregate amount of Additional Interest exceed 1.00% per annum; PROVIDED, FURTHER, HOWEVER, that (1) upon the filing of the applicable Exchange Offer Registration Statement or the applicable Shelf Registration Statement as required hereunder (in the case of clause (i) above of this Section 4), (2) upon the effectiveness of the Exchange Offer Registration Statement or the applicable Shelf Registration Statement as required hereunder (in the case of clause (ii) of this Section 4), or (3) upon the
exchange of the applicable Exchange Notes for all Notes tendered (in the case of clause (iii)(A) of this Section 4), or upon the effectiveness of the applicable Shelf Registration Statement which had ceased to remain effective (in the case of (iii)(B) of this Section 4), Additional Interest on the Notes in respect of which such events relate as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within three business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an "EVENT DATE"). Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in the manner set forth in the Notes semiannually on each June 1 and December 1 (to the holders of record on the May 15 and November 15 immediately preceding such dates), commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Registrable Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360.
5. REGISTRATION PROCEDURES
In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations to permit the sale of the Notes covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Company hereunder the Company shall:
(a) Prepare and file with the SEC prior to the applicable Filing Date, a Registration Statement or Registration Statements as prescribed by Sections 2 or 3 hereof, and use its reasonable best efforts to cause each such Registration Statement to become effective and remain effective as provided herein; PROVIDED, HOWEVER, that, if (1) such filing is pursuant to Section 3 hereof or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company shall furnish to and afford the Holders of the Registrable Notes included in such Registration Statement or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five days prior to such filing, or such later date as is reasonable under the circumstances). The Company shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a majority in aggregate principal amount of the Registrable Notes included in such Registration Statement, or any such Participating Broker-Dealer, as the case may be, their counsel, or the managing underwriters, if any, shall reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration Statement or Exchange Offer Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to each of them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus. The Company shall be deemed not to have used its reasonable best efforts to keep a Registration Statement effective during the Effectiveness Period or the Applicable Period, as the case may be, relating thereto if the Company voluntarily takes any action that would result in selling Holders of the Registrable Notes covered thereby or Participating Broker-Dealers seeking to sell Exchange Notes not being able to sell such Registrable Notes and Exchange Notes during that period unless such action is required by applicable law or permitted by this Agreement.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto from whom the Company has received
written notice that it will be a Participating Broker-Dealer in the Exchange
Offer, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly (but in any event within two business days), and
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request in writing, obtain, at the
sole expense of the Company, one conformed copy of such Registration Statement
or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registrable Notes or resales
of Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated by Section 5(l) hereof cease to be true and correct in
all material respects (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-
Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the Company's determination that a post-effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for sale in any jurisdiction, and, if any such order is issued, to use its reasonable best efforts to obtain the withdrawal of any such order at the earliest possible moment.
(e) Subject to the third paragraph of Section 3(a) hereof, if a Shelf Registration is filed pursuant to Section 3 and if requested by the managing underwriter or underwriters (if any) or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering or any Participating Broker-Dealer, (i) as promptly as practicable incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters (if any), such Holders, any Participating Broker Dealer or counsel for any of them reasonably request to be included therein, (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment, and (iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish to each selling Holder of Registrable Notes and to each such Participating Broker-Dealer who so requests and to their respective counsel and each managing underwriter, if any, at the sole expense of the Company, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules, and, if reasonably
requested in writing, all documents incorporated or deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, deliver to each selling Holder of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be,
their respective counsel, and the underwriters, if any, at the sole expense of
the Company, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and, if
requested in writing, any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto (provided the manner of such use complies with
all applicable federal securities laws, the rules and regulations of the SEC and
applicable state securities "Blue Sky" laws and subject to the provisions of
this Agreement) by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Offer Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the managing underwriter or underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer, or the managing underwriter or underwriters reasonably request in writing; PROVIDED, HOWEVER, that where Exchange Notes held by Participating Broker-Dealers or Registrable Notes are offered other than through an underwritten offering, the Company agrees to cause its counsel to perform Blue Sky investigations and file registrations and qualifications required to be filed pursuant to this Section 5(h), keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; PROVIDED, HOWEVER, that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Registrable Notes to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or selling Holders may reasonably request.
(j) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole expense of the Company, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not contain an 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, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Company shall not be required to amend or supplement a Registration Statement, any related Prospectus or any document incorporated therein by reference, in the event that, and for a period not to exceed an aggregate of 60 days in any calendar year if, (i) an event occurs and is continuing as a result of which the Shelf Registration would, in the Company's good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) (a) the Company determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Company or (b) the disclosure otherwise relates to a pending material business transaction that has not yet been publicly disclosed.
(k) Prior to the effective date of the first Registration Statement relating to the Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Notes.
(l) In connection with any underwritten offering of Registrable Notes pursuant to a Shelf Registration, enter into an underwriting agreement as is customary in underwritten offerings of debt securities similar to the Notes in form and substance reasonably satisfactory to the Company and take all such other actions as are reasonably requested by the managing underwriter or underwriters in order to expedite or facilitate the registration or the disposition of such Registrable Notes and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters with respect to the business of the Company
and the subsidiaries of the Company (including any acquired business, properties or entity, if applicable) and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by Company to underwriters in underwritten offerings of debt securities similar to the Notes, and confirm the same in writing if and when requested in form and substance reasonably satisfactory to the Company; (ii) upon the request of Holders of 10% of the Registrable Notes, obtain the written opinions of counsel to the Company and written updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions reasonably requested in underwritten offerings and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) upon the request of Holders of 10% of the Registrable Notes, use its reasonable best efforts to obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the independent public accountants of the Company (and, if necessary, any other independent public accountants of the Company, any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of debt securities similar to the Notes and such other matters as reasonably requested by the managing underwriter or underwriters as permitted by the Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable to the sellers and underwriters, if any, than those set forth in Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement and the managing underwriter or underwriters or agents, if any). The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder.
(m) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Notes, if any, and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be, underwriter (collectively, the "INSPECTORS"), at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and instruments of the Company and subsidiaries of the Company (collectively, the "RECORDS") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and any of their subsidiaries to supply all information reasonably requested by any such Inspector in connection with such Registration Statement and Prospectus. The foregoing inspection and information gathering shall be coordinated on behalf of the selling Holders by one counsel designated by such parties as described in Section 6(b) hereof. Each Inspector shall agree in writing that it will keep the Records confidential and that it
will not disclose any of the Records that the Company determines, in good faith, to be confidential unless (i) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (ii) the information in such Records has been made generally available to the public; PROVIDED, HOWEVER, that prior notice shall be provided as soon as practicable to the Company of the potential disclosure of any information by such Inspector pursuant to clause (i) of this sentence to permit the Company to obtain a protective order or take other appropriate action to prevent the disclosure of such information at the Company's sole expense (or waive the provisions of this paragraph (m)) and that such Inspector shall take such actions as are reasonably necessary to protect the confidentiality of such information (if practicable) to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of the Holder or any Inspector. Each selling Holder of such Registrable securities will be required to agree that information obtained by it as a result of such inspections shall be deemed confidential by it and shall not be used by it as a basis for any market transactions in the securities of the Company unless and until such information is generally available to the public.
(n) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a) hereof, as the case may be, to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable Notes; and in connection therewith, cooperate with the trustee under any such indenture and the Holders of the Registrable Notes to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner.
(o) Comply with all applicable rules and regulations of the SEC and make generally available to its securityholders with regard to any applicable Registration Statement, a consolidated earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 60 days after the end of any fiscal quarter (or 120 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods.
(p) Upon consummation of the Exchange Offer, obtain an opinion of counsel to the Company, in a form customary for underwritten transactions, addressed to the Trustee for the benefit of all Holders of Registrable Notes participating in the Exchange Offer that the Exchange Notes and the related indenture constitute legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, subject to customary exceptions and qualifications.
(q) If the Exchange Offer is to be consummated, upon delivery of the Registrable Notes by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Notes, the Company shall mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are being cancelled in exchange for the Exchange Notes; in no event shall such Registrable Notes be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD").
(s) Use its reasonable best efforts to take all other steps reasonably necessary to effect the registration of the Registrable Notes covered by a Registration Statement contemplated hereby.
Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon actual receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by such Holder or Participating Broker Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof, or until it is advised in writing (the "ADVICE") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto. In the event that the Company shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(j) hereof or (y) the Advice.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance with this Agreement by the Company (other than any underwriting discounts or commissions) shall be borne by the Company, including, without limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with an underwritten offering and (B) reasonable fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of Registrable Notes are located, in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the case
of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement, or in respect of Registrable Notes or Exchange Notes to be sold by
any Participating Broker-Dealer during the Applicable Period, as the case may
be, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and fees and disbursements of special
counsel for sellers of Registrable Notes (subject to Section 6(b) hereof and
exclusive of any counsel retained pursuant to Section 7 hereof), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(l)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) Securities Act liability insurance, if the Company desires
such insurance, (vii) fees and expenses of all other Persons retained by the
Company, (viii) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (ix) the expense of any annual audit, (x) any fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, and the obtaining of a rating of the
securities, in each case, if applicable, and (xi) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, indentures and any other documents necessary in order
to comply with this Agreement.
(b) The Company shall (i) reimburse the Holders of the Registrable Notes being registered in a Shelf Registration for the reasonable fees and disbursements of not more than one counsel (in addition to appropriate local counsel) chosen by the Holders of a majority in aggregate principal amount of the Registrable Notes to be included in such Registration Statement and (ii) reimburse reasonable out-of-pocket expenses (other than legal expenses and other sale commissions or similar costs) of Holders of Registrable Notes incurred in connection with the registration and sale of Registrable Notes pursuant to a Shelf Registration or in connection with exchange of the Registrable Notes in connection with the Exchange Offer.
7 INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder of Registrable Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, the affiliates, officers, directors, representatives, employees and agents of each such Person, and each Person, if any, who controls any such Person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a "PARTICIPANT"), from and against any and all losses, claims, damages, judgments, liabilities and expenses (including, without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, EXCEPT insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Participant furnished to the Company in writing by such Participant expressly for use therein and with respect to any preliminary Prospectus, to the extent that any such loss, claim, damage or liability arises solely from the fact that any Participant sold Notes to a person to whom there was not sent or given a copy of the Prospectus (as amended or supplemented) at or prior to the written confirmation of such sale if the Company shall have previously furnished copies thereof to the Participant in accordance herewith and the Prospectus (as amended or supplemented) would have corrected any such untrue statement or omission.
(b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the Company, its respective affiliates, officers, directors, representatives, employees and agents and each Person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent (but on a several, and not joint, basis) as the foregoing indemnity from the Company to each Participant, but only with reference to information relating to such Participant furnished to the Company in writing by such Participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary prospectus. The liability of any Participant under this paragraph shall in no event exceed the proceeds received by such Participant from sales of Registrable Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such Person (the "INDEMNIFIED PERSON") shall promptly notify the Persons against whom such indemnity may be sought (the "INDEMNIFYING PERSONS") in writing, and the Indemnifying Persons, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may reasonably designate in such proceeding and shall pay the reasonable fees and expenses actually incurred by such counsel related to such proceeding; PROVIDED, HOWEVER, that the failure to so notify the Indemnifying Persons will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent such failure results in the forfeiture by the Indemnifying Person of substantial rights and defenses and the Indemnifying Person was not otherwise aware of such action or claim. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Persons and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons shall have failed within a reasonable period of time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both any Indemnifying Person and the Indemnified Person 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 Persons shall not, in connection with such proceeding or separate but substantially similar related proceeding in the same jurisdiction arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed promptly as they are incurred. Any such separate firm for the Participants and such control Persons of Participants shall be designated in writing by Participants who sold a majority in interest of Registrable Notes and Exchange Notes sold by all such Participants and shall be reasonably acceptable to the Company, and any such separate firm for the Company, its affiliates, officers, directors, representatives, employees and agents and such control Persons of the Company shall be designated in writing by the Company and shall be reasonably acceptable to the Holders.
The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff for which the Indemnified Person is entitled to indemnification pursuant to this Agreement, each Indemnifying Person agrees to indemnify and hold harmless each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Person (which consent shall not be unreasonably withheld or delayed), effect any settlement or compromise of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party, or indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional written release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of such Indemnified Person.
(d) If the indemnification provided for in the first and second paragraphs of this Section 7 is for any reason unavailable to, or insufficient to hold harmless, an Indemnified Person in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Participant or such other Indemnified Person, as the case may be, on the other, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by PRO RATA allocation (even if the Participants 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 the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages, judgments, liabilities and expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall a Participant be required to contribute any amount in excess of the amount by which proceeds received by such Participant from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of any damages that such Participant has otherwise been required to pay or has paid 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.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. RULES 144 AND 144A
The Company covenants and agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and, for so long as any Registrable Notes remain outstanding and, if the Company is not required to file such reports, the Company will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such information of the type specified in Sections 13 and 15(d) of the Exchange Act. The Company further covenants and agrees, for so long as any Registrable Notes remain outstanding, to make available to any Holder or beneficial owner of Registrable Notes in connection with any sale thereof and any prospective purchaser of such Registrable Notes from such Holder or beneficial owner the information required by Rule 144A(d)(4) and 144(c) under the Securities Act in order to permit resales of such Registrable Notes pursuant to Rule 144A.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Notes covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering and shall be reasonably acceptable to the Company.
No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.
10. MISCELLANEOUS
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date hereof, and the Company shall not, after the date of this Agreement, enter into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. The Company will not enter into any agreement with respect to any of its securities which will grant to any Person piggy-back registration rights with respect to any Registration Statement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE NOTES. The Company shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a registration undertaken pursuant to this Agreement.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than with the prior written consent of (I) the Company and (II) the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes; PROVIDED, HOWEVER, that Section 7 and this Section 10(c) may not be amended, modified or supplemented without the prior written consent of each Holder affected by any such amendment, modification or supplement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being sold pursuant to such Registration Statement.
(d) NOTICES. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes at the most current address of such Holder set forth on the records of the registrar under the Indenture.
(ii) if to the Company, at the address as follows:
TransDigm Holding Company
8233 Imperial Drive
Waco, TX 76712
Facsimile No.: (254) 741-5402
Attention: Chief Financial Officer
with copies to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Facsimile No.: (212) 751-4864
Attention: Kirk Davenport
All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier; and when transmission is confirmed, if sent by facsimile.
Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address and in the manner specified in such Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto and the Holders; PROVIDED, HOWEVER, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Notes in violation of the terms of the Purchase Agreement or the Indenture.
(f) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) NOTES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than Kelso to the extent it is deemed such an affiliate) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.
(k) THIRD-PARTY BENEFICIARIES. Holders of Registrable Notes are intended third-party beneficiaries of this Agreement, and this Agreement may be enforced by such Persons.
(l) ENTIRE AGREEMENT. This Agreement, together with the Merger Agreement and the Indenture, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understandings, correspondence, conversations and memoranda between the Holders on the one hand and the Company on the other, or between or among any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby.
WITNESS the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.
TRANSDIGM HOLDING COMPANY
By: /s/ Peter B. Radekevich -------------------------------- Name: Peter B. Radekevich Title: Chief Financial Officer |
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
KELSO INVESTMENT ASSOCIATES IV, L.P.
By: /s/ David I. Wahrhaftig ---------------------------- Name: David I. Wahrhaftig Title: General Partner |
KELSO EQUITY PARTNERS II, L.P.
By: /s/ David I. Wahrhaftig ---------------------------- Name: David I. Wahrhaftig Title: General Partner |
Exhibit 4.8
CREDIT AGREEMENT
among
TRANSDIGM HOLDING COMPANY,
TRANSDIGM INC.,
VARIOUS LENDING INSTITUTIONS,
CREDIT SUISSE FIRST BOSTON,
as SYNDICATION AGENT and CO-LEAD ARRANGER,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT and CO-LEAD ARRANGER
Dated as of December 3, 1998
TABLE OF CONTENTS
SECTION 1. Amount and Terms of Credit...................................... 1
1.01 Commitments ............................................... 1
1.02 Minimum Borrowing Amounts, etc............................... 4
1.03 Notice of Borrowing.......................................... 4
1.04 Disbursement of Funds........................................ 5
1.05 Notes 6
1.06 Conversions ............................................... 7
1.07 Pro Rata Borrowings.......................................... 8
1.08 Interest 8
1.09 Interest Periods............................................. 9
1.10 Increased Costs; Illegality; etc............................. 10
1.11 Compensation ............................................... 12
1.12 Change of Lending Office..................................... 13
1.13 Replacement of Lenders....................................... 13
1.14 Limitation on Additional Amounts, etc........................ 14
SECTION 2. Letters of Credit............................................... 15
2.01 Letters of Credit............................................ 15
2.02 Letter of Credit Requests.................................... 16
2.03 Letter of Credit Participations.............................. 16
2.04 Agreement to Repay Letter of Credit Drawings................. 19
2.05 Increased Costs.............................................. 19
SECTION 3. Fees; Commitments............................................... 20
3.01 Fees ........................................................ 20
3.02 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment.................................. 21
3.03 Mandatory Reduction of Commitments........................... 22
SECTION 4. Payments ....................................................... 23
4.01 Voluntary Prepayments........................................ 23
4.02 Mandatory Repayments and Commitment Reductions............... 24
4.03 Method and Place of Payment.................................. 31
4.04 Net Payments ............................................... 31
SECTION 5. Conditions Precedent............................................ 33
5.01 Execution of Agreement; Notes................................ 33
5.02 Officers Certificate......................................... 33
5.03 Opinions of Counsel.......................................... 33
5.04 Corporate Documents; Proceedings............................. 33
5.05 Adverse Change, etc.......................................... 34
5.06 Litigation ............................................... 34
5.07 Approvals ................................................... 34
5.08 Consummation of the Recapitalization......................... 34
|
5.09 Refinancing ............................................... 35
5.10 Consummation of the Equity Financing; Note Issuances; etc.... 35
5.11 Pledge Agreement; Security Agreement; etc.................... 36
5.12 Subsidiaries Guaranty........................................ 37
5.13 Employee Benefit Plans; Shareholders Agreements; Management
Agreements; Employment Agreements; Collective Bargaining
Agreements; Existing Indebtedness Agreements; Tax
Allocation Agreements ..................................... 37
5.14 Solvency Certificate; Insurance Certificates; Financial
Statements; Budgets........................................ 38
5.15 Payment of Fees.............................................. 39
SECTION 6. Conditions Precedent to All Credit Events....................... 39
6.01 No Default; Representations and Warranties................... 39
6.02 Notice of Borrowing; Letter of Credit Request................ 39
SECTION 7. Representations, Warranties and Agreements...................... 39
7.01 Corporate Status............................................. 40
7.02 Corporate Power and Authority................................ 40
7.03 No Violation ............................................... 40
7.04 Litigation ............................................... 40
7.05 Use of Proceeds; Margin Regulations.......................... 41
7.06 Governmental Approvals....................................... 41
7.07 Investment Company Act....................................... 41
7.08 Public Utility Holding Company Act........................... 41
7.09 True and Complete Disclosure................................. 41
7.10 Financial Condition; Financial Statements.................... 42
7.11 Security Interests........................................... 43
7.12 Transaction ............................................... 43
7.13 Compliance with ERISA........................................ 43
7.14 Capitalization............................................... 45
7.15 Subsidiaries ............................................... 46
7.16 Intellectual Property, etc................................... 46
7.17 Compliance with Statutes, etc................................ 46
7.18 Environmental Matters........................................ 46
7.19 Properties ............................................... 47
7.20 Labor Relations.............................................. 47
7.21 Tax Returns and Payments..................................... 47
7.22 Existing Indebtedness........................................ 47
7.23 Insurance ................................................... 48
7.24 Representations and Warranties in Other Documents............ 48
7.25 Special Purpose Corporations................................. 48
7.26 Subordinated Notes; etc...................................... 48
7.27 Year 2000 ................................................. 48
SECTION 8. Affirmative Covenants........................................... 49
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8.01 Information Covenants........................................ 49
8.02 Books, Records and Inspections; Annual Meeting with Lenders.. 52
8.03 Insurance ................................................... 52
8.04 Payment of Taxes............................................. 53
8.05 Corporate Franchises......................................... 53
8.06 Compliance with Statutes; etc................................ 53
8.07 Compliance with Environmental Laws........................... 53
8.08 ERISA ....................................................... 54
8.09 Good Repair ............................................... 56
8.10 End of Fiscal Years; Fiscal Quarters......................... 56
8.11 Additional Security; Further Assurances...................... 56
8.12 Foreign Subsidiaries Security................................ 57
8.13 Ownership of Subsidiaries.................................... 58
8.14 Permitted Acquisitions....................................... 58
8.15 Maintenance of Corporate Separateness........................ 60
8.16 Performance of Obligations................................... 60
8.17 Use of Proceeds.............................................. 60
8.18 Contributions; Payments; etc................................. 60
8.19 Year 2000 Compliance......................................... 60
8.20 Seller Subordinated Notes.................................... 61
SECTION 9. Negative Covenants.............................................. 61
9.01 Changes in Business.......................................... 61
9.02 Consolidation; Merger; Sale or Purchase of Assets; etc....... 61
9.03 Liens ....................................................... 63
9.04 Indebtedness ............................................... 65
9.05 Advances; Investments; Loans................................. 67
9.06 Dividends; etc............................................... 69
9.07 Transactions with Affiliates................................. 71
9.08 Capital Expenditures......................................... 71
9.09 Minimum Consolidated EBITDA.................................. 73
9.10 Consolidated Interest Coverage Ratio......................... 74
9.11 Total Leverage Ratio......................................... 74
9.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements etc. .. 75
9.13 Limitation on Issuance of Capital Stock...................... 76
9.14 Limitation on Certain Restrictions on Subsidiaries........... 76
9.15 Limitation on the Creation of Subsidiaries and Joint
Ventures................................................... 77
SECTION 10. Events of Default.............................................. 77
10.01 Payments ................................................... 77
10.02 Representations, etc........................................ 77
10.03 Covenants ............................................... 78
10.04 Default Under Other Agreements.............................. 78
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10.05 Bankruptcy, etc............................................. 78
10.06 ERISA ...................................................... 79
10.07 Security Documents.......................................... 79
10.08 Guaranties ............................................... 80
10.09 Judgments ............................................... 80
10.10 Change of Control........................................... 80
SECTION 11. Definitions .................................................. 81
SECTION 12. The Administrative Agent....................................... 106
12.01 Appointment ............................................... 106
12.02 Delegation of Duties........................................ 106
12.03 Exculpatory Provisions...................................... 106
12.04 Reliance by Administrative Agent............................ 107
12.05 Notice of Default........................................... 107
12.06 Nonreliance on Administrative Agent and Other Lenders....... 107
12.07 Indemnification............................................. 108
12.08 Administrative Agent in its Individual Capacity............. 108
12.09 Holders .................................................... 109
12.10 Resignation of the Administrative Agent..................... 109
SECTION 13. Miscellaneous.................................................. 109
13.01 Payment of Expenses, etc.................................... 109
13.02 Right of Setoff............................................. 110
13.03 Notices .................................................... 111
13.04 Benefit of Agreement........................................ 111
13.05 No Waiver; Remedies Cumulative.............................. 113
13.06 Payments Pro Rata........................................... 113
13.07 Calculations; Computations.................................. 114
13.08 Governing Law; Submission to Jurisdiction; Venue............ 114
13.09 Counterparts ............................................... 115
13.10 Effectiveness............................................... 115
13.11 Headings Descriptive........................................ 115
13.12 Amendment or Waiver; etc.................................... 115
13.13 Survival ................................................... 117
13.14 Domicile of Loans and Commitments........................... 117
13.15 Confidentiality............................................. 117
13.16 Waiver of Jury Trial........................................ 118
13.17 Register ................................................... 118
SECTION 14. Holdings Guaranty.............................................. 118
14.01 The Guaranty ............................................... 118
14.02 Bankruptcy ............................................... 119
14.03 Nature of Liability......................................... 119
14.04 Independent Obligation...................................... 119
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14.05 Authorization............................................... 120 14.06 Reliance ................................................... 121 14.07 Subordination............................................... 121 14.08 Waiver ..................................................... 121 14.09 Nature of Liability......................................... 123 |
ANNEX I List of Lenders and Commitments
ANNEX II Lender Addresses
ANNEX III Plans
ANNEX IV Subsidiaries
ANNEX V Real Property
ANNEX VI Existing Indebtedness
ANNEX VII Insurance
ANNEX VIII Existing Liens
ANNEX IX Existing Investments
ANNEX X Indebtedness to be Refinanced
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of A Term Note
EXHIBIT B-2 -- Form of B Term Note
EXHIBIT B-3 -- Form of Revolving Note
EXHIBIT B-4 -- Form of Swingline Note
EXHIBIT C -- Form of Letter of Credit Request
EXHIBIT D -- Form of Section 4.04(b)(ii) Certificate
EXHIBIT E -- Form of Opinion of Latham & Watkins,
special counsel to the Credit Parties
EXHIBIT F -- Form of Officers' Certificate
EXHIBIT G -- Form of Pledge Agreement
EXHIBIT H -- Form of Security Agreement
EXHIBIT I -- Form of Subsidiaries Guaranty
EXHIBIT J -- Form of Solvency Certificate
EXHIBIT K -- Form of Assignment and Assumption Agreement
EXHIBIT L -- Form of Intercompany Note
EXHIBIT M -- Form of Shareholder Subordinated Note
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CREDIT AGREEMENT, dated as of December 3, 1998, among TRANSDIGM HOLDING COMPANY, a Delaware corporation ("Holdings"), TRANSDIGM INC., a Delaware corporation (the "Borrower"), the lenders from time to time party hereto (each, a "Lender" and, collectively, the "Lenders"), CREDIT SUISSE FIRST BOSTON, as Syndication Agent and Co-Lead Arranger (in such capacity, the "Syndication Agent"), and BANKERS TRUST COMPANY, as Administrative Agent and Co-Lead Arranger (in such capacity, the "Administrative Agent"). Unless otherwise defined herein, all capitalized terms used herein and defined in Section 11 are used herein as so defined.
W I T N E S S E T H:
WHEREAS, subject to and upon the terms and conditions herein set forth, the Lenders are willing to make available to the Borrower the credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. (a) Subject to and upon the terms and conditions
set forth herein, each Lender with an A Term Loan Commitment severally agrees to
make a term loan or term loans (each, an "A Term Loan" and, collectively, the "A
Term Loans") to the Borrower, which A Term Loans: (i) shall be incurred pursuant
to a single drawing on the Initial Borrowing Date; (ii) shall be denominated in
U.S. Dollars; (iii) except as hereafter provided, shall, at the option of the
Borrower, be incurred and maintained as, and/or converted into, Base Rate Loans
or Eurodollar Loans, provided that (x) all A Term Loans made as part of the same
Borrowing shall, unless otherwise specifically provided herein, consist of A
Term Loans of the same Type and (y) unless the Administrative Agent has
determined that the Syndication Date has occurred (at which time this clause (y)
shall no longer be applicable), no more than four Borrowings of A Term Loans to
be maintained as Eurodollar Loans may be incurred prior to the 60th day after
the Initial Borrowing Date (each of which Borrowings of Eurodollar Loans may
only have an Interest Period of (A) in the case of the first two such
Borrowings, seven days, and (B) in the case of the remaining two Borrowings, one
month, and the first of which Borrowings may only be made on the Initial
Borrowing Date or on or prior to the sixth Business Day after the Initial
Borrowing Date and with each such Borrowing made thereafter to be made only on
the last day of the Interest Period of the immediately preceding Borrowing); and
(iv) shall not exceed for any such Lender at the time of incurrence thereof on
the Initial Borrowing Date that aggregate principal amount as is equal to the A
Term Loan Commitment of such Lender as in effect on the Initial Borrowing Date
(before giving effect to the termination thereof on such date pursuant to
Section 3.03(b)). Once repaid, A Term Loans incurred hereunder may not be
reborrowed.
(b) Subject to and upon the terms and conditions set forth herein, each Lender with a B Term Loan Commitment severally agrees to make a term loan or term loans (each, a "B Term Loan" and, collectively, the "B Term Loans" and, together with the A Term Loans, the "Term Loans") to the Borrower, which B Term Loans: (i) shall be incurred pursuant to a single drawing on the Initial Borrowing Date; (ii) shall be denominated in U.S. Dollars; (iii) except as
hereafter provided, shall, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) all B Term Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of B Term Loans of the
same Type and (y) unless the Administrative Agent has determined that the
Syndication Date has occurred (at which time this clause (y) shall no longer be
applicable), no more than four Borrowings of B Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 60th day after the Initial
Borrowing Date (each of which Borrowings of Eurodollar Loans (A) may only have
the same Interest Period as is then permitted for a Borrowing of A Term Loans
that are maintained as Eurodollar Loans and (B) shall begin and end on the same
day as a Borrowing of A Term Loans that are maintained as Eurodollar Loans); and
(iv) shall not exceed for any such Lender at the time of incurrence thereof on
the Initial Borrowing Date that aggregate principal amount as is equal to the B
Term Loan Commitment of such Lender as in effect on the Initial Borrowing Date
(before giving effect to the termination thereof on such date pursuant to
Section 3.03(c)). Once repaid, B Term Loans incurred hereunder may not be
reborrowed.
(c) Subject to and upon the terms and conditions set forth herein,
each RL Lender severally agrees, at any time and from time to time on and after
the Initial Borrowing Date and prior to the Revolving Loan Maturity Date, to
make a revolving loan or revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans: (i)
shall be denominated in U.S. Dollars; (ii) except as hereinafter provided,
shall, at the option of the Borrower, be incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that (x) all
Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type and
(y) unless the Administrative Agent has determined that the Syndication Date has
occurred (at which time this clause (y) shall no longer be applicable), no more
than four Borrowings of Revolving Loans to be maintained as Eurodollar Loans may
be incurred prior to the 60th day after the Initial Borrowing Date (each of
which Borrowings of Eurodollar Loans (A) may only have the same Interest Period
as is then permitted for a Borrowing of A Term Loans that are maintained as
Eurodollar Loans and (B) shall begin and end on the same day as a Borrowing of A
Term Loans that are maintained as Eurodollar Loans); (iii) may be repaid and
reborrowed in accordance with the provisions hereof; and (iv) shall not exceed
for any RL Lender at any time outstanding that aggregate principal amount which,
when combined with such RL Lender's Percentage of the Swingline Loans then
outstanding and the Letter of Credit Outstandings (exclusive of Unpaid Drawings
relating to Letters of Credit which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) at such time, equals the Revolving Loan Commitment of such RL Lender at
such time.
(d) Subject to and upon the terms and conditions set forth herein, BTCo in its individual capacity agrees to make at any time and from time to time on and after the Initial Borrowing Date and prior to the Swingline Expiry Date, a revolving loan or revolving loans to the Borrower (each, a "Swingline Loan" and, collectively, the "Swingline Loans"), which Swingline Loans: (i) shall be made and maintained as Base Rate Loans; (ii) shall be denominated in U.S. Dollars; (iii) may be repaid and reborrowed in accordance with the provisions hereof; (iv) shall not exceed in aggregate principal amount at any time outstanding, when
combined with the aggregate principal amount of all Revolving Loans then
outstanding and the Letter of Credit Outstandings (exclusive of Unpaid Drawings
relating to Letters of Credit which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans) at such time, an amount equal to the Total Revolving Loan Commitment then
in effect; and (v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount. BTCo shall not be obligated to make
any Swingline Loans at a time when a Lender Default exists unless BTCo has
entered into arrangements satisfactory to it and the Borrower to eliminate
BTCo's risk with respect to the Defaulting Lender's or Lenders' participation in
such Swingline Loans, including by cash collateralizing such Defaulting Lender's
or Lenders' Percentage of the outstanding Swingline Loans. BTCo will not make a
Swingline Loan after it has received written notice from the Borrower, any other
Credit Party or the Required Lenders stating that a Default or an Event of
Default exists until such time as BTCo shall have received a written notice of
(i) rescission of such notice from the party or parties originally delivering
the same or (ii) a waiver of such Default or Event of Default from the Required
Lenders.
(e) On any Business Day, BTCo may, in its sole discretion, give
notice to the RL Lenders that its outstanding Swingline Loans shall be funded
with a Borrowing of Revolving Loans (provided that each such notice shall be
deemed to have been automatically given upon the occurrence of a Default or an
Event of Default under Section 10.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 10), in which case a Borrowing of
Revolving Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all RL
Lenders pro rata based on each RL Lender's Percentage, and the proceeds thereof
shall be applied directly to repay BTCo for such outstanding Swingline Loans.
Each RL Lender hereby irrevocably agrees to make Base Rate Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the date specified in
writing by BTCo notwithstanding (i) that the amount of the Mandatory Borrowing
may not comply with the Minimum Borrowing Amount otherwise required hereunder,
(ii) whether any conditions specified in Section 5 or 6 are then satisfied,
(iii) whether a Default or an Event of Default has occurred and is continuing,
(iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code in respect of the Borrower), each RL Lender (other
than BTCo) hereby agrees that it shall forthwith purchase from BTCo (without
recourse or warranty) such assignment of the outstanding Swingline Loans as
shall be necessary to cause the RL Lenders to share in such Swingline Loans
ratably based upon their respective Percentages (determined before giving effect
to any termination of the Revolving Loan Commitments pursuant to the last
paragraph of Section 10), provided that (x) all interest payable on the
Swingline Loans shall be for the account of BTCo until the date the respective
assignment is purchased and, to the extent attributable to the purchased
assignment, shall be payable to the RL Lender purchasing same from and after
such date of purchase and (y) at the time any purchase of assignments pursuant
to this sentence is actually made, the purchasing RL Lender shall be required to
pay BTCo interest on the principal amount of assignment purchased for each day
from and including the day upon which the
Mandatory Borrowing would otherwise have occurred to but excluding the date of payment for such assignment, at the overnight Federal Funds Rate for the first three days or the rate otherwise applicable to Revolving Loans maintained as Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount applicable to such Loans, provided that Mandatory Borrowings shall be made in the amounts required by Section 1.01(e). More than one Borrowing may be incurred on any day, provided that at no time shall there be outstanding more than ten Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur Loans hereunder (excluding Swingline Loans and Revolving Loans incurred pursuant to a Mandatory Borrowing), the Borrower shall give the Administrative Agent at the Notice Office, prior to 12:00 Noon (New York time), at least three Business Days' prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Eurodollar Loans and at least one Business Day's prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate Loans to be made hereunder. Each such notice (each, a "Notice of Borrowing") shall, except as otherwise expressly provided in Section 1.10, be irrevocable, and, in the case of each written notice and each confirmation of telephonic notice, shall be in the form of Exhibit A, appropriately completed to specify: (i) the aggregate principal amount of the Loans to be made pursuant to such Borrowing; (ii) the date of such Borrowing (which shall be a Business Day); (iii) whether the respective Borrowing shall consist of A Term Loans, B Term Loans or Revolving Loans; (iv) whether the respective Borrowing shall consist of Base Rate Loans or, to the extent permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be initially applicable thereto; and (v) in the case of a Borrowing of Revolving Loans the proceeds of which are to be utilized to finance, in whole or in part, the purchase price of a Permitted Acquisition, (x) a reference to the officer's certificate, if any, delivered in accordance with Section 8.14, (y) the aggregate principal amount of such Revolving Loans to be utilized in connection with such Permitted Acquisition and (z) the aggregate principal amount of all Revolving Loans relating to Permitted Acquisitions then outstanding after giving effect to the incurrence of such Revolving Loans. The Administrative Agent shall promptly give each Lender which is required to make Loans of the Tranche specified in the respective Notice of Borrowing, written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing, of such Lender's proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing.
(b) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give BTCo not later than 12:00 Noon (New York
time) on the day such Swingline Loan is to be incurred, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing. Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(e), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(e).
(c) Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice permitted to be given hereunder, the Administrative Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the Letter of Credit Issuer (in the case of the issuance of Letters of Credit), as the case may be, may prior to receipt of written confirmation act without liability upon the basis of such telephonic notice, believed by the Administrative Agent, BTCo or the Letter of Credit Issuer, as the case may be, in good faith to be from an Authorized Officer of the Borrower. In each such case, the Borrower hereby waives the right to dispute the Administrative Agent's, BTCo's or the Letter of Credit Issuer's record of the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) Not later than 1:00 P.M. (New York time) on the date specified in each Notice of Borrowing (or (x) in the case of Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than 12:00 Noon (New York time) on the date specified in Section 1.01(e)), each Lender with a Commitment of the respective Tranche will make available its pro rata share, if any, of each Borrowing requested to be made on such date (or in the case of Swingline Loans, BTCo shall make available the full amount thereof) in the manner provided below. All amounts shall be made available to the Administrative Agent in U.S. Dollars and in immediately available funds at the Payment Office and, except for Revolving Loans made pursuant to a Mandatory Borrowing, the Administrative Agent promptly will make available to the Borrower by depositing to its account at the Payment Office the aggregate of the amounts so made available in the type of funds received. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available same to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover on demand from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds Rate or (y) if paid by the Borrower, the then applicable rate of interest, calculated in accordance with Section 1.08.
(b) Nothing in this Agreement shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of, and interest on, all the Loans made to it by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 13.17 and shall, if requested by such Lender, also be evidenced (i) if A Term Loans, by a promissory note substantially in the form of Exhibit B-1 with blanks appropriately completed in conformity herewith (each, an "A Term Note" and, collectively, the "A Term Notes"), (ii) if B Term Loans, by a promissory note substantially in the form of Exhibit B-2 with blanks appropriately completed in conformity herewith (each, a "B Term Note" and, collectively, the "B Term Notes"), (iii) if Revolving Loans, by a promissory note substantially in the form of Exhibit B-3 with blanks appropriately completed in conformity herewith (each, a "Revolving Note" and, collectively, the "Revolving Notes") and (iv) if Swingline Loans, by a promissory note substantially in the form of Exhibit B-4 with blanks appropriately completed in conformity herewith (the "Swingline Note").
(b) The A Term Note issued to each Lender with an A Term Loan Commitment or with outstanding A Term Loans shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Initial Borrowing Date (or, if issued after the Initial Borrowing Date, the date of the issuance thereof), (iii) be in a stated principal amount equal to the A Term Loans made by such Lender on the Initial Borrowing Date (or, if issued after the Initial Borrowing Date, be in a stated principal amount equal to the outstanding principal amount of A Term Loans of such Lender at such time) and be payable in the outstanding principal amount of A Term Loans evidenced thereby, (iv) mature on the A Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to voluntary repayment as provided in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement and the other Credit Documents.
(c) The B Term Note issued to each Lender with a B Term Loan Commitment or with outstanding B Term Loans shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Initial Borrowing Date (or, if issued after the Initial Borrowing Date, the date of the issuance thereof), (iii) be in a stated principal amount equal to the B Term Loans made by such Lender on the Initial Borrowing Date (or, if issued after the Initial Borrowing Date, be in a stated principal amount equal to the outstanding principal amount of B Term Loans of such Lender at such time) and be payable in the outstanding principal amount of B Term Loans evidenced thereby, (iv) mature on the B Term Loan Maturity Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to voluntary repayment as provided in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement and the other Credit Documents.
(d) The Revolving Note issued to each Lender with a Revolving Loan Commitment or with outstanding Revolving Loans shall (i) be executed by the Borrower, (ii) be payable to such Lender or its registered assigns and be dated the Initial Borrowing Date (or, if issued after the Initial Borrowing Date, the date of the issuance thereof), (iii) be in a stated princi-
pal amount equal to the Revolving Loan Commitment of such Lender (or, if issued
after the termination of the Total Revolving Loan Commitment, be in a stated
principal amount equal to the outstanding principal amount of Revolving Loans of
such Lender at such time) and be payable in the outstanding principal amount of
Revolving Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to BTCo or its registered assigns and be dated the
Initial Borrowing Date, (iii) be in a stated principal amount equal to the
Maximum Swingline Amount and be payable in the outstanding principal amount of
Swingline Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v)
bear interest as provided in Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(f) Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will prior to any transfer of any of its Notes endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in such notation shall not affect the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert on any Business Day occurring on or after the Initial Borrowing Date, all or a portion at least equal to the applicable Minimum Borrowing Amount of the outstanding principal amount of Loans (other than Swingline Loans which shall at all times be maintained as Base Rate Loans) made pursuant to one or more Borrowings of one or more Types of Loans under a single Tranche into a Borrowing or Borrowings of another Type of Loan under such Tranche; provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only on the last day of an Interest Period applicable to the Loans being converted and no partial conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii) unless the Required Lenders otherwise agree, Base Rate Loans may only be converted into Eurodollar Loans if no Default or Event of Default is in existence on the date of the conversion, (iii) unless the Administrative Agent has determined that the Syndication Date has occurred (at which time this clause (iii) shall no longer be applicable), prior to the 60th day after the Initial Borrowing Date, conversions of Base Rate Loans into Eurodollar Loans may only be made if any such conversion is effective on the first day of the first, second, third or fourth Interest Period referred to in clause (y) of the proviso in each of Sections 1.01(a)(iii), 1.01(b)(iii) and 1.01(c)(ii) and so long as such conversion does not result in a greater number of Borrowings of Eurodollar Loans prior to the 60th day after the Initial Borrowing Date as are permitted under such Sections, and (iv) Borrowings of Eurodollar Loans resulting from
this Section 1.06 shall be limited in number as provided in Section 1.02. Each such conversion shall be effected by the Borrower by giving the Administrative Agent at the Notice Office, prior to 12:00 Noon (New York time), at least three Business Days' (or one Business Day's in the case of a conversion into Base Rate Loans) prior written notice (or telephonic notice promptly confirmed in writing) (each, a "Notice of Conversion") specifying the Loans to be so converted, the Borrowing(s) pursuant to which the Loans were made and, if to be converted into a Borrowing of Eurodollar Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall give each Lender prompt notice of any such proposed conversion affecting any of its Loans. Upon any such conversion, the proceeds thereof will be deemed to be applied directly on the day of such conversion to prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of A Term Loans, B Term Loans and Revolving Loans under this Agreement shall be incurred by the Borrower from the Lenders pro rata on the basis of their A Term Loan Commitments, B Term Loan Commitments or Revolving Loan Commitments, as the case may be; provided that all Borrowings of Revolving Loans made pursuant to a Mandatory Borrowing shall be incurred from the Lenders pro rata on the basis on their Percentages. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan shall bear interest from the date of the Borrowing thereof until the earlier of (i) the maturity (whether by acceleration or otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum which shall at all times be the Base Rate plus the Applicable Base Rate Margin each as in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear interest from the date of the Borrowing thereof until the earlier of (i) the maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all times be the Applicable Eurodollar Rate Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan shall bear interest at a rate per annum equal to the greater of (x) the rate which is 2% in excess of the rate borne by the respective Loans immediately prior to the respective payment default and (y) the rate which is 2% in excess of the rate otherwise applicable to Base Rate Loans from time to time. Interest which accrues under this Section 1.08(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable (i) in respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment Date, (ii) in respect of each Eurodollar
Loan, on (x) the date of any prepayment or repayment thereof (on the amount prepaid or repaid), (y) the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as applicable (on the amount converted) and (z) the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three month intervals after the first day of such Interest Period and (iii) in respect of each Loan, at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance with Section 13.07(b).
(f) Upon each Interest Determination Date, the Administrative Agent shall determine the Eurodollar Rate for the respective Interest Period or Interest Periods and shall promptly notify the Borrower and the Lenders thereof. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion in respect of the making of, or conversion into, a Borrowing of Eurodollar Loans (in the case of the initial Interest Period applicable thereto) or prior to 12:00 Noon (New York time) on the third Business Day prior to the expiration of an Interest Period applicable to a Borrowing of Eurodollar Loans (in the case of any subsequent Interest Period), the Borrower shall have the right to elect by giving the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower (but otherwise subject to clause (y) of the proviso to Section 1.01(a)(iii), 1.01(b)(iii), 1.01(c)(ii) and to clause (iii) of the proviso to Section 1.06), be a one, two, three or six month period and, if prior to the earlier of the Syndication Date and December 23, 1998, a 7-day period. Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall at all times have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of Base Rate Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period for any Borrowing of Eurodollar Loans begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, provided that if any Interest Period for any Borrowing of Eurodollar Loans would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period for a Borrowing under a Tranche of Loans shall be elected which would extend beyond the respective Maturity Date for such Tranche;
(vi) unless the Required Lenders otherwise agree, no Interest Period may be elected at any time when a Default or an Event of Default is then in existence;
(vii) no Interest Period in respect of any Borrowing of A Term Loans shall be elected which extends beyond any date upon which a Tranche A Scheduled Repayment will be required to be made under Section 4.02(b) if, after giving effect to the election of such Interest Period, the aggregate principal amount of such A Term Loans which have Interest Periods which will expire after such date will be in excess of the aggregate principal amount of such A Term Loans then outstanding less the aggregate amount of such required Tranche A Scheduled Repayment; and
(viii) no Interest Period in respect of any Borrowing of B Term Loans shall be elected which extends beyond any date upon which a Tranche B Scheduled Repayment will be required to be made under Section 4.02(c) if, after giving effect to the election of such Interest Period, the aggregate principal amount of such B Term Loans which have Interest Periods which will expire after such date will be in excess of the aggregate principal amount of such B Term Loans then outstanding less the aggregate amount of such required Tranche B Scheduled Repayment.
If upon the expiration of any Interest Period applicable to a Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not permitted to elect, a new Interest Period to be applicable to the respective Borrowing of Eurodollar Loans as provided above, the Borrower shall be deemed to have elected to convert such Borrowing into a Borrowing of Base Rate Loans effective as of the expiration date of such current Interest Period.
1.10 Increased Costs; Illegality; etc. (a) In the event that (x) in the case of clause (i) below, the Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any Interest Determination Date, that, by reason of any changes arising after the date of this Agreement affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Loans because of (x) any change since the date of this Agreement in any applicable law, governmental rule, regulation, guideline, order or request (whether or not having the force of law), or in the interpretation or administration thereof and including the introduction of any new law
or governmental rule, regulation, guideline, order or request (such as, for example, but not limited to, (A) without duplication of any amounts payable under Section 4.04(a), a change in the basis of taxation or payment to any Lender of the principal of or interest on such Eurodollar Loans or any other amounts payable hereunder (except for changes with respect to any tax imposed on, or determined by reference to, the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which such Lender is organized or in which such Lender's principal office or applicable lending office is located or any subdivision thereof or therein), or (B) a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate and/or (y) other circumstances affecting the interbank Eurodollar market or the position of such Lender in such market; or
(iii) at any time since the date of this Agreement, that the making or continuance of any Eurodollar Loan has become unlawful by compliance by such Lender with any law, governmental rule, regulation, guideline or order (or would conflict with any governmental rule, regulation, guideline, request or order not having the force of law but with which such Lender customarily complies even though the failure to comply therewith would not be unlawful), or has become impracticable as a result of a contingency occurring after the date of this Agreement which materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and (except in the case of clause (i)) to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter, (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower agrees, subject to
Section 1.14, to pay to such Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Lender in its sole discretion
shall determine) as shall be required to compensate such Lender for such
increased costs or reductions in amounts received or receivable hereunder (a
written notice as to the additional amounts owed to such Lender, showing the
basis for the calculation thereof, submitted to the Borrower by such Lender
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto, although the failure to give any such notice shall not release
or diminish any of the Borrower's obligations to pay additional amounts pursuant
to this Section 1.10(a) upon the subsequent receipt of such notice) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in Section 1.10(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of a Eurodollar Loan
affected pursuant to Section 1.10(a)(iii) the Borrower shall) either (i) if the affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel said Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 1.10(a)(ii) or (iii)), or (ii) if the affected Eurodollar Loan is then outstanding, upon at least three Business Days' notice to the Administrative Agent, require the affected Lender to convert each such Eurodollar Loan into a Base Rate Loan; provided that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 1.10(b).
(c) If any Lender shall have determined that the adoption or
effectiveness after the date hereof of any applicable law, rule or regulation
regarding capital adequacy, or any change therein after the date hereof, or any
change after the date hereof in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration 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) of any such authority,
central bank or comparable agency adopted or effective after the date hereof,
has or would have the effect of reducing the rate of return on such Lender's or
such other corporation's capital or assets as a consequence of such Lender's
Commitment or Commitments hereunder or its obligations hereunder to a level
below that which such Lender or such other corporation could have achieved but
for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's or such other corporation's policies with respect to
capital adequacy), then from time to time, upon written demand by such Lender
(with a copy to the Administrative Agent), accompanied by the notice referred to
in the last sentence of this clause (c), the Borrower shall, subject to Section
1.14, pay to such Lender such additional amount or amounts as will compensate
such Lender or such other corporation for such reduction. Each Lender, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 1.10(c), will give prompt written notice thereof to the Borrower
(a copy of which shall be sent by such Lender to the Administrative Agent),
which notice shall set forth the basis of the calculation of such additional
amounts, although the failure to give any such notice shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to this
Section 1.10(c) upon the subsequent receipt of such notice. A Lender's
reasonable good faith determination of compensation owing under this Section
1.10(c) shall, absent manifest error, be final and conclusive and binding on all
the parties hereto.
1.11 Compensation. The Borrower shall, subject to Section 1.14, compensate each Lender, promptly upon its written request (which request shall set forth the basis for requesting such compensation), for all losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Loans) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of, or conversion from or into, Eurodollar Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment made pursuant to Section 4.01 or 4.02 or as a result of an acceleration
of the Loans pursuant to Section 10 or as a result of the replacement of a Lender pursuant to Section 1.13 or 13.12(b)) or conversion of any Eurodollar Loans occurs on a date which is not the last day of an Interest Period applicable thereto; (iii) if any prepayment of any Eurodollar Loans is not made on any date specified in a notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any other default by the Borrower to repay its Eurodollar Loans when required by the terms of this Agreement or (y) an election made pursuant to Section 1.10(b). A Lender's basis for requesting compensation pursuant to this Section 1.11 and a Lender's calculation of the amount thereof, shall, absent manifest error, be final and conclusive and binding on all parties hereto.
1.12 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 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
or Letters of Credit affected by such event; provided that such designation is
made on such terms that, in the sole judgment of such Lender, such Lender and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequences of the event giving rise to the
operation of any such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Lender
provided in Section 1.10, 2.05 or 4.04.
1.13 Replacement of Lenders. (x) If any Lender becomes a Defaulting
Lender, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Lender which results in such Lender charging to the Borrower
increased costs in excess of those being generally charged by the other Lenders
or (z) in the case of a refusal by a Lender to consent to a proposed change,
waiver, discharge or termination with respect to this Agreement which has been
approved by the Required Lenders as (and to the extent) provided in Section
13.12(b), the Borrower shall have the right, in accordance with Section
13.04(b), if no Default or Event of Default then exists or would exist after
giving effect to such replacement, to replace such Lender (the "Replaced
Lender") with one or more other Eligible Transferee or Transferees, none of whom
shall constitute a Defaulting Lender at the time of such replacement
(collectively, the "Replacement Lender") and each of whom shall be reasonably
acceptable to the Administrative Agent or, at the option of the Borrower, to
replace only (a) the Revolving Loan Commitment (and outstandings pursuant
thereto) of the Replaced Lender with an identical Revolving Loan Commitment
provided by the Replacement Lender or (b) in the case of a replacement as
provided in Section 13.12(b) where the consent of the respective Lender is
required with respect to less than all Tranches of its Loans or Commitments, the
Commitments and/or outstanding Loans of such Lender in respect of each Tranche
where the consent of such Lender would otherwise be individually required, with
identical Commitments and/or Loans of the respective Tranche provided by the
Replacement Lender; provided that:
(i) at the time of any replacement pursuant to this Section 1.13, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant to said Section 13.04(b) to be paid
by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the Commitments and outstanding Loans (or, in the case of the replacement of only (a) the Revolving Loan Commitment, the Revolving Loan Commitment and outstanding Revolving Loans and participations in Letter of Credit Outstandings, (b) A Term Loans, the outstanding A Term Loans and/or (c) B Term Loans, the outstanding B Term Loans) of, and in each case (except for the replacement of only outstanding Term Loans of the respective Lender) participations in Letters of Credit by, the Replaced Lender and, in connection therewith, shall pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans (or, in the case of the replacement of only (I) the Revolving Loan Commitment, the outstanding Revolving Loans, (II) the A Term Loans, the outstanding A Term Loans or (III) the B Term Loans, the outstanding B Term Loans) of the Replaced Lender, (B) except in the case of the replacement of only outstanding Term Loans of a Replaced Lender, an amount equal to all Unpaid Drawings that have been funded by (and not reimbursed to) such Replaced Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender (but only with respect to the relevant Tranche, in the case of the replacement of less than all Tranches of Loans then held by the respective Replaced Lender) pursuant to Section 3.01, (y) except in the case of the replacement of only outstanding Term Loans of a Replaced Lender, each Letter of Credit Issuer an amount equal to such Replaced Lender's Percentage of any Unpaid Drawing relating to Letters of Credit issued by such Letter of Credit Issuer (which at such time remains an Unpaid Drawing) to the extent such amount was not theretofore funded by such Replaced Lender and (z) in the case of any replacement of Revolving Loan Commitments, BTCo an amount equal to such Replaced Lender's Percentage of any Mandatory Borrowing to the extent such amount was not theretofore funded by such Replaced Lender; and
(ii) all obligations of the Borrower then owing to the Replaced
Lender (other than those (a) specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is
concurrently being, paid, but including all amounts, if any, owing under
Section 1.11 or (b) relating to any Tranche of Loans and/or Commitments of
the respective Replaced Lender which will remain outstanding after giving
effect to the respective replacement) shall be paid in full to such
Replaced Lender concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the payment of amounts referred to in clauses (i) and (ii) above, recordation of the assignment on the Register by the Administrative Agent pursuant to Section 13.17 and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrower, (x) the Replacement Lender shall become a Lender hereunder and, unless the respective Replaced Lender continues to have outstanding Term Loans or a Revolving Loan Commitment hereunder, the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06), which shall survive as to such
Replaced Lender and (y) in the case of the replacement of a Defaulting Lender with a Non-Defaulting Lender, the Percentages of the Lenders shall be automatically adjusted at such time to give effect to such replacement.
1.14 Limitation on Additional Amounts, etc. Notwithstanding anything
to the contrary contained in Sections 1.10, 1.11, 2.05 or 4.04, unless a Lender
gives notice to the Borrower that the Borrower is obligated to pay an amount
under any such Section within 180 days after the later of (x) the date such
Lender incurs the respective increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital or
(y) the date such Lender has actual knowledge of its incurrence of the
respective increased costs, Taxes, loss, expense or liability, reductions in
amounts received or receivable or reduction in return on capital, then such
Lender shall only be entitled to be compensated for such amount by the Borrower
pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be, to the
extent the costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs 180 days prior to such Lender giving
notice to the Borrower that the Borrower is obligated to pay the respective
amounts pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be.
This Section 1.14 shall have no applicability to any Section of this Agreement
or any other Credit Document other than said Sections 1.10, 1.11, 2.05 and 4.04.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and conditions set forth herein, the Borrower may request a Letter of Credit Issuer at any time and from time to time on or after the Initial Borrowing Date and prior to the tenth Business Day (or the 30th day in the case of trade Letters of Credit) preceding the Revolving Loan Maturity Date to issue, for the account of the Borrower and in support of (x) trade obligations of the Borrower or any of its Subsidiaries that arise in the ordinary course of business and/or (y) on a standby basis, L/C Supportable Obligations of the Borrower or any of its Subsidiaries to any other Person, irrevocable sight letters of credit in such form as may be approved by such Letter of Credit Issuer (each such letter of credit, a "Letter of Credit" and, collectively, the "Letters of Credit"). Notwithstanding the foregoing, no Letter of Credit Issuer shall be under any obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or arbitrator shall purport by its terms to enjoin or restrain such Letter of Credit Issuer from issuing such Letter of Credit or any requirement of law applicable to such Letter of Credit Issuer or any request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over such Letter of Credit Issuer shall prohibit, or request that such Letter of Credit Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Letter of Credit Issuer with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such Letter of Credit Issuer is not otherwise compensated) not in effect on the date hereof, or any unreimbursed loss, cost or expense which was not applicable, in effect or
known to such Letter of Credit Issuer as of the date hereof and which such Letter of Credit Issuer in good faith deems material to it; or
(ii) such Letter of Credit Issuer shall have received notice from
the Borrower, any other Credit Party or the Required Lenders prior to the
issuance of such Letter of Credit of the type described in clause (vi) of
Section 2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and prior to the issuance of, the respective Letter of Credit) at such time, would exceed either (x) $5,000,000 or (y) when added to the aggregate principal amount of all Revolving Loans and Swingline Loans then outstanding, the Total Revolving Loan Commitment at such time; (ii) (x) each standby Letter of Credit shall have an expiry date occurring not later than one year after such Letter of Credit's date of issuance, provided that any such Letter of Credit may be extendable for successive periods of up to one year, but not beyond the tenth Business Day preceding the Revolving Loan Maturity Date, on terms acceptable to the Letter of Credit Issuer and (y) each trade Letter of Credit shall have an expiry date occurring not later than 180 days after such Letter of Credit's date of issuance; (iii) (x) no standby Letter of Credit shall have an expiry date occurring later than the tenth Business Day preceding the Revolving Loan Maturity Date and (y) no trade Letter of Credit shall have an expiry date occurring later than 30 days prior to the Revolving Loan Maturity Date; (iv) each Letter of Credit shall be denominated in U.S. Dollars; (v) the Stated Amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to the respective Letter of Credit Issuer; and (vi) no Letter of Credit Issuer will issue any Letter of Credit after it has received written notice from the Borrower, any other Credit Party or the Required Lenders stating that a Default or an Event of Default exists until such time as such Letter of Credit Issuer shall have received a written notice of (x) rescission of such notice from the party or parties originally delivering the same or (y) a waiver of such Default or Event of Default by the Required Lenders.
(c) Notwithstanding the foregoing, in the event a Lender Default exists, no Letter of Credit Issuer shall be required to issue any Letter of Credit unless the respective Letter of Credit Issuer has entered into arrangements satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's risk with respect to the participation in Letters of Credit of the Defaulting Lender or Lenders, including by cash collateralizing such Defaulting Lender's or Lenders' Percentage of the Letter of Credit Outstandings, as the case may be.
2.02 Letter of Credit Requests. (a) Whenever the Borrower desires that a Letter of Credit be issued, the Borrower shall give the Administrative Agent and the respective Letter of Credit Issuer written notice (including by way of facsimile transmission to telecopier no. (212) 250-5817) (or such alternative telecopier number as may be provided by the Administrative Agent from time to time), immediately confirmed in writing by submission of the original of such request by mail to the Administrative Agent) thereof prior to 12:00 Noon (New York time) at least five Business Days (or such shorter period as may be acceptable to the respective Letter of Credit Issuer) prior to the proposed date of issuance (which shall be a Business Day), which
written notice shall be in the form of Exhibit C (each, a "Letter of Credit Request"). Each Letter of Credit Request shall include any other documents as such Letter of Credit Issuer customarily requires in connection therewith.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that such Letter of Credit may
be issued in accordance with, and it will not violate the requirements of,
Section 2.01(a). Unless the respective Letter of Credit Issuer has received
notice from the Required Lenders before it issues a Letter of Credit that one or
more of the applicable conditions specified in Section 5 or 6, as the case may
be, are not then satisfied, or that the issuance of such Letter of Credit would
violate Section 2.01(a), then such Letter of Credit Issuer may issue the
requested Letter of Credit for the account of the Borrower in accordance with
such Letter of Credit Issuer's usual and customary practice.
2.03 Letter of Credit Participations. (a) Immediately upon the issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of Credit Issuer shall be deemed to have sold and transferred to each other RL Lender, and each such RL Lender (each, a "Participant") shall be deemed irrevocably and unconditionally to have purchased and received from such Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation, to the extent of such Participant's Percentage, in such Letter of Credit, each substitute Letter of Credit, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto (although Letter of Credit Fees shall be payable directly to the Administrative Agent for the account of the RL Lenders as provided in Section 3.01(b) and the Participants shall have no right to receive any portion of any Facing Fees with respect to such Letters of Credit) and any security therefore or guaranty pertaining thereto. Upon any change in the Revolving Loan Commitments of the RL Lenders pursuant to Section 1.13 or 13.04(b), it is hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid Drawings with respect thereto, there shall be an automatic adjustment to the participations pursuant to this Section 2.03 to reflect the new Percentages of the assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, no Letter of Credit Issuer shall have any obligation relative to the Participants other than to determine that any documents required to be delivered under such Letter of Credit have been delivered and that they appear to substantially comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by any Letter of Credit Issuer under or in connection with any Letter of Credit issued by it if taken or omitted in the absence of gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction), shall not create for such Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to the Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each such Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such
Participant's Percentage of such payment in U.S. Dollars and in same day funds. If the Administrative Agent so notifies any Participant required to fund a payment under a Letter of Credit prior to 11:00 A.M. (New York time) on any Business Day, such Participant shall make available to the Administrative Agent at the Payment Office for the account of the respective Letter of Credit Issuer such Participant's Percentage of the amount of such payment on such Business Day in same day funds (and, to the extent such notice is given after 11:00 A.M. (New York time) on any Business Day, such Participant shall make such payment on the immediately following Business Day). If and to the extent such Participant shall not have so made its Percentage of the amount of such payment available to the Administrative Agent for the account of the respective Letter of Credit Issuer, such Participant agrees to pay to the Administrative Agent for the account of such Letter of Credit Issuer, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Letter of Credit Issuer at the overnight Federal Funds Rate. The failure of any Participant to make available to the Administrative Agent for the account of the respective Letter of Credit Issuer its Percentage of any payment under any Letter of Credit issued by it shall not relieve any other Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Letter of Credit Issuer its applicable Percentage of any payment under any such Letter of Credit on the date required, as specified above, but no Participant shall be responsible for the failure of any other Participant to make available to the Administrative Agent for the account of such Letter of Credit Issuer such other Participant's Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a reimbursement obligation as to which the Administrative Agent has received for the account of such Letter of Credit Issuer any payments from the Participants pursuant to clause (c) above, such Letter of Credit Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each Participant which has paid its Percentage thereof, in U.S. Dollars and in same day funds, an amount equal to such Participant's Percentage of the principal amount thereof and interest thereon accruing after the purchase of the respective participations.
(e) Each Letter of Credit Issuer shall, promptly after each issuance of, or amendment or modification to, a standby Letter of Credit issued by it, give the Administrative Agent, each Participant and the Borrower written notice of the issuance of, or amendment or modification to, such Letter of Credit, which, if so requested by a Participant, shall be accompanied by a copy of the standby Letter of Credit or standby Letters of Credit issued by it and each such amendment or modification thereto.
(f) Each Letter of Credit Issuer (other than BTCo) shall deliver to the Administrative Agent, promptly on the first Business Day of each week, by facsimile transmission, the daily aggregate Stated Amount available to be drawn under the outstanding trade Letters of Credit issued by such Letter of Credit Issuer for the previous week.
(g) The obligations of the Participants to make payments to the Administrative Agent for the account of the respective Letter of Credit Issuer with respect to Letters of Credit issued by it shall be irrevocable and not subject to counterclaim, set-off or other
defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right which Holdings or any of its Subsidiaries may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Letter of Credit Issuer, any Lender, or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between Holdings or any of its Subsidiaries and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower hereby agrees to reimburse each Letter of Credit Issuer, by making payment to the Administrative Agent in immediately available funds at the Payment Office, for any payment or disbursement made by such Letter of Credit Issuer under any Letter of Credit issued by it (each such amount so paid or disbursed until reimbursed, an "Unpaid Drawing") no later than one Business Day following the date of such payment or disbursement, with interest on the amount so paid or disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or disbursement, from and including the date paid or disbursed to but not including the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall be the Base Rate plus the Applicable Base Rate Margin for Revolving Loans as in effect from time to time (plus an additional 2% per annum if not reimbursed by the third Business Day after the date of such payment or disbursement), such interest also to be payable on demand; provided that it is understood and agreed, however, that the notices referred to below in this clause (a) shall not be required to be given if a Default or an Event of Default under Section 10.05 shall have occurred and be continuing (in which case the Unpaid Drawings shall be due and payable immediately without presentment, demand, protest or notice of any kind (all of which are hereby waived by each Credit Party) and shall bear interest at a rate per annum which shall be the Base Rate plus the Applicable Base Rate Margin for Revolving Loans plus 2% on and after the third Business Day following the respective Drawing). Each Letter of Credit Issuer shall provide the Borrower prompt notice of any payment or disbursement made by it under any Letter of Credit issued by it, although the failure of, or delay in, giving any such notice shall not
release or diminish the obligations of the Borrower under this Section 2.04(a) or under any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.04 to reimburse the respective Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or any of its Subsidiaries may have or have had against such Letter of Credit Issuer, the Administrative Agent or any Lender, including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit issued by it to conform to the terms of the Letter of Credit or any nonapplication or misapplication by the beneficiary of the proceeds of such drawing; provided, however, that the Borrower shall not be obligated to reimburse such Letter of Credit Issuer for any wrongful payment made by such Letter of Credit Issuer under a Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct or gross negligence on the part of such Letter of Credit Issuer (as finally determined by a court of competent jurisdiction).
2.05 Increased Costs. If the adoption or effectiveness after the date hereof of any applicable law, rule or regulation, order, guideline or request or any change therein after the date hereof, or any change adopted or effective after the date hereof in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Letter of Credit Issuer or any Participant with any request or directive (whether or not having the force of law) by any such authority, central bank or comparable agency adopted or effective after the date hereof shall either (i) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by such Letter of Credit Issuer or such Participant's participation therein, or (ii) impose on any Letter of Credit Issuer or any Participant any other conditions directly or indirectly affecting this Agreement, any Letter of Credit or such Participant's participation therein; and the result of any of the foregoing is to increase the cost to such Letter of Credit Issuer or such Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Letter of Credit Issuer or such Participant hereunder or reduce the rate of return on its capital with respect to Letters of Credit, then, upon written demand to the Borrower by such Letter of Credit Issuer or such Participant (a copy of which notice shall be sent by such Letter of Credit Issuer or such Participant to the Administrative Agent), accompanied by the certificate described in the last sentence of this Section 2.05, the Borrower shall, subject to Section 1.14, pay to such Letter of Credit Issuer or such Participant such additional amount or amounts as will compensate such Letter of Credit Issuer or such Participant for such increased cost or reduction. A certificate submitted to the Borrower by such Letter of Credit Issuer or such Participant, as the case may be (a copy of which certificate shall be sent by such Letter of Credit Issuer or such Participant to the Administrative Agent), setting forth the basis for the determination of such additional amount or amounts necessary to compensate such Letter of Credit Issuer or such Participant as aforesaid shall be final and conclusive and binding on the Borrower absent manifest error, although the failure to deliver any such certificate shall not release or diminish the Borrower's obligations to pay additional amounts pursuant to this Section 2.05 upon subsequent receipt of such certificate.
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower shall pay to the Administrative Agent, for distribution to each Non-Defaulting Lender with a Revolving Loan Commitment, a commitment fee (the "Commitment Fee") for the period from the Effective Date to but not including Revolving Loan Maturity Date (or such earlier date as the Total Revolving Loan Commitment shall have been terminated), computed at a rate per annum of 1/2 of 1% on the daily average Unutilized Revolving Loan Commitment of such Non-Defaulting Lender. Accrued Commitment Fees shall be due and payable quarterly in arrears on each Quarterly Payment Date and on the Revolving Loan Maturity Date (or such earlier date upon which the Total Revolving Loan Commitment is terminated).
(b) The Borrower shall pay to the Administrative Agent for pro rata distribution to each RL Lender (based on their respective Percentages), a fee in respect of each Letter of Credit (the "Letter of Credit Fee") computed at a rate per annum equal to the Applicable Eurodollar Rate Margin for Revolving Loans then in effect on the daily Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on each Quarterly Payment Date and upon the first day on or after the termination of the Total Revolving Loan Commitment upon which no Letters of Credit remain outstanding.
(c) The Borrower shall pay to each Letter of Credit Issuer a fee in
respect of each Letter of Credit issued by such Letter of Credit Issuer (the
"Facing Fee") computed at a rate per annum of 1/4 of 1% on the daily Stated
Amount of such Letter of Credit; provided that in no event shall the annual
Facing Fee with respect to each Letter of Credit be less than $500; it being
agreed that (x) on the date of issuance of any Letter of Credit and on each
anniversary thereof prior to the termination of such Letter of Credit, if $500
will exceed the amount of Facing Fees that will accrue with respect to such
Letter of Credit for the immediately succeeding 12-month period, the full $500
shall be payable on the date of issuance of such Letter of Credit and on each
such anniversary thereof prior to the termination of such Letter of Credit and
(y) if on the date of the termination of any Letter of Credit, $500 actually
exceeds the amount of Facing Fees paid or payable with respect to such Letter of
Credit for the period beginning on the date of the issuance thereof (or if the
respective Letter of Credit has been outstanding for more than one year, the
date of the last anniversary of the issuance thereof occurring prior to the
termination of such Letter of Credit) and ending on the date of the termination
thereof, an amount equal to such excess shall be paid as additional Facing Fees
with respect to such Letter of Credit on the next date upon which Facing Fees
are payable in accordance with the immediately succeeding sentence. Except as
provided in the immediately preceding sentence, accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day on or after the termination of the Total Revolving Loan Commitment
upon which no Letters of Credit remain outstanding.
(d) The Borrower shall pay directly to each Letter of Credit Issuer upon each issuance of, payment under, and/or amendment of, a Letter of Credit issued by such Letter of Credit Issuer such amount as shall at the time of such issuance, payment or amendment be the administrative charge which such Letter of Credit Issuer is customarily charging for issuances of,
payments under or amendments of, letters of credit issued by it, plus any expenses relating to such transactions.
(e) The Borrower shall pay to the Administrative Agent, for its own account, such fees as may be agreed to in writing from time to time between the Borrower and the Administrative Agent, when and as due.
(f) All computations of Fees shall be made in accordance with
Section 13.07(b).
3.02 Voluntary Termination or Reduction of Total Unutilized
Revolving Loan Commitment. (a) Upon at least three Business Days' prior notice
to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Revolving Loan Commitment, provided that
(x) any such termination or partial reduction shall apply to proportionately and
permanently reduce the Revolving Loan Commitment of each of the RL Lenders, (y)
any partial reduction pursuant to this Section 3.02(a) shall be in integral
multiples of $1,000,000 and (z) the reduction to the Total Unutilized Revolving
Loan Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any RL Lender to be reduced (as required by the preceding
clause (x)) by an amount which exceeds the remainder of (A) the Unutilized
Revolving Loan Commitment of such RL Lender as in effect immediately before
giving effect to such reduction minus (B) such RL Lender's Percentage of the
aggregate principal amount of Swingline Loans then outstanding.
(b) In the event of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders as (and to the extent) provided in Section 13.12(b), the Borrower shall have the right, subject to obtaining the consents required by Section 13.12(b), upon five Business Days' prior written notice to the Administrative Agent at the Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), to terminate the entire Revolving Loan Commitment of such Lender, so long as all Loans, together with accrued and unpaid interest, Fees and all other amounts, owing to such Lender (including all amounts, if any, owing pursuant to Section 1.11 but excluding amounts owing in respect of Term Loans maintained by such Lender, if such Term Loans are not being repaid pursuant to Section 13.12(b)) are repaid concurrently with the effectiveness of such termination (at which time Annex I shall be deemed modified to reflect such changed amounts) and at such time, unless the respective Lender continues to have outstanding Term Loans hereunder, such Lender shall no longer constitute a "Lender" for purposes of this Agreement, except with respect to indemnifications under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06), which shall survive as to such repaid Lender.
3.03 Mandatory Reduction of Commitments. (a) The Total Commitment (and each Commitment of each Lender) shall terminate in its entirety on December 31, 1998 (or such earlier date as the Borrower shall have notified the Administrative Agent in writing that it has
terminated discussions regarding the Recapitalization) unless the Initial Borrowing Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant to this Section 3.03, the Total A Term Loan Commitment (and the A Term Loan Commitment of each Lender) shall terminate in its entirety on the Initial Borrowing Date (after giving effect to the incurrence of A Term Loans on such date).
(c) In addition to any other mandatory commitment reductions pursuant to this Section 3.03, the Total B Term Loan Commitment (and the B Term Loan Commitment of each Lender) shall terminate in its entirety on the Initial Borrowing Date (after giving effect to the incurrence of B Term Loans on such date).
(d) In addition to any other mandatory commitment reductions pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving Loan Commitment of each RL Lender) shall terminate in its entirety on the earlier of (x) the date on which a Change of Control occurs and (y) the Revolving Loan Maturity Date.
(e) (i) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Initial Borrowing Date
upon which a mandatory prepayment of Term Loans pursuant to Section 4.02(d),
(e), (f), (g) or (h) is required (and exceeds in amount the aggregate principal
amount of Term Loans then outstanding) or would be required if Term Loans were
then outstanding, the Total Revolving Loan Commitment shall be permanently
reduced by the amount, if any, by which the amount required to be applied
pursuant to said Section (determined as if an unlimited amount of Term Loans
were actually outstanding) exceeds the aggregate principal amount of Term Loans
then outstanding.
(ii) In addition to any other mandatory commitment reductions pursuant to this Section 3.03, on each date after the Initial Borrowing Date upon which a mandatory prepayment of Term Loans is required and one or more Lenders holding outstanding Tranche B Term Loans have waived their right to receive all or a portion of such prepayment in respect of such Tranche B Term Loans pursuant to Section 4.02(l), the Total Revolving Loan Commitment shall be permanently reduced by the amount, if any, by which the aggregate amount so waived exceeds the aggregate outstanding principal amount of Tranche A Term Loans.
(f) Each reduction to the Total Revolving Loan Commitment pursuant to this Section 3.03 shall be applied proportionately to reduce the Revolving Loan Commitment of each RL Lender.
SECTION 4. Payments.
4.01 Voluntary Prepayments. (a) The Borrower shall have the right to prepay the Loans, and the right to allocate such prepayments to Revolving Loans, Swingline Loans and/or Term Loans as the Borrower elects, in whole or in part, without premium or penalty except as otherwise provided in Section 1.11, from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent at the Notice Office written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay the Loans, whether such Loans are Term Loans, Revolving Loans or Swingline Loans, the amount of such prepayment, the Type of Loans to be repaid and (in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which made, which notice shall be given by the Borrower prior to 12:00 Noon (New York time) (x) at least one Business Day prior to the date of such prepayment in the case of Base Rate Loans, (y) on the date of such prepayment in the case of Swingline Loans and (z) at least three Business Days prior to the date of such prepayment in the case of Eurodollar Loans, which notice shall, except in the case of Swingline Loans, promptly be transmitted by the Administrative Agent to each of the Lenders;
(ii) each prepayment (other than prepayments in full of (x) all outstanding Base Rate Loans or (y) any outstanding Borrowing of Eurodollar Loans) shall be in an aggregate principal amount of at least (x) $500,000, in the case of Term Loans and Revolving Loans and (y) $100,000, in the case of Swingline Loans and, in each case, if greater, in integral multiples of $100,000, provided that no partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate principal amount of the Eurodollar Loans outstanding pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto;
(iii) at the time of any prepayment of Eurodollar Loans pursuant to this Section 4.01(a) on any date other than the last day of the Interest Period applicable thereto, the Borrower shall pay the amounts required pursuant to Section 1.11;
(iv) each voluntary prepayment of Term Loans pursuant to this
Section 4.01(a) shall be applied to the A Term Loans and, subject to the
provisions of Section 4.02(l), the B Term Loans on a pro rata basis (based
upon the then outstanding principal amount of A Term Loans and B Term
Loans);
(v) each prepayment in respect of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, provided that at the Borrower's election in connection with any prepayment of Revolving Loans pursuant to this Section 4.01(a), such prepayment shall not, so long as no Default or Event of Default then exists, be applied to any Revolving Loans of a Defaulting Lender; and
(vi) each prepayment of principal of any Tranche of Term Loans pursuant to this Section 4.01(a) shall be applied to reduce the then remaining Scheduled Repayments of such Tranche on a pro rata basis (based upon the then remaining amount of each such Scheduled Repayment after giving affect to all prior reductions thereto).
(b) In the event of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders (and to the extent) as provided in Section 13.12(b), the Borrower shall have the right, upon five Business Days' prior written notice to the Administrative Agent at the Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), to repay all Loans of such Lender (including all amounts, if any, owing pursuant to Section 1.11), together with accrued and unpaid interest, Fees and all other amounts then owing to such Lender (or owing to such Lender with respect to the Tranche which gave rise to the need to obtain such Lender's individual consent) in accordance with said Section 13.12(b), so long as (A) in the case of the repayment of Revolving Loans of any Lender pursuant to this clause (b), the Revolving Loan Commitment of such Lender is terminated concurrently with such repayment pursuant to Section 3.02(b) (at which time Annex I shall be deemed modified to reflect the changed Revolving Loan Commitments), and (B) the consents required by Section 13.12(b) in connection with the repayment pursuant to this clause (b) shall have been obtained.
4.02 Mandatory Repayments and Commitment Reductions. (a) If on any date the sum of (i) the aggregate outstanding principal amount of Revolving Loans and Swingline Loans (after giving effect to all other repayments thereof on such date) and (ii) the Letter of Credit Outstandings on such date exceeds the Total Revolving Loan Commitment as then in effect, the Borrower shall repay on such date the principal of Swingline Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans in an aggregate amount equal to such excess. If, after giving effect to the prepayment of all outstanding Swingline Loans and Revolving Loans, the aggregate amount of Letter of Credit Outstandings exceeds the Total Revolving Loan Commitment as then in effect, the Borrower shall pay to the Administrative Agent on such date an amount in cash and/or Cash Equivalents equal to such excess (up to the aggregate amount of Letter of Credit Outstandings at such time) and the Administrative Agent shall hold such payment as security for the obligations of the Borrower hereunder pursuant to a cash collateral agreement to be entered into in form and substance satisfactory to the Administrative Agent.
(b) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date set forth below, the Borrower shall be required to
repay that principal amount of A Term Loans, to the extent then outstanding, as
is set forth opposite such date (each such repayment, as the same may be reduced
as provided in Sections 4.01(a) and 4.02(i), a "Tranche A Scheduled Repayment"):
Tranche A Scheduled Repayment Date Amount
---------------------------------- ------
August 15, 1999 $3,000,000
November 15, 1999 $1,250,000
February 15, 2000 $1,250,000
May 15, 2000 $1,250,000
August 15, 2000 $1,250,000
November 15, 2000 $1,875,000
February 15, 2001 $1,875,000
May 15, 2001 $1,875,000
August 15, 2001 $1,875,000
November 15, 2001 $1,875,000
February 15, 2002 $1,875,000
|
May 15, 2002 $1,875,000 August 15, 2002 $1,875,000 November 15, 2002 $2,500,000 February 15, 2003 $2,500,000 May 15, 2003 $2,500,000 August 15, 2003 $2,500,000 November 15, 2003 $2,400,000 February 15, 2004 $2,400,000 May 15, 2004 $2,400,000 August 15, 2004 $2,400,000 A Term Loan Maturity Date $2,400,000 |
(c) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date set forth below, the Borrower shall be required to
repay that principal amount of B Term Loans, to the extent then outstanding, as
is set forth opposite such date (each such repayment, as the same may be reduced
as provided in Sections 4.01(a) and 4.02(i), a "Tranche B Scheduled Repayment"
and, together with the Tranche A Scheduled Repayments, each a "Scheduled
Repayment"):
Tranche B Scheduled Repayment Date Amount
---------------------------------- ------
August 15, 1999 $225,000
November 15, 1999 $225,000
February 15, 2000 $112,500
May 15, 2000 $112,500
August 15, 2000 $112,500
November 15, 2000 $112,500
February 15, 2001 $112,500
May 15, 2001 $112,500
August 15, 2001 $112,500
November 15, 2001 $112,500
February 15, 2002 $112,500
May 15, 2002 $112,500
August 15, 2002 $112,500
November 15, 2002 $112,500
February 15, 2003 $112,500
May 15, 2003 $112,500
August 15, 2003 $112,500
November 15, 2003 $112,500
February 15, 2004 $112,500
May 15, 2004 $112,500
August 15, 2004 $112,500
November 15, 2004 $112,500
|
Tranche B Scheduled Repayment Date Amount
---------------------------------- ------
February 15, 2005 $7,050,000
May 15, 2005 $7,050,000
August 15, 2005 $7,050,000
November 15, 2005 $7,050,000
February 15, 2006 $7,050,000
B Term Loan Maturity Date $7,050,000
|
(d) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date on or after the Initial Borrowing Date on which
Holdings or any of its Subsidiaries receives Net Sale Proceeds from any Asset
Sale, an amount equal to 100% of the Net Sale Proceeds from such Asset Sale
shall be applied as a mandatory repayment of outstanding Term Loans in
accordance with the requirements of Sections 4.02(i) and (j); provided that (i)
during any fiscal year of the Borrower up to $1,000,000 in aggregate Net Sale
Proceeds received during such fiscal year may be retained by Holdings and its
Subsidiaries without giving rise to a mandatory repayment so long as no Default
or Event of Default exists at the time such Net Sale Proceeds are received and
an Authorized Officer of the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such Net Sale
Proceeds shall be used to purchase assets used or to be used in the businesses
permitted pursuant to Section 9.01 (including, without limitation (but only to
the extent permitted by Section 9.02), the purchase of the capital stock of a
Person engaged in such businesses) within one year following the date of receipt
of such Net Sale Proceeds from such Asset Sale (which certificate shall set
forth the estimates of the proceeds to be so expended) and (ii) if all or any
portion of such Net Sale Proceeds not required to be so applied to the
outstanding Term Loans are not so used within such one year period, such
remaining portion shall be applied on the last day of such period (or such
earlier date, if any, as the Board of Directors of Holdings or such Subsidiary,
as the case may be, determines not to reinvest the Net Sale Proceeds relating to
such Asset Sale as set forth above) as a mandatory repayment of outstanding Term
Loans as provided above.
(e) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date on or after the Initial Borrowing Date on which
Holdings or any of its Subsidiaries receives any cash proceeds from any
incurrence of Indebtedness (other than Indebtedness permitted to be incurred
pursuant to Section 9.04 as in effect on the Effective Date) by Holdings or any
of its Subsidiaries, an amount equal to 100% of the cash proceeds (net of all
underwriting discounts, fees and commissions and other costs and expenses
associated therewith) of the respective incurrence of Indebtedness shall be
applied as a mandatory repayment of outstanding Term Loans in accordance with
the requirements of Sections 4.02(i) and (j).
(f) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each date on or after the Initial Borrowing Date on which
Holdings or any of its Subsidiaries receives any cash proceeds from any sale or
issuance of preferred or common equity (including from the sale or issuance of
options, warrants or rights to purchase any such equity) of
(or cash capital contributions to) Holdings or any of its Subsidiaries (other
than proceeds received from (i) the Equity Financing, (ii) equity contributions
to any Subsidiary of Holdings made by Holdings or any other Subsidiary of
Holdings, (iii) the sale or issuance by Holdings of shares of its common stock
(including as a result of the exercise of any options or warrants with regard
thereto), or options or warrants purchase shares of its common stock, to any
employee, officer or director of Holdings or any of its Subsidiaries in an
aggregate amount not to exceed $2,000,000 in any fiscal year of Holdings and
(iv) equity issuances to, and/or capital contributions from, Odyssey and its
Affiliates, management shareholders of Holdings and other existing shareholders
of Holdings as of the Initial Borrowing Date in an aggregate amount for all such
Persons not to exceed $50,000,000, the proceeds of which (in each case) are used
to fund all or a portion of the purchase price for a Permitted Acquisition), an
amount equal to 100% of such cash proceeds (net of all underwriting discounts,
fees and commissions and other costs and expenses associated therewith) of the
respective equity issuance or capital contribution shall be applied as a
mandatory repayment of outstanding Terms Loan in accordance with the
requirements of Sections 4.02(i) and (j).
(g) In addition to any other mandatory repayments pursuant to this
Section 4.02, within 10 days following each date on or after the Initial
Borrowing Date on which Holdings or any of its Subsidiaries receives any cash
proceeds from any Recovery Event (other than cash proceeds from Recovery Events
in an amount less than $100,000 per Recovery Event), an amount equal to 100% of
the cash proceeds from such Recovery Event (net of reasonable costs including,
without limitation, legal costs and expenses, and taxes incurred in connection
with such Recovery Event) shall be applied as a mandatory repayment of
outstanding Term Loans in accordance with the requirements of Sections 4.02(i)
and (j); provided that (x) so long as no Default or Event of Default then exists
and such proceeds do not exceed $2,000,000, such proceeds shall not be required
to be so applied on such date to the extent that an Authorized Officer of the
Borrower has delivered a certificate to the Administrative Agent on or prior to
such date stating that such proceeds shall be used or shall be committed to be
used to replace or restore any properties or assets in respect of which such
proceeds were paid within one year following the date of such Recovery Event
(which certificate shall set forth the estimates of the proceeds to be so
expended) and (y) so long as no Default or Event of Default then exists and if
(i) the amount of such proceeds exceeds $2,000,000, (ii) the amount of such
proceeds, together with other cash available to the Borrower and its
Subsidiaries and permitted to be spent by them on Capital Expenditures during
the relevant period pursuant to Section 9.08, equals at least 100% of the cost
of replacement or restoration of the properties or assets in respect of which
such proceeds were paid as determined by the Borrower and as supported by such
estimates or bids from contractors or subcontractors or such other supporting
information as the Administrative Agent may reasonably request, (iii) an
Authorized Officer of the Borrower has delivered to the Administrative Agent a
certificate on or prior to the date the application would otherwise be required
pursuant to this Section 4.02(g) in the form described in clause (x) above and
also certifying its determination as required by preceding clause (ii) and
certifying the sufficiency of business interruption
insurance as required by succeeding clause (iv), and (iv) an Authorized Officer of the Borrower has delivered to the Administrative Agent such evidence as the Administrative Agent may reasonably request in form and substance reasonably satisfactory to the Administrative Agent establishing that the Borrower has sufficient business interruption insurance and that the Borrower will receive payment thereunder in such amounts and at such times as are necessary to satisfy all obligations and expenses of the Borrower (including, without limitation, all debt service requirements, including pursuant to this Agreement), without any delay or extension thereof, for the period from the date of the respective casualty, condemnation or other event giving rise to the Recovery Event and continuing through the completion of the replacement or restoration of respective properties or assets, then the entire amount of the proceeds of such Recovery Event and not just the portion in excess of $2,000,000 shall be deposited with the Administrative Agent pursuant to a cash collateral arrangement reasonably satisfactory to the Administrative Agent whereby such proceeds shall be disbursed to the Borrower from time to time as needed to pay actual costs incurred by it or its applicable subsidiary in connection with the replacement or restoration of the respective properties or assets (pursuant to such certification requirements as may be established by the Administrative Agent), provided further, that at any time while an Event of Default has occurred and is continuing, the Required Lenders may direct the Administrative Agent (in which case the Administrative Agent shall, and is hereby authorized by the Borrower to, follow said directions) to apply any or all proceeds then on deposit in such collateral account to the repayment of Obligations hereunder, and provided further, that if all or any portion of such proceeds not required to be applied as a mandatory repayment pursuant to the second preceding proviso (whether pursuant to clause (x) or (y) thereof) are either (A) not so used or committed to be so used within one year after the date of the respective Recovery Event or (B) if committed to be used within one year after the date of receipt of such net proceeds and not so used within 18 months after the date of respective Recovery Event then, in either such case, such remaining portion not used or committed to be used in the case of preceding clause (A) and not used in the case of preceding clause (B) shall be applied on the date which is the first anniversary of the date of the respective Recovery Event in the case of clause (A) above or the date occurring 18 months after the date of the respective Recovery Event in the case of clause (B) above (or, in either case, such earlier date, if any, as the Board of Directors of Holdings or such Subsidiary, as the case may be, determines not to reinvest the net proceeds relating to such Recovery Event as set forth above) as a mandatory repayment of outstanding Terms Loans in accordance with the requirements of Sections 4.02(i) and (j).
(h) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each Excess Cash Flow Payment Date, an amount equal to 50% of
the Excess Cash Flow for the relevant Excess Cash Flow Payment Period shall be
applied as a mandatory repayment of outstanding Term Loans in accordance with
the requirements of Sections 4.02(i) and (j).
(i) Each amount required to be applied to Term Loans pursuant to Sections 4.02 (d), (e), (f), (g) and (h) shall be applied pro rata to each Tranche of Term Loans (subject to the provisions of Section 4.02(l) with respect to the B Term Loans) based upon the then outstanding principal amount of Tranche A Term Loans and Tranche B Term Loans. The amount of each principal repayment of Term Loans made as required by Sections 4.02(d), (e), (f), (g) and (h), after giving effect to adjustments pursuant to Section 4.02(l), shall be applied to reduce the then remaining Scheduled Repayments of the respective Tranche pro rata based upon the then remaining principal amounts of the Scheduled Repayments of the respective Tranche after giving effect to all prior reductions thereto.
(j) With respect to each repayment of Loans required by this Section 4.02, the Borrower may designate the Types of Loans of the respective Tranche which are to be repaid and, in the case of Eurodollar Loans, the specific Borrowing or Borrowings of the respective Tranche pursuant to which made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section 4.02 may only be made on the last day of an Interest Period applicable thereto unless all Eurodollar Loans of the respective Tranche with Interest Periods ending on such date of required repayment and all Base Rate Loans of the respective Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount applicable thereto, such Borrowing shall be converted at the end of the then current Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of any Tranche of Loans made pursuant to a Borrowing shall be applied pro rata among such Tranche of Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its sole discretion with a view, but no obligation, to minimize breakage costs owing under Section 1.11.
(k) Notwithstanding anything to the contrary contained elsewhere in this Agreement, (i) all then outstanding Loans shall be repaid in full on the respective Maturity Date for such Loans and (ii) all outstanding Loans shall be repaid in full upon the occurrence of a Change of Control.
(l) Notwithstanding anything to the contrary contained in Section
4.01(a) or above in this Section 4.02, with respect to any mandatory repayments
of B Term Loans (excluding Tranche B Scheduled Repayments and repayments
pursuant to Section 4.02(k)) otherwise required above pursuant to this Section
4.02, and with respect to that portion of any voluntary repayment of Term Loans
pursuant to Section 4.01(a) which, in accordance with the provisions of clause
(iv) thereof is required to be applied to B Term Loans, if on or prior to the
date the respective mandatory repayment is otherwise required to be made
pursuant to this Section 4.02 or on or prior to the date of the respective
voluntary repayment pursuant to Section 4.01(a), the Borrower has given the
Administrative Agent written notification that the Borrower has elected to give
each Lender with a B Term Loan the right to waive such Bank's rights to receive
such repayment (the "Waivable Mandatory Repayment"), the Administrative Agent
shall notify such Lenders of such receipt and the amount of the repayment to be
applied to each such Lender's B Term Loans. In the event any such Lender with a
B Term Loan desires to waive such Lender's right to receive any such Waivable
Mandatory Repayment in whole or in part, such Lender shall so advise the
Administrative Agent no later than 5:00 P.M. (New York time) three Business Days
after the date of such notice from the Administrative Agent which notice shall
also include the amount the Lender desires to receive. If the Lender does not
reply to the Administrative Agent within such three Business Day period, it will
be deemed acceptance of the total payment. If the Lender does not specify an
amount it wishes to receive, it will be deemed acceptance of 100% of the total
payment. In the event that any such Lender waives such Lender's right to any
such Waivable Mandatory Repayment, the Administrative Agent shall apply 100% of
the amount so waived by such Lenders to (x) prepay the A Term Loans (i) in the
case of a repayment pursuant to Section 4.01(a), in accordance with Section
4.01(a) (exclusive of clause (iv) thereof) or (ii) in the case of a repayment
pursuant to Section 4.02, in accordance with Sections 4.02(i)
and (j) and (y) to the extent in excess of the amount to be applied pursuant to
preceding clause (x)(ii), as provided in Section 3.03(e)(ii) (as if no Terms
Loans were then outstanding). If the Borrower elects to give the notice
described above in this Section 4.02(l) with respect to any voluntary or
mandatory repayment, the amount of the respective Waivable Mandatory Repayment
shall be deposited with the Administrative Agent on the date the voluntary
repayment is otherwise made pursuant to Section 4.01(a) or the date the
mandatory repayment would otherwise be required pursuant to the relevant
provisions of this Section 4.02, as the case may be (and held by the
Administrative Agent as cash collateral for the B Term Loans and, but only to
the extent Lenders with B Term Loans waive their right to receive their share of
the Waivable Mandatory Repayment, for the benefit of the A Term Loans in a cash
collateral account which shall permit the investment thereof in Cash Equivalents
reasonably satisfactory to the Administrative Agent until the proceeds are
applied to the applicable Loans) and the respective repayment shall not be
required to be made until the fifth Business Day occurring after the date the
respective repayment would otherwise have been required to be made.
Notwithstanding anything to the contrary contained above, (i) if one or more
Lenders waives its right to receive all or any part of any Waivable Mandatory
Repayment, but less than all the Lenders holding B Term Loans waive in full
their right to receive 100% of the total payment otherwise required with respect
to the Tranche B Term Loans, then of the amount actually applied to the
repayment of B Term Loans of Lenders which have waived in part, but not in full,
their right to receive 100% of such repayment, such amount shall be applied to
each then outstanding Borrowing of B Term Loans on a pro rata basis (so that
each Lender holding B Term Loans shall, after giving effect to the application
of the respective repayment, maintain the same percentage (as determined for
such Lender, but not the same percentage as the other Lenders hold and not the
same percentage held by such Lender prior to repayment) of each Borrowing of B
Term Loans which remains outstanding after giving effect to such application),
(ii) the Borrower's option pursuant to this Section 4.02(l) with respect to a
voluntary prepayment pursuant to Section 4.01(a) shall only be applicable so
long as any A Term Loans are outstanding and (iii) the Borrower's option
pursuant to this Section 4.02(l) with respect to any mandatory repayment shall
only be applicable so long as A Term Loans are outstanding or the Total
Revolving Loan Commitment is in effect.
4.03 Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Administrative Agent for the ratable account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in immediately available funds and in U.S. Dollars at the Payment Office. Any payments under this Agreement or under any Note which are made later than 12:00 Noon (New York time) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder or under any Note will be made without setoff, counterclaim or other defense. Except as provided in Sec-
tion 4.04(b), all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, except as provided in the second succeeding sentence, any tax imposed on or measured by the net income or net profits of a Lender pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect to such non excluded taxes, levies, imposts, duties, fees, assessments or other charges (all such nonexcluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower agrees, subject to Section 1.14, to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. If any amounts are payable in respect of Taxes pursuant to the preceding sentence, the Borrower agrees, subject to Section 1.14, to reimburse each Lender, upon the written request of such Lender, for taxes imposed on or measured by the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located and for any withholding of taxes as such Lender shall determine are payable by, or withheld from, such Lender in respect of such amounts so paid to or on behalf of such Lender pursuant to the preceding sentence and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. The Borrower will furnish to the Administrative Agent within 45 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Borrower. The Borrower agrees to indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes agrees to deliver to the Borrower and the Administrative Agent on or prior to the Effective Date, or in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 1.13 or 13.04(b) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement as of such date to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 (or successor forms) pursuant to clause (i) above, (x)
a certificate substantially in the form of Exhibit D (any such certificate, a
"Section 4.04(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement as of such date to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Lender agrees
that from time to time after the Effective Date, when a lapse in time or change
in circumstances renders the previous certification obsolete or inaccurate in
any material respect, it will deliver to the Borrower and the Administrative
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms), or Form W-8 (or successor forms)
and a Section 4.04(b)(ii) Certificate, as the case may be, and such other forms
as may be required in order to confirm or establish the entitlement of such
Lender to a continued exemption from or reduction in United States withholding
tax with respect to payments under this Agreement and any Note, or it shall
immediately notify the Borrower and the Administrative Agent of its inability to
deliver any such Form or Certificate in which case such Lender shall not be
required to deliver any such Form or Certificate pursuant to this Section
4.04(b). Notwithstanding anything to the contrary contained in Section 4.04(a),
but subject to Section 13.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Lender which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes to the extent that such Lender
has not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 4.04(a) hereof to gross-up
payments to be made to a Lender in respect of income or similar taxes imposed by
the United States (or any political subdivision or taxing authority thereof or
therein) if (I) such Lender has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this
Section 4.04(b) or (II) in the case of a payment, other than interest, to a
Lender described in clause (ii) above, to the extent that such Forms do not
establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 4.04 and except as set forth in Section 13.04(b), the Borrower
agrees to pay additional amounts and to indemnify each Lender in the manner set
forth in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any Taxes deducted or
withheld by it as described in the immediately preceding sentence as a result of
any changes that are effective after the Effective Date in any applicable law,
treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of such Taxes
(or, if later, the date such Lender became party to this Agreement).
SECTION 5. Conditions Precedent. The obligation of each Lender to make each Loan to the Borrower hereunder, and the obligation of the Letter of Credit Issuer to issue each Letter of Credit hereunder, in either case on the Initial Borrowing Date is subject, at the time of the making of such Loans or the issuance of such Letters of Credit to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall have been delivered to the Administrative Agent for the account of each Lender that has requested same the appropriate A
Term Note, B Term Note and/or Revolving Note and to BTCo to the extent that BTCo has requested same the Swingline Note, in each case executed by the Borrower and in the amount, maturity and as otherwise provided herein.
5.02 Officer's Certificate. On the Initial Borrowing Date, the Administrative Agent shall have received a certificate dated such date signed by an Authorized Officer of the Borrower stating that all of the applicable conditions set forth in Sections 5.05 through 5.10, inclusive and Section 6.01 have been satisfied on such date.
5.03 Opinions of Counsel. On the Initial Borrowing Date, the Administrative Agent shall have received an opinion, addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Initial Borrowing Date, from Latham & Watkins, special counsel to the Credit Parties, which opinion shall cover the matters contained in Exhibit E and such other matters incident to the transactions contemplated herein as the Agents may reasonably request.
5.04 Corporate Documents; Proceedings. (a) On the Initial Borrowing Date, the Administrative Agent shall have received from each Credit Party a certificate, dated the Initial Borrowing Date, signed by the chairman, a vice-chairman, the president or any vice-president of such Credit Party, and attested to by the secretary or any assistant secretary of such Credit Party, in the form of Exhibit F with appropriate insertions, together with copies of the certificate of incorporation and by-laws of such Credit Party (or equivalent organizational documents) and the resolutions of such Credit Party referred to in such certificate and all of the foregoing (including each such certificate of incorporation and by-laws (or equivalent organizational documents)) shall be reasonably satisfactory to the Agents.
(b) On the Initial Borrowing Date, all corporate, partnership, limited liability company and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Transaction Documents shall be reasonably satisfactory in form and substance to the Agents, and the Administrative Agent shall have received all information and copies of all certificates, documents and papers, including good standing certificates, bring-down certificates and any other records of corporate proceedings and governmental approvals, if any, which the Agents reasonably may have requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities.
(c) On the Initial Borrowing Date and after giving effect to the Transaction, the corporate and capital structure (including, without limitation, the terms of any capital stock, options, warrants or other securities issued by Holdings or any of its Subsidiaries) of Holdings and each of its Subsidiaries shall be in form and substance reasonably satisfactory to the Agents, and the management of Holdings and its Subsidiaries shall be reasonably satisfactory to the Agents.
5.05 Adverse Change, etc. On or prior to the Initial Borrowing Date, nothing shall have occurred since September 30, 1998 (and neither the Lenders nor the Agents shall have become aware of any facts or conditions not previously known) which the Required Lenders or
the Agents shall determine has had, or could reasonably be expected to have, (i) a Material Adverse Effect or (ii) a material adverse effect on the Transaction.
5.06 Litigation. On the Initial Borrowing Date, there shall be no
actions, suits, proceedings or investigations pending or threatened which the
Agents or the Required Lenders shall determine could reasonably be expected to
(i) have a Material Adverse Effect or (ii) have a material adverse effect on the
Transaction.
5.07 Approvals. On or prior to the Initial Borrowing Date, (i) all necessary and material governmental (domestic and foreign), regulatory and third party approvals and/or consents in connection with the Credit Documents, the other Transaction Documents, the Transaction and otherwise referred to herein or therein shall have been obtained and remain in full force and effect and (ii) all applicable waiting periods shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction, the making of the Loans, the issuance of Letters of Credit and the transactions contemplated by the Transaction Documents or otherwise referred to herein or therein. Additionally, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon, or materially delaying, or making economically unfeasible, the consummation of the Transaction or the making of the Loans, the issuance of Letters of Credit or the transactions contemplated by the Transaction Documents.
5.08 Consummation of the Recapitalization. On or prior to the Initial Borrowing Date, there shall have been delivered to the Administrative Agent true and correct copies of the Recapitalization Documents, with those Recapitalization Documents which were executed on August 3, 1998 and November 9, 1998 to be in the form so executed with any changes thereto or waivers of the terms therein to be reasonably satisfactory to the Agents and the Required Lenders, and with all other Recapitalization Documents to be in form and substance reasonably satisfactory to the Agents and the Required Lenders. All conditions precedent to the consummation of the Recapitalization as set forth in the Recapitalization Documents shall have been satisfied, and not waived unless consented to by the Agents and the Required Lenders (which consent shall not be unreasonably withheld or delayed), to the reasonable satisfaction of the Agents and the Required Lenders. The Recapitalization shall have been consummated in all material respects in accordance with the terms and conditions of the Recapitalization Documents and all applicable laws.
5.09 Refinancing. (a) On the Initial Borrowing Date, the commitments under the Indebtedness to be Refinanced shall have been terminated, all loans outstanding thereunder shall have been repaid in full, together with all accrued and unpaid interest thereon, all accrued and unpaid fees thereon shall have been paid in full, all letters of credit issued thereunder shall have been terminated and all other amounts owing pursuant to the Indebtedness to be Refinanced shall have been repaid in full.
(b) On the Initial Borrowing Date, all security interests in respect of, and Liens securing, obligations under the Indebtedness to be Refinanced shall have been terminated and released to the satisfaction of the Agents, and the Administrative Agent shall have received all such releases as may have been requested by the Agents, which releases shall be in form and substance reasonably satisfactory to the Agents. Without limiting the foregoing, there shall have been delivered (i) proper termination statements (Form UCC-3 or the appropriate equivalent) for filing under the UCC of each jurisdiction where a financing statement Form UCC-1 or equivalent was filed with respect to Holdings or any of its Subsidiaries in connection with the security interests created pursuant to the Indebtedness to be Refinanced and the documentation related thereto, (ii) termination or reassignment of any security interest in, or Lien on, any patents, trademarks, copyrights or similar interests of Holdings or any of its Subsidiaries on which filings have been made to secure obligations under the Indebtedness to be Refinanced and (iii) terminations of all mortgages, leasehold mortgages and deeds of trusts created with respect to property of Holdings or any of its Subsidiaries to secure the obligations under the Indebtedness to be Refinanced, all of which shall be in form and substance reasonably satisfactory to the Agents.
5.10 Consummation of the Equity Financing; Note Issuances; etc. (a)
On the Initial Borrowing Date, (i) Holdings shall have received gross cash
proceeds of at least $100,200,000 in connection with the Equity Financing, (ii)
certain existing shareholders of Holdings shall have rolled-over and retained
their equity (including options) in Holdings with an aggregate value of no more
than $30,300,000 (it being understood that the sum of the amounts referred to in
preceding clause (i) and in this clause (ii) shall be at least $130,500,000) and
(iii) Holdings shall have used the entire amount of such gross cash proceeds to
make payments owing in connection with the Transaction prior to utilizing any
proceeds of Loans for such purpose. All of the terms and conditions of the
Equity Financing Documents shall be reasonably satisfactory to the Agents and
the Required Lenders, and all conditions precedent to the consummation of the
Equity Financing as set forth in the Equity Financing Documents shall have been
satisfied (and not waived, unless consented to by the Agents and the Required
Lenders (which consent shall not be unreasonably withheld or delayed)), to the
reasonable satisfaction of the Agents and the Required Lenders. The Equity
Financing shall have been consummated in all material respects in accordance
with the terms and conditions of the Equity Financing Documents and all
applicable laws.
(b) On the Initial Borrowing Date, (i) the Borrower shall have received gross cash proceeds of $125,000,000 from the issuance by it of a like principal amount of the Senior Subordinated Notes and (ii) the Borrower shall have used the entire amount of such cash proceeds to make payments owing in connection with the Transaction prior to utilizing any proceeds of Loans for such purpose. All of the terms and conditions of the Senior Subordinated Note Documents shall be reasonably satisfactory to the Agents and the Required Lenders, and all conditions precedent to the issuance of the Senior Subordinated Notes as set forth in the Senior Subordinated Note Documents shall have been satisfied (and not waived, unless consented to by the Agents and the Required Lenders (which consent shall not be unreasonably withheld or delayed)), to the reasonable satisfaction of the Agents and the Required Lenders. The issuance of the Senior Subordinated Notes shall have been consummated in all material respects in accord-
ance with the terms and conditions of the Senior Subordinated Note Documents and all applicable laws.
(c) On the Initial Borrowing Date, Holdings shall have issued the Seller Subordinated Notes in the aggregate principal amount of $20,000,000. All of the terms and conditions of the Seller Subordinated Note Documents shall be reasonably satisfactory to the Agents and the Required Lenders.
(d) On the Initial Borrowing Date (but before giving effect to any component of the Transaction), the Borrower and its Subsidiaries shall have cash on hand of at least $20,000,000, and the Borrower shall have used such cash to make payments owing in connection with the Transaction prior to using any proceeds of Loans for such purpose.
5.11 Pledge Agreement; Security Agreement; etc. (a) On the Initial Borrowing Date, each Credit Party shall have duly authorized, executed and delivered the Pledge Agreement in the form of Exhibit G (as amended, modified or supplemented from time to time in accordance with the terms thereof and hereof, the "Pledge Agreement") and shall have delivered to the Collateral Agent, as pledgee thereunder, all of the Securities referred to (and as defined) therein, endorsed in blank in the case of promissory notes or accompanied by executed and undated stock powers in the case of capital stock, along with evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Pledge Agreement have been taken and the Pledge Agreement shall be in full force and effect.
(b) On the Initial Borrowing Date, each Credit Party shall have duly authorized, executed and delivered the Security Agreement in the form of Exhibit H (as amended, modified or supplemented from time to time in accordance with the terms thereof and hereof, the "Security Agreement") covering all of the Security Agreement Collateral of such Credit Party, together with:
(i) executed copies of Financing Statements (Form UCC-1) or appropriate local equivalent in appropriate form for filing under the UCC or appropriate local equivalent of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by the Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports, each of a recent date listing all effective financing statements that name Holdings or any of its Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (i) above, together with copies of such financing statements that name Holdings or any of its Subsidiaries as debtor (none of which shall cover the Collateral except (x) those with respect to which appropriate termination statements executed by the secured lender thereunder have been delivered to the Administrative Agent and (y) to the extent evidencing Permitted Liens);
(iii) evidence of the completion of all other recordings and filings of, or with respect to, the Security Agreement as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement; and
(iv) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement have been taken;
and the Security Agreement shall be in full force and effect.
5.12 Subsidiaries Guaranty. On the Initial Borrowing Date, each Subsidiary Guarantor shall have duly authorized, executed and delivered the Subsidiaries Guaranty in the form of Exhibit I (as amended, modified or supplemented from time to time in accordance with the terms thereof and hereof, the "Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall be in full force and effect.
5.13 Employee Benefit Plans; Shareholders' Agreements; Management Agreements; Employment Agreements; Collective Bargaining Agreements; Existing Indebtedness Agreements; Tax Allocation Agreements. On or prior to the Initial Borrowing Date, there shall have been delivered to the Administrative Agent true and correct copies, certified as true and complete by an Authorized Officer of the Holdings of:
(i) all Plans and Multiemployer Plans (and for each Plan or Multiemployer Plan that is required to file an annual report on Internal Revenue Service Form 5500, a copy of the most recent such report (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information), and for each Plan that is a "single-employer plan," as defined in Section 4001(a)(15) of ERISA, the most recently prepared actuarial valuation therefor) and any other "employee benefit plans," as defined in Section 3(3) of ERISA, and any other material agreements, plans or arrangements, with or for the benefit of current or former employees of Holdings or any of its Subsidiaries or any ERISA Affiliate (provided that the foregoing shall apply in the case of any Multiemployer Plan only to the extent that any document described therein is in the possession of Holdings or any Subsidiary of Holdings or any ERISA Affiliate or reasonably available thereto from the sponsor or trustee of any such plan) (collectively, the "Employee Benefit Plans");
(ii) all agreements (including, without limitation, shareholders' agreements, stockholders' agreements, subscription agreements and registration rights agreements) entered into by Holdings or any of its Subsidiaries governing the terms and relative rights of its capital stock and any agreements entered into by shareholders relating to any such entity with respect to its capital stock, in each case, that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Shareholders' Agreements");
(iii) all material agreements with members of, or with respect to, the management of Holdings or any of its Subsidiaries (other than Employment Agreements) that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Management Agreements");
(iv) any material employment agreements entered into by Holdings or any of its Subsidiaries (collectively, the Employment Agreements");
(v) all collective bargaining agreements applying or relating to any employee of Holdings or any of its Subsidiaries that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Existing Indebtedness of Holdings that are to remain in effect after giving effect to the consummation of the Transaction (collectively, the "Existing Indebtedness Agreements"); and
(vii) any tax sharing, tax allocation or similar agreements entered into by Holdings or any of its Subsidiaries (collectively, the "Tax Allocation Agreements");
all of which Employee Benefit Plans, Shareholders' Agreements, Management Agreements, Employment Agreements, Collective Bargaining Agreements, Existing Indebtedness Agreements and Tax Allocation Agreements shall be in form and substance satisfactory to the Agents.
5.14 Solvency Certificate; Insurance Certificates; Financial Statements; Budgets. On or before the Initial Borrowing Date, the Administrative Agent shall have received:
(i) a solvency certificate from the chief financial officer of Holdings in the form of Exhibit J;
(ii) evidence of insurance complying with the requirements of
Section 8.03 for the business and properties of Holdings and its
Subsidiaries, in scope, form and substance reasonably satisfactory to the
Agents and naming the Collateral Agent as an additional insured and/or
loss payee, and stating that such insurance shall not be canceled or
revised without at least 30 days' prior written notice by the insurer to
the Collateral Agent;
(iii) true and correct copies of the historical financial statements, the pro forma financial statements and the Projections referred to in Sections 7.10(b) and (e), which historical financial statements, pro forma financial statements and Projections shall be in form and substance reasonably satisfactory to the Agents and the Required Lenders; and
(iv) a budget of Holdings and its Subsidiaries in reasonable detail for each of the twelve months of Holdings' current fiscal year.
5.15 Payment of Fees. On the Initial Borrowing Date, all costs, fees and expenses, and all other compensation due to the Agents or the Lenders (including, without limitation, legal fees and expenses) shall have been paid to the extent due.
SECTION 6. Conditions Precedent to All Credit Events. The obligation of each Lender to make Loans (including Loans made on the Initial Borrowing Date but excluding Mandatory Borrowings made thereafter, which shall be made as provided in Section 1.01(e)), and the obligation of a Letter of Credit Issuer to issue any Letter of Credit, is subject, at the time of each such Credit Event (except as hereinafter indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time of each such Credit Event and also after giving effect thereto (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein and in each other Credit Document shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on the date of the making of such Credit Event (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to the making of each Loan (excluding Swingline Loans and Mandatory Borrowings), the Administrative Agent shall have received a Notice of Borrowing meeting the requirements of Section 1.03(a). Prior to the making of any Swingline Loan, BTCo shall have received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the Administrative Agent and the respective Issuing Lender shall have received a Letter of Credit Request meeting the requirements of Section 2.02(a).
The occurrence of the Initial Borrowing Date and the acceptance of
the benefits or proceeds of each Credit Event shall constitute a representation
and warranty by each of Holdings and the Borrower to the Administrative Agent
and each of the Lenders that all the conditions specified in Section 5 (with
respect to Credit Events on the Initial Borrowing Date) and in this Section 6
(with respect to Credit Events on or after the Initial Borrowing Date) and
applicable to such Credit Event exist as of that time. All of the Notes,
certificates, legal opinions and other documents and papers referred to in
Section 5 and in this Section 6, unless otherwise specified, shall be delivered
to the Administrative Agent at the Notice Office for the account of each of the
Lenders and, except for the Notes, in sufficient counterparts or copies for each
of the Lenders and shall be in form and substance satisfactory to the Agents and
the Required Lenders.
SECTION 7. Representations, Warranties and Agreements. In order to induce the Lenders to enter into this Agreement and to make the Loans and issue and/or participate in the Letters of Credit provided for herein, each of Holdings and the Borrower makes the following representations, warranties and agreements with the Lenders, in each case after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement, the making of the Loans and the issuance of the Letters of Credit (with the occurrence of each Credit Event being deemed to constitute a representation and warranty that the matters specified in this Section 7 are true and correct in all material respects on and as of the date of each such Credit
Event, unless stated to relate to a specific earlier date in which case such representations and warranties shall be true and correct in all material respects as of such earlier date):
7.01 Corporate Status. Each of Holdings and each of its Subsidiaries
(i) is a duly organized and validly existing corporation, partnership or limited
liability company, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate, partnership or limited
liability company power and authority, as the case may be, to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in all jurisdictions where it is required to be so
qualified and where the failure to be so qualified, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
7.02 Corporate Power and Authority. Each Credit Party has the corporate, partnership or limited liability company power and authority, as the case may be, to execute, deliver and carry out the terms and provisions of the Transaction Documents to which it is a party and has taken all necessary corporate, partnership or limited liability company action, as the case may be, to authorize the execution, delivery and performance of the Transaction Documents to which it is a party. Each Credit Party has duly executed and delivered each Transaction Document to which it is a party and each such Transaction Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance by any Credit Party of the Transaction Documents to which it is a party, nor compliance by any Credit Party with the terms and provisions thereof, nor the consummation of the transactions contemplated herein or therein, (i) will contravene any applicable provision of any law, statute, rule or regulation, or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or (other than pursuant to the Security Documents) result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of Holdings or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material agreement or instrument to which Holdings or any of its Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be subject (including, without limitation, the Existing Indebtedness) or (iii) will violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents) of Holdings or any of its Subsidiaries.
7.04 Litigation. There are no actions, suits, proceedings or investigations pending or, to the best knowledge of Holdings and the Borrower, threatened with respect to Holdings or any of its Subsidiaries that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Additionally, there does not exist any judgment,
order or injunction prohibiting or imposing material adverse conditions upon the occurrence of any Credit Event.
7.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all Term Loans shall be utilized to finance the Transaction and to pay the fees and expenses incurred in connection therewith.
(b) The proceeds of all Revolving Loans and Swingline Loans shall be utilized for the general corporate and working capital purposes of the Borrower and its Subsidiaries (including to effect Permitted Acquisitions and make Capital Expenditures, in each case to the extent permitted by this Agreement), provided that (x) not more than $5,000,000 of proceeds of Revolving Loans and Swingline Loans in the aggregate may be used to finance the Transaction and to pay the fees and expenses incurred in connection therewith and (y) not more than $25,000,000 of proceeds of Revolving Loans and Swingline Loans in the aggregate may be used to finance Permitted Acquisitions.
(c) Neither the making of any Loan, nor the use of the proceeds thereof, nor the occurrence of any other Credit Event, will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System and no part of any Credit Event (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.
7.06 Governmental Approvals. Except as may have been obtained or made on or prior to the Initial Borrowing Date (and which remain in full force and effect on the Initial Borrowing Date), no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required in connection with (i) the execution, delivery and performance of any Transaction Document or (ii) the legality, validity, binding effect or enforceability of any Transaction Document.
7.07 Investment Company Act. Neither Holdings nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.
7.08 Public Utility Holding Company Act. Neither Holdings nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended.
7.09 True and Complete Disclosure. All factual information (excluding the Projections, which are subject to Section 7.10(e)) (taken as a whole) heretofore or contemporaneously furnished by or on behalf of Holdings or any of its Subsidiaries in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Transaction Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of any such Persons in writing to the Administrative
Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided.
7.10 Financial Condition; Financial Statements. (a) On and as of the Initial Borrowing Date, on a pro forma basis after giving effect to the Transaction and all other transactions contemplated by the Transaction Documents and to all Indebtedness incurred, and to be incurred, and Liens created, and to be created, by each Credit Party in connection therewith, with respect to each of Holdings and the Borrower (x) the sum of the assets (including capital stock and promissory notes), at a fair valuation, of each of Holdings and the Borrower will exceed its debts, (y) it has not incurred nor intended to, nor believes that it will, incur debts beyond its ability to pay such debts as such debts mature and (z) it will have sufficient capital with which to conduct its business. For purposes of this Section 7.10(a), "debt" means any liability on a claim, and "claim" means (i) 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 (ii) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
(b) (i) The consolidated balance sheets of Holdings and its Subsidiaries for the fiscal years ended September 30, 1996, 1997 and 1998, respectively, and the related consolidated statements of income, cash flows and shareholders' equity of Holdings and its Subsidiaries for the fiscal years ended on such dates, copies of which have been furnished to the Lenders prior to the Initial Borrowing Date, present fairly in all material respects the consolidated financial position of Holdings and its Subsidiaries at the date of such balance sheets and the consolidated results of the operations of Holdings and its Subsidiaries for the periods covered thereby. All of the foregoing historical financial statements have been prepared in accordance with GAAP consistently applied except as disclosed in the notes thereto and, in the case of the nine month financial statements, the absence of footnotes and normal year-end audit adjustments.
(ii) The pro forma consolidated financial statements of Holdings and its Subsidiaries at September 30, 1998 after giving effect to the Transaction and the financing therefor, copies of which have been furnished to the Lenders prior to the Initial Borrowing Date, present fairly in all material respects the pro forma consolidated financial position of Holdings and its Subsidiaries as of September 30, 1998 and the pro forma consolidated results of operations of Holdings and its Subsidiaries for the twelve-month period ended on September 30, 1998. Such pro forma financial statements have been prepared on a basis consistent with the historical financial statements set forth in clause (i) of this Section 7.10(b).
(c) Since September 30, 1998 (but after giving effect to the Transaction as if same had occurred prior thereto), nothing has occurred that has had or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(d) Except as fully reflected in the financial statements described in Section 7.10(b) and the Indebtedness incurred under the Transaction Documents, (i) there were as of the Initial Borrowing Date (and after giving effect to any Loans made on such date), no liabilities or obligations (excluding current obligations incurred in the ordinary course of business) with respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) and (ii) neither Holdings nor the Borrower knows of any basis for the assertion against Holdings or any of its Subsidiaries of any such liability or obligation which as to clauses (i) and (ii) above, either individually or in the aggregate, are or could be reasonably likely to have, a Material Adverse Effect.
(e) The Projections have been prepared on a basis consistent with
the financial statements referred to in Section 7.10(b) (except as may otherwise
be indicated in the Projections), and are based on good faith estimates and
assumptions made by the management of Holdings. On the Initial Borrowing Date
(i) such management believed that the Projections were reasonable and attainable
and (ii) there is no fact known to Holdings or any of its Subsidiaries which
could have a Material Adverse Effect which has not been disclosed herein or in
such other documents, certificates and statements furnished to the Lenders for
use in connection with the transactions contemplated hereby.
7.11 Security Interests. On and after the Initial Borrowing Date, each of the Security Documents creates (or after the execution and delivery thereof will create), as security for the Obligations, a valid and enforceable perfected security interest in and Lien on all of the Collateral subject thereto, superior to and prior to the rights of all third Persons, and subject to no other Liens (other than Permitted Liens), in favor of the Collateral Agent. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings which shall have been made on or prior to the tenth day after the Initial Borrowing Date as contemplated by Section 5.11(b) or on or prior to the execution and delivery thereof as contemplated by Sections 8.11, 8.12 and 9.15.
7.12 Transaction. At the time of consummation thereof, the Transaction shall have been consummated in all material respects in accordance with the terms of the respective Transaction Documents and all applicable laws. At the time of consummation thereof, all necessary and material consents and approvals of, and filings and registrations with, and all other actions in respect of, all governmental agencies, authorities or instrumentalities required to make or consummate the Transaction have been obtained, given, filed or taken or waived and are or will be in full force and effect (or effective judicial relief with respect thereto has been obtained). All applicable waiting periods with respect thereto have or, prior to the time when required, will have, expired without, in all such cases, any action being taken by any competent authority which restrains, prevents, or imposes material adverse conditions upon the Transaction. Additionally, there does not exist any judgment, order or injunction prohibiting or imposing material adverse conditions upon the Transaction, or the occurrence of any Credit Event or the performance by Holdings and its Subsidiaries of their respective obligations under the Transaction Documents and all applicable laws. The Transaction has been consummated in all material respects in accordance with the respective Transaction Documents and all applicable laws.
7.13 Compliance with ERISA. (a) Annex III sets forth, as of the Initial Borrowing Date, each Plan and each Multiemployer Plan. Each Plan (and each related trust, insurance contract or fund) is in material compliance with its terms and with all applicable laws, including, without limitation, ERISA and the Code; each plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has occurred which could reasonably be expected to result in a liability of $1,000,000 or more; no Multiemployer Plan is insolvent or in reorganization; no Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans and the amounts described in the last sentence of Section 7.13(b) with respect to Foreign Plans, exceeds $3,700,000; no Plan which is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated funding deficiency, within the meaning of such sections of the Code or ERISA, or has applied for or received a waiver of an accumulated funding deficiency or an extension of any amortization period, within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all contributions required to be made with respect to a Plan and a Multiemployer Plan have been timely made; neither Holdings nor any Subsidiary of Holdings nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any such material liability under any of the foregoing sections with respect to any Plan or a Multiemployer Plan; no condition exists which presents a material risk to Holdings or any Subsidiary of Holdings or any ERISA Affiliate of incurring a material liability to or on account of a Plan or a Multiemployer Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted to terminate or appoint a trustee to administer any Plan which is subject to Title IV or ERISA; the PBGC has not requested orally or in writing that Holdings or any Subsidiary or any ERISA Affiliate post a bond or furnish security or make additional contributions to a Plan on account of a Reportable Event which has occurred with respect to a Plan; the PBGC has not notified Holdings or any Subsidiary or any ERISA Affiliate orally or in writing that the PBGC intends to take any action as a result of a Reportable Event that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, expected or, to the knowledge of Holdings or the Borrower, threatened; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan ended prior to the date of the most recent Credit Event, would not exceed $1,000,000, each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of Holdings, any Subsidiary of Holdings, or any ERISA Affiliate has at all times been operated in material compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on the assets of Holdings or any Subsidiary of Holdings or any ERISA Affiliate exists or is likely to arise on account of any Plan or Multiemployer Plan; and Holdings and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any of them without incurring any liability which could reasonably be expected to have a Material Adverse Effect.
(b) Each Foreign Pension Plan, if any, has been maintained in material compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Foreign Pension Plan, if any, have been timely made. Neither Holdings nor any of its Subsidiaries has incurred any material obligation in connection with the termination of or withdrawal from any Foreign Pension Plan. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of Holdings' most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans determined as of the end of Holdings' most recently completed fiscal year, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities by more than $3,700,000.
7.14 Capitalization. (a) On the Initial Borrowing Date and after giving effect to the Transaction and the other transactions contemplated hereby, the authorized capital stock of Holdings shall consist of 1,000,000 shares, consisting of (i) 900,000 shares of Common Stock par value $.01 per share, of which 236,120 shares shall be issued and outstanding, and (ii) 100,000 shares of Class A Common Stock, par value $.01 per share (together with the Common Stock referred to above, the "Holdings Common Stock"), of which 13,750 shares shall be issued and outstanding. All such outstanding shares have been duly and validly issued and are fully paid and nonassessable. Holdings does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock, except for options or warrants that have been or may be issued from time to time to purchase shares of Holdings Common Stock.
(b) On the Initial Borrowing Date and after giving effect to the Transaction and the other transactions contemplated hereby, the authorized capital stock of the Borrower shall consist of 1,000 shares of common stock, $.01 par value per share, of which 100 shares shall be issued and outstanding, owned by Holdings and pledged by Holdings pursuant to the Pledge Agreement. All such outstanding shares have been duly and validly issued and are fully paid and nonassessable. The Borrower does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock.
(c) All outstanding shares of capital stock of each Subsidiary of Holdings have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. No Subsidiary of Holdings has outstanding any securities convertible into or exchangeable for its capital stock or outstanding any right to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
7.15 Subsidiaries. On and as of the Initial Borrowing Date and after giving effect to the consummation of the Transaction, Holdings has no Subsidiaries other than the Borrower and its Subsidiaries, and the Borrower has no Subsidiaries other than those Subsidiaries listed on Annex IV. Annex IV correctly sets forth, as of the Initial Borrowing Date and after giving effect to the Transaction, the percentage ownership (direct and indirect) of the Borrower in each class of capital stock of each of its Subsidiaries and also identifies the direct owner thereof.
7.16 Intellectual Property, etc. Each of Holdings and each of its Subsidiaries owns all patents, trademarks, permits, service marks, trade names, technology, copyrights, licenses, franchises and formulas, or other rights with respect to the foregoing, and has obtained assignments of all leases and other rights of whatever nature, and has in full force and effect all accreditations and certifications, reasonably necessary for the conduct of its business, without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.
7.17 Compliance with Statutes, etc. Each of Holdings and each of its Subsidiaries is in compliance with all applicable statutes, regulations, rules and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, except such non-compliance as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.18 Environmental Matters. (a) Each of Holdings and each of its
Subsidiaries has complied with, and on the date of each Credit Event is in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws and neither Holdings nor any of its
Subsidiaries is liable for any penalties, fines or forfeitures for failure to
comply with any of the foregoing. There are no pending or, to the best knowledge
of Holdings or the Borrower, threatened Environmental Claims against Holdings or
any of its Subsidiaries or any Real Property owned, leased or operated by
Holdings or any of its Subsidiaries. There are no facts, circumstances,
conditions or occurrences on any Real Property owned, leased or operated by
Holdings or any of its Subsidiaries or, to the best knowledge of Holdings or the
Borrower, on any property adjoining or in the vicinity of any such Real Property
that could reasonably be expected (i) to form the basis of an Environmental
Claim against Holdings or any of its Subsidiaries or any such Real Property or
(ii) to cause any such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Property by Holdings
or any of its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, any Real Property owned, leased or operated by Holdings or
any of its Subsidiaries except in compliance with all applicable Environmental Laws and as reasonably required in connection with the operation, use and maintenance of such Real Property by Holdings' or such Subsidiary's business. Hazardous Materials have not at any time been Released on or from any Real Property owned, leased or operated by Holdings or any of its Subsidiaries. There are not now any underground storage tanks located on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 7.18, the representations and warranties made in this Section 7.18 shall only be untrue if the effect of any or all conditions, failures, noncompliances, Environmental Claims, Releases and presence of underground storage tanks, in each case of the types described above, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
7.19 Properties. All Real Property owned by Holdings and its Subsidiaries and all Leaseholds leased by Holdings and its Subsidiaries, in each case as of the Initial Borrowing Date and after giving effect to the Transaction, and the nature of the interest therein, is correctly set forth in Annex V. Each of Holdings and each of its Subsidiaries has good and marketable title to, or a validly subsisting leasehold interest in, all material properties owned or leased by it, including all Real Property reflected in Annex V or in the financial statements referred to in Section 7.10(b), free and clear of all Liens, other than Permitted Liens.
7.20 Labor Relations. Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries or threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Holdings or any of its Subsidiaries or threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against Holdings or any of its Subsidiaries or threatened against Holdings or any of its Subsidiaries and (iii) no union representation question existing with respect to the employees of Holdings or any of its Subsidiaries and no union organizing activities are taking place, except as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
7.21 Tax Returns and Payments. Each of Holdings and each of its Subsidiaries has filed all federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it which have become due, except for those contested in good faith and adequately disclosed and fully provided for on the financial statements of Holdings and its Subsidiaries in accordance with GAAP. Each of Holdings and each of its Subsidiaries has at all times paid, or has provided adequate reserves (in the good faith judgment of the management of Holdings) for the payment of, all federal, state and foreign income taxes applicable for all prior fiscal years and for the current fiscal year to date. There is no action, suit, proceeding, investigation, audit, or claim now pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened by any authority regarding any taxes relating to Holdings or any of its Subsidiaries which, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. As of the Initial Borrowing Date, neither Holdings nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of Holdings or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of Holdings or any of its Subsidiaries not to be subject to the normally applicable statute of limitations.
7.22 Existing Indebtedness. Annex VI sets forth a true and complete list of all Indebtedness of Holdings and its Subsidiaries as of the Initial Borrowing Date and which is to remain outstanding after giving effect to the Transaction (excluding the Obligations, the Senior Subordinated Notes and the Seller Subordinated Notes, the "Existing Indebtedness"), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any other entity which directly or indirectly guaranteed such debt.
7.23 Insurance. Set forth on Annex VII hereto is a true, correct and complete summary of all insurance carried (including amounts thereof) by each Credit Party on and as of the Initial Borrowing Date.
7.24 Representations and Warranties in Other Documents. All representations and warranties set forth in the other Transaction Documents were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made) and shall be true and correct in all material respects as of the Initial Borrowing Date as if such representations or warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations or warranties shall be true and correct in all material respects as of such earlier date.
7.25 Special Purpose Corporations. Holdings has no significant assets (other than the capital stock of the Borrower and immaterial assets used for the performance of those activities permitted to be performed by Holdings pursuant to Section 9.01(b)(i)) or liabilities (other than under this Agreement and the other Transaction Documents to which it is a party and those liabilities permitted to be incurred by Holdings pursuant to Section 9.01(b)(i)).
7.26 Subordinated Notes; etc. (a) The subordination provisions contained in the Senior Subordinated Notes and in the other Senior Subordinated Note Documents are enforceable against the respective Credit Parties party thereto and the holders of the Senior Subordinated Notes, and all Obligations and Guaranteed Obligations (as defined herein and in the Subsidiaries Guaranty) are within the definition of "Senior Debt" included in such subordination provisions.
(b) The subordination provisions contained in the Seller Subordinated Notes and in the other Seller Subordinated Note Documents are enforceable against Holdings and the holders of the Seller Subordinated Notes, and all Guaranteed Obligations are within the definition of "Senior Debt" included in such subordination provisions.
(c) After the issuance thereof, the subordination provisions contained in any Additional Subordinated Debt will be enforceable against Holdings or the Borrower, as the case
may be, and the holders of the Additional Subordinated Debt, and all Obligations and Guaranteed Obligations (as applicable) will be within the definition of "Senior Debt" included in such subordinated provisions.
7.27 Year 2000. All Information Systems and Equipment are either Year 2000 Compliant, or any reprogramming, remediation, or any other corrective action, including the internal testing of all such Information Systems and Equipment, will be completed by September 30, 1999. Further, to the extent that such reprogramming/remediation and testing action is required, the cost thereof, as well as the cost of the reasonably foreseeable consequences of failure to become Year 2000 Compliant, to Holdings and its Subsidiaries (including, without limitation, reprogramming errors and the failure of other systems or equipment) will not result in a Default, an Event of Default or a Material Adverse Effect.
SECTION 8. Affirmative Covenants. Holdings and the Borrower hereby covenant and agree that as of the Effective Date and thereafter for so long as this Agreement is in effect and until the Total Commitment has terminated, no Letters of Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with interest, Fees and all other Obligations (other than any indemnities described in Section 13.13 which are not then due and payable) incurred hereunder, are paid in full:
8.01 Information Covenants. Holdings will furnish, or will cause to be furnished, to each Lender:
(a) Monthly Reports. Within 30 days after the end of each fiscal month of Holdings, the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such fiscal month and the related consolidated statements of income for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month, in each case setting forth comparative figures for the corresponding fiscal month in the prior fiscal year and comparable budgeted figures for such fiscal month as set forth in the respective budget delivered pursuant to Section 8.01(d), all of which shall be certified by the chief financial officer or other Authorized Officer of Holdings that they fairly present in all material respects on a basis consistent with GAAP the financial condition of Holdings and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
of the first three quarterly accounting periods in each fiscal year of Holdings,
(i) the consolidated balance sheet of Holdings and its Subsidiaries as at the
end of such quarterly accounting period and the related consolidated statements
of income and retained earnings and cash flows for such quarterly accounting
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly accounting period, in each case setting forth comparative figures
for the corresponding quarterly accounting period in the prior fiscal year and
comparable budgeted figures for such quarterly accounting period as set forth in
the respective budget delivered pursuant to Section 8.01(d) and (ii)
management's discussion and analysis of the important operational and financial
developments during such quarterly accounting period, all of which
shall be in reasonable detail and certified by the chief financial officer or other Authorized Officer of Holdings that they fairly present in all material respects in accordance with GAAP the financial condition of Holdings and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.
(c) Annual Financial Statements. Within 90 days after the close of each fiscal year of Holdings, the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and cash flows for such fiscal year and setting forth comparative consolidated figures for the preceding fiscal year and comparable budgeted figures for such fiscal year as set forth in the respective budget delivered pursuant to Section 8.01(d) and (except for such comparable budgeted figures) certified by Deloitte & Touche, LLP or such other independent certified public accountants of recognized national standing as shall be reasonably acceptable to the Administrative Agent, in each case to the effect that such statements fairly present in all material respects the financial condition of Holdings and its Subsidiaries as of the dates indicated and the results of their operations and changes in its financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years, together with a certificate of such accounting firm stating that in the course of its regular audit of the business of Holdings and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, no Default or Event of Default relating to financial or accounting matters which has occurred and is continuing has come to their attention or, if such a Default or an Event of Default has come to their attention, a statement as to the nature thereof (it being understood that such accounting firm shall not have any liability for failure to obtain knowledge of any Default or Event of Default).
(d) Budgets, etc. As soon as available but not more than 45 days
after the commencement of each fiscal year of Holdings beginning with its fiscal
year commencing on October 1, 1999, a budget of Holdings and its Subsidiaries
(x) in reasonable detail for each of the twelve months and four fiscal quarters
of such fiscal year and (y) in summary form for each of the four fiscal years
immediately following such fiscal year, in each case as customarily prepared by
management for its internal use setting forth, with appropriate discussion, the
principal assumptions upon which such budgets are based. Together with each
delivery of financial statements pursuant to Sections 8.01(a), (b) and (c), a
comparison of the current year to date financial results (other than in respect
of the balance sheets included therein) against the budgets required to be
submitted pursuant to this clause (d) also shall be presented.
(e) Officer's Certificates. At the time of the delivery of the financial statements provided for in Sections 8.01(a), (b) and (c), a certificate of the chief financial officer or other Authorized Officer of Holdings to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall, if delivered in connection with the financial statements in respect of a period ending on the last day of a fiscal quarter or fiscal year of Holdings, set forth (in reasonable detail) the calculations required to establish (x) whether Holdings and its Subsidiaries were in compliance with the provisions of Sections 3.03(e), 4.02(a), 4.02(e), 4.02(f), 4.02(g), 4.02(h), 8.14, 9.02, 9.04, 9.05,
9.06(ii), 9.06(v) and 9.08 through and including 9.11, as at the end of such fiscal quarter or year, as the case may be, and (y) the Senior Leverage Ratio as at the end of such fiscal quarter or year, as the case may be. In addition, at the time of the delivery of the financial statements provided for in Section 8.01(c), a certificate of the chief financial officer or other Authorized Officer of Holdings setting forth (in reasonable detail) the amount of, and calculations required to establish the amount of, Excess Cash Flow for the Excess Cash Flow Payment Period ending on the last day of the respective fiscal year.
(f) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after an officer of Holdings or any of its
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default, which notice shall
specify the nature and period of existence thereof and what action Holdings or
the Borrower proposes to take with respect thereto, (ii) any litigation or
proceeding pending or threatened (x) against Holdings or any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect, (y) with
respect to any material Indebtedness of Holdings or any of its Subsidiaries or
(z) with respect to any Transaction Document, (iii) any material governmental
investigation pending or threatened against Holdings or any of its Subsidiaries
and (iv) any other event which could reasonably be expected to have a Material
Adverse Effect.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each report or "management letter" submitted to Holdings or any of its Subsidiaries by its independent accountants in connection with any annual, interim or special audit made by them of the books of Holdings or any of its Subsidiaries and the management's non-privileged responses thereto.
(h) Environmental Matters. Promptly after obtaining knowledge of any of the following (but only to the extent that any of the following, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect), written notice of:
(i) any pending or threatened Environmental Claim against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that (x) results in noncompliance by Holdings or any of its Subsidiaries with any applicable Environmental Law or (y) could reasonably be anticipated to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that could reasonably be anticipated to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability by Holdings or its Subsidiary, as the case may be, of its interest in such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Holdings'
or the Borrower's response or proposed response thereto. In addition, Holdings
agrees to provide the Lenders with copies of all material communications by
Holdings or any of its Subsidiaries with any Person, government or governmental
agency relating to any of the matters set forth in clauses (i)-(iv) above, and
such detailed reports relating to any of the matters set forth in clauses
(i)-(iv) above as may reasonably be requested by the Administrative Agent or the
Required Lenders.
(i) Other Information. Promptly upon transmission thereof, copies of any filings and registrations with, and reports to, the SEC by Holdings or any of its Subsidiaries and copies of all financial statements, proxy statements, notices and reports as Holdings or any of its Subsidiaries shall send generally to analysts and the holders of their capital stock in their capacity as such holders (to the extent not theretofore delivered to the Lenders pursuant to this Agreement) and, with reasonable promptness, such other information or documents (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of the Required Lenders may reasonably request from time to time.
8.02 Books, Records and Inspections; Annual Meeting with Lenders.
(a) Holdings and the Borrower will, and will cause each of their respective
Subsidiaries to, keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. Holdings and the Borrower will, and will cause each of their
respective Subsidiaries to, permit, upon notice to the chief financial officer
or other Authorized Officer of Holdings or the Borrower, officers and designated
representatives of the Administrative Agent or the Required Lenders to visit and
inspect any of the properties or assets of Holdings and any of its Subsidiaries
in whomsoever's possession, and to examine the books of account of Holdings and
any of its Subsidiaries and discuss the affairs, finances and accounts of
Holdings and of any of its Subsidiaries with, and be advised as to the same by,
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Lenders may desire.
(b) At the request of the Administrative Agent, Holdings will within 120 days after the close of each of its fiscal years, hold a meeting (at a mutually agreeable location and time) with all of the Lenders at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of Holdings and its Subsidiaries and the budgets presented for the current fiscal year of Holdings and its Subsidiaries.
8.03 Insurance. (a) Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, (i) maintain, with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as is consistent and in accordance with industry practice and (ii) furnish to the Administrative Agent
and each of the Lenders, upon request, full information as to the insurance
carried. In addition to the requirements of the immediately preceding sentence,
Holdings and the Borrower will at all times cause insurance of the types
described in Annex VII to be maintained (with the same scope of coverage as that
described in Annex VII) at levels which are at least as great as the respective
amount described opposite the respective type of insurance on Annex VII. Such
insurance shall include physical damage insurance on all real and personal
property (whether now owned or hereafter acquired) on an all risk basis,
covering the full repair and replacement costs of all such property and business
interruption insurance for the actual loss sustained. The provisions of this
Section 8.03 shall be deemed supplemental to, but not duplicative of, the
provisions of any Security Documents that require the maintenance of insurance.
(b) Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, at all times keep the respective property of Holdings and its Subsidiaries insured in favor of the Collateral Agent, and all policies or certificates with respect to such insurance (i) shall be endorsed to the Collateral Agent's satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as certificate holder and loss payee with respect to all property (real and personal), additional insured with respect to general liability and umbrella liability coverage and certificate holder with respect to workers' compensation insurance), (ii) shall state that such insurance policies shall not be canceled or materially changed without at least 30 days' prior written notice thereof by the respective insurer to the Collateral Agent and (iii) shall be deposited with the Collateral Agent.
(c) If Holdings or any of its Subsidiaries shall fail to maintain all insurance in accordance with this Section 8.03, or if Holdings or any of its Subsidiaries shall fail to so name the Collateral Agent as an additional insured or loss payee, as the case may be, or so deposit all certificates with respect thereto, the Administrative Agent and/or the Collateral Agent shall have the right (but shall be under no obligation) to procure such insurance, and the Credit Parties agree to jointly and severally reimburse the Administrative Agent or the Collateral Agent, as the case may be, for all costs and expenses of procuring such insurance.
8.04 Payment of Taxes. Holdings and the Borrower will pay and discharge, and will cause each of their respective Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims for sums that have become due and payable which, if unpaid, might become a Lien not otherwise permitted under Section 9.03(a); provided that neither Holdings nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
8.05 Corporate Franchises. Holdings and the Borrower will do, and
will cause each of their respective Subsidiaries to do, or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and
its material rights, franchises, authority to do business, licenses,
certifications, accreditations and patents; provided, however, that (i) any
transaction permitted by Section 9.02 will not constitute a breach of this
Section 8.05 and (ii) nothing
in this Section 8.05 shall prevent the withdrawal by Holdings or any of its Subsidiaries of its qualification as a foreign corporation in any jurisdiction where such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.06 Compliance with Statutes; etc. Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property except for such noncompliance as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.07 Compliance with Environmental Laws. (a) (i) Holdings and the Borrower will comply, and will cause each of their respective Subsidiaries to comply, in all respects with all Environmental Laws applicable to the ownership or use of its Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws and (ii) neither Holdings nor any of its Subsidiaries will generate, use, treat, store, Release or dispose of, or permit the generation, use, treatment, storage, release or disposal of, Hazardous Materials on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, unless the failure to comply with the requirements specified in clause (i) or (ii) above, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. If Holdings or any of its Subsidiaries, or any tenant or occupant of any Real Property owned, leased or operated by Holdings or any of its Subsidiaries, cause or permit any intentional or unintentional act or omission resulting in the presence or Release of any Hazardous Material (except in compliance with applicable Environmental Laws), Holdings and the Borrower agree to undertake, and/or to cause any of their respective Subsidiaries, tenants or occupants to undertake, at their sole expense, any clean up, removal, remedial or other action required pursuant to Environmental Laws to remove and clean up any Hazardous Materials from any Real Property except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; provided that neither Holdings nor any of its Subsidiaries shall be required to comply with any such order or directive which is being contested in good faith and by proper proceedings so long as it has maintained adequate reserves with respect to such compliance to the extent required in accordance with GAAP.
(b) At the written request of the Administrative Agent or the Required Lenders, which request shall specify in reasonable detail the basis therefor, at any time and from time to time, the Holdings and Borrower will provide, at their sole cost and expense, an environmental site assessment report concerning any Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, prepared by an environmental consulting firm approved by the Administrative Agent, which approval shall not be unreasonably withheld, addressing the matters in clause (i), (ii) or (iii) below which gives rise to such request (or, in the case of a request pursuant to following clause (i), addressing such matter as may be requested by the Administrative Agent or the Required Lenders) and estimating the range of the potential costs
of any removal, remedial or other corrective action in connection with any such
matter, provided that in no event shall such request be made unless (i) an Event
of Default has occurred and is continuing, (ii) the Lenders receive notice under
Section 8.01(h) for any event for which notice is required to be delivered for
any such Real Property or (iii) the Administrative Agent or the Required Lenders
reasonably believe that there was a breach of any representation, warranty or
covenant contained in Section 7.18 or 8.07(a). If Holdings or the Borrower fails
to provide the same within 60 days after such request was made, the
Administrative Agent may order the same, and Holdings and the Borrower shall
grant and hereby grants, to the Administrative Agent and the Lenders and their
agents access to such Real Property and specifically grants, the Administrative
Agent and the Lenders and their agents an irrevocable non-exclusive license,
subject to the rights of tenants, to undertake such an assessment, all at
Holdings' expense.
8.08 ERISA. As soon as possible and, in any event, within ten (10)
days after Holdings, any Subsidiary of Holdings or any ERISA Affiliate knows or
has reason to know of the occurrence of any of the following, Holdings will
deliver to each of the Lenders a certificate of the chief financial officer or
other Authorized Officer of Holdings setting forth in reasonable detail
information as to such occurrence and the action, if any, that Holdings, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed by Holdings, the
Subsidiary, the Plan administrator or such ERISA Affiliate to or with, the PBGC
or any other governmental agency, or a Plan or Multiemployer Plan participant,
and any notices received by Holdings, such Subsidiary or ERISA Affiliate from
the PBGC or other governmental agency or a Plan or Multiemployer Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred (except to the extent that Holdings has previously delivered
to the Lenders a certificate and notices (if any) concerning such event pursuant
to the next clause hereof); that a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the
advance reporting requirement of PBGC Regulation Section 4043.61 (without regard
to subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following 30 days; that an
accumulated funding deficiency, within the meaning of Section 412 of the Code or
Section 302 of ERISA, has been incurred or an application is reasonably likely
to be or has been made for a waiver or modification of the minimum funding
standard (including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of ERISA
with respect to a Plan; that any contribution required to be made with respect
to a Plan or Multiemployer Plan or Foreign Pension Plan has not been timely
made; that a Plan or Multiemployer Plan has been or is reasonably likely to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that the PBGC has requested orally or in writing that Holdings or any
Subsidiary of Holdings or any ERISA Affiliate post a bond or furnish security to
the PBGC or make additional contributions to a Plan on account of a Reportable
Event which has occurred with respect to a Plan; or the PBGC has notified
Holdings or any Subsidiary of Holdings or any ERISA Affiliate orally or in
writing that the PBGC intends to take any action as a result of a Reportable
Event that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; that a Plan has an Unfunded Current
Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans,
exceeds the aggregate amount of such Unfunded Current Liabilities that existed
on the Initial Borrowing Date by $500,000; that proceedings are reasonably
likely to be or have been instituted to terminate or appoint a trustee to
administer a Plan which is subject to Title IV of ERISA; that a proceeding has
been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan or Multiemployer Plan; that Holdings, any Subsidiary of
Holdings or any ERISA Affiliate will or is reasonably likely to incur any
material liability (including any indirect, contingent, or secondary liability)
to or on account of the termination of or withdrawal from a Plan or
Multiemployer plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or with respect to a Plan or Multiemployer Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA or
with respect to a group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that
Holdings or any Subsidiary of Holdings is reasonably likely to incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan or
any Foreign Pension Plan. Holdings and the Borrower will deliver to each of the
Lenders copies of any records, documents or other information that must be
furnished to the PBGC with respect to any Plan pursuant to Section 4010 of
ERISA. Holdings and the Borrower will also deliver to each of the Lenders a
complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Lenders pursuant to the first sentence hereof, copies of annual reports
and any records, documents or other information required to be furnished to the
PBGC, and any material notices received by Holdings, any Subsidiary of Holdings
or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan or
received from any government agency or plan administrator or sponsor or trustee
with respect to any Multiemployer Plan, shall be delivered to the Lenders no
later than ten (10) days after the date such annual report has been filed with
the Internal Revenue Service or such records, documents and/or information has
been furnished to the PBGC or such notice has been received by Holdings, the
Subsidiary or the ERISA Affiliate, as applicable. Holdings and each of its
applicable Subsidiaries shall insure that all Foreign Pension Plans administered
by it or into which it makes payments obtains or retains (as applicable)
registered status under and as required by applicable law and is administered in
a timely manner in all respects in compliance with all applicable laws except
where the failure to do any of the foregoing could not reasonably be expected to
have a Material Adverse Effect.
8.09 Good Repair. Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, ensure that its material properties and equipment used in its business are kept in good repair, working order and condition, and that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, to the extent and in the manner useful or customary for companies in similar businesses.
8.10 End of Fiscal Years; Fiscal Quarters. Holdings will, for financial reporting purposes, cause (i) each of its, and each of its Subsidiaries', fiscal years to end on September 30
of each year and (ii) each of its and its Subsidiaries' fiscal quarters to end on dates which are consistent with a fiscal year end as provided above and Holdings' practice as in effect on the Initial Borrowing Date.
8.11 Additional Security; Further Assurances. (a) Holdings and the Borrower will, and will cause each of their Domestic Subsidiaries (and to the extent Section 8.12 is operative, each of its Foreign Subsidiaries) to, grant to the Collateral Agent security interests in such personal property of Holdings and its Subsidiaries as are not covered by the original Security Documents, and as may be requested from time to time by the Administrative Agent or the Required Lenders (collectively, the "Additional Security Documents"). All such security interests shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Administrative Agent, in each case constituting valid and enforceable perfected security interests superior to and prior to the rights of all third Persons and subject to no other Liens except for Permitted Liens. The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full.
(b) Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, at the expense of Holdings and the Borrower, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, Holdings and the Borrower will cause to be delivered to the Collateral Agent such opinions of counsel and other related documents as may be reasonably requested by the Administrative Agent to assure themselves that this Section 8.11 has been complied with.
(c) Each of the Credit Parties agrees that each action required above by this Section 8.11 shall be completed as soon as possible, but in no event later than 90 days after such action is either requested to be taken by the Administrative Agent or the Required Lenders or required to be taken by Holdings and its Subsidiaries pursuant to the terms of this Section 8.11.
8.12 Foreign Subsidiaries Security. If following a change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder, counsel for the Borrower reasonably acceptable to the Administrative Agent does not within 30 days after a request from the Administrative Agent or the Required Lenders deliver evidence, in form and substance mutually satisfactory to the Administrative Agent and the Borrower, with respect to any Foreign Subsidiary of Holdings which has not already had all of its stock pledged pursuant to the Pledge Agreement that (i) a pledge of 66-2/3% or more of the total combined voting power of all classes of capital stock of such Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign Subsidiary of a security agreement in substantially the form of the Security Agreement and (iii) the entering into by such
Foreign Subsidiary of a guaranty in substantially the form of the Subsidiaries Guaranty, in any such case could reasonably be expected to cause (I) any undistributed earnings of such Foreign Subsidiary as determined for Federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary's United States parent for Federal income tax purposes or (II) other Federal income tax consequences to the Credit Parties having a Material Adverse Effect, then in the case of a failure to deliver the evidence described in clause (i) above, that portion of such Foreign Subsidiary's outstanding capital stock not theretofore pledged pursuant to the Pledge Agreement shall be pledged to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), and in the case of a failure to deliver the evidence described in clause (ii) above, such Foreign Subsidiary shall execute and deliver the Security Agreement and Pledge Agreement (or another security agreement or pledge agreement in substantially similar form, if needed), granting the Secured Creditors a security interest in all of such Foreign Subsidiary's assets and securing the Obligations of the Borrower under the Credit Documents and under any Interest Rate Protection Agreement or Other Hedging Agreement and, in the event the Subsidiaries Guaranty shall have been executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the case of a failure to deliver the evidence described in clause (iii) above, such Foreign Subsidiary shall execute and deliver the Subsidiaries Guaranty (or another guaranty in substantially similar form, if needed), guaranteeing the Obligations of the Borrower under the Credit Documents and under any Interest Rate Protection Agreement or Other Hedging Agreement, in each case to the extent that the entering into such Security Agreement or Subsidiaries Guaranty is permitted by the laws of the respective foreign jurisdiction and with all documents delivered pursuant to this Section 8.12 to be in form and substance reasonably satisfactory to the Administrative Agent.
8.13 Ownership of Subsidiaries. Except to the extent otherwise
expressly consented in writing by the Required Lenders or as other permitted by
Section 9.05(xiii) or the definition of Permitted Acquisition, the Credit
Parties shall directly or indirectly own 100% of the capital stock or
partnership or other equity interests of each of their Subsidiaries.
8.14 Permitted Acquisitions. (a) Subject to the provisions of this
Section 8.14 and the requirements contained in the definition of Permitted
Acquisition, the Borrower and the Subsidiary Guarantors may from time to time
effect Permitted Acquisitions, so long as (in each case except to the extent the
Required Lenders otherwise specifically agree in writing in the case of a
specific Permitted Acquisition): (i) no Default or Event of Default shall be in
existence at the time of the consummation of the proposed Permitted Acquisition
or immediately after giving effect thereto; (ii) the Borrower shall have given
the Administrative Agent and the Lenders at least 10 Business Days' prior
written notice of any Permitted Acquisition; (iii) calculations are made by the
Borrower of compliance with the covenants contained in Sections 9.09, 9.10 and
9.11 for the Test Period (taken as one accounting period) most recently ended
prior to the date of such Permitted Acquisition for which financial statements
are available (each, a "Calculation Period"), on a Pro Forma Basis as if the
respective Permitted Acquisition (as well as all other Permitted Acquisitions
theretofore consummated after the first day of such Calculation Period) had
occurred on the first day of such Calculation Period, and such recalculations
shall show that such financial covenants would have been complied with if the
Permitted Acquisition had
occurred on the first day of such Calculation Period; (iv) based on good faith
projections prepared by the Borrower for the period from the date of the
consummation of the Permitted Acquisition to the date which is one year
thereafter, the level of financial performance measured by the covenants set
forth in Sections 9.09, 9.10 and 9.11 shall be better than or equal to such
level as would be required to provide that no Default or Event of Default would
exist under the financial covenants contained in Sections 9.09, 9.10 and 9.11 as
compliance with such covenants would be required through the date which is one
year from the date of the consummation of the respective Permitted Acquisition;
(v) the Borrower shall certify, and the Administrative Agent shall have been
satisfied in its reasonable discretion, that the proposed Permitted Acquisition
could not reasonably be expected to result in increased tax, ERISA,
environmental or other contingent liabilities with respect to Holdings or any of
its Subsidiaries that either individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect; (vi) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Permitted Acquisition (both before and after giving effect thereto), unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date; (vii) the Borrower provides to the Administrative Agent and the
Lenders as soon as available but not later than 5 Business Days after the
execution thereof, a copy of any executed purchase agreement or similar
agreement with respect to such Permitted Acquisition; (viii) the aggregate
consideration (including, without limitation, (I) the aggregate principal amount
of any Indebtedness assumed, incurred or issued in connection therewith, (II)
the fair market value (as determined in good faith by the Board of Directors of
Holdings) of any common stock or Qualified Preferred Stock of Holdings issued as
part of the purchase price therefor (provided that no Default or Event of
Default under Section 10.10 would result therefrom) and (III) the aggregate
amount paid and to be paid pursuant to any earn-out, non-compete or deferred
compensation or purchase price arrangements for any such proposed Permitted
Acquisition and for all other Permitted Acquisitions consummated prior to such
Permitted Acquisition shall not exceed $75,000,000, provided that such amount
may be increased to $125,000,000 if at the time of any Permitted Acquisition,
and after giving effect thereto, the Senior Leverage Ratio for the respective
Calculation Period, calculated on a Pro Forma Basis as if the respective
Permitted Acquisition (as well as all other Permitted Acquisitions theretofore
consummated after the first day of such Calculation Period) had occurred on the
first day of such Calculation Period, is less than or equal to 2.50:1.00; (ix)
no more than $25,000,000 of the aggregate consideration paid in connection with
all such Permitted Acquisitions shall be funded with Indebtedness (including
Revolving Loans, Swingline Loans and/or Additional Subordinated Debt), provided
that if at the time of any Permitted Acquisition, and after giving effect
thereto, the Senior Leverage Ratio for the respective Calculation Period,
calculated on a Pro Forma Basis as if the respective Permitted Acquisition (as
well as all other Permitted Acquisitions theretofore consummated after the first
day of such Calculation Period) had occurred on the first day of such
Calculation Period, is less than or equal to 2.50:1:.00, then the aggregate
principal amount of such Indebtedness may be increased to $75,000,000, provided,
however, in no event shall more than $25,000,000 of proceeds of Revolving Loans
and Swingline Loans in the aggregate be used to fund Permitted Acquisitions; (x)
after giving effect to each Permitted Acquisition (and all payments to be made
in connection therewith), the Total Unutilized Revolving Loan Commitment shall
equal or
exceed $5,000,000; and (xi) the Borrower shall have delivered to the
Administrative Agent an officer's certificate executed by an Authorized Officer
of the Borrower, certifying to the best of such officer's knowledge, compliance
with the requirements of preceding clauses (i) through (vi), inclusive, (viii),
(ix) and (x) and containing the calculations (in reasonable detail) (A) required
by the preceding clauses (iii), (iv), (viii), (ix) and (x) and (B) necessary to
establish the Acquired EBITDA of the Acquired Entity or Business acquired
pursuant to each Permitted Acquisition for the most recently ended 12 month
period for which financial statements are available for such Acquired Entity or
Business, which calculations shall be reasonably approved by the Administrative
Agent.
(b) At the time of each Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other equity interest of any Person, all capital stock or other equity interests thereof created or acquired in connection with such Permitted Acquisition shall be pledged for the benefit of the Secured Creditors pursuant to (and to the extent required by) the Pledge Agreement.
(c) Holdings shall cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver, all of the documentation required by, Sections 8.11 and 9.15, to the satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by Holdings and the Borrower that the certifications by the Borrower (or by one or more of its Authorized Officers) pursuant to Section 8.14(a) are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Sections 6 and 10.
8.15 Maintenance of Corporate Separateness. Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, satisfy customary corporate formalities, including the holding of regular board of directors' and shareholders' meetings or action by directors or shareholders without a meeting and the maintenance of corporate offices and records. Neither Holdings nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, which is likely to result in the corporate existence of Holdings or any of its Subsidiaries being ignored, or in the assets and liabilities of Holdings or any of its Subsidiaries being substantively consolidated with those of any other such Person in a bankruptcy, reorganization or other insolvency proceeding.
8.16 Performance of Obligations. Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, perform all of its obligations under the terms of each mortgage, deed of trust, indenture, loan agreement or credit agreement and each other material agreement, contract or instrument by which it is bound, except such non-performances as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.17 Use of Proceeds. All proceeds of the Loans shall be used as provided in Section 7.05.
8.18 Contributions; Payments; etc. (a) Holdings will, upon its receipt thereof, contribute as an equity contribution to the capital of the Borrower, any cash proceeds received by Holdings from any asset sale, any incurrence of Indebtedness, any Recovery Event, any sale or issuance of its preferred or common equity (other than from the Equity Financing), any cash capital contributions or any tax refunds.
(b) The Borrower will use the proceeds of all equity contributions received by it from Holdings as provided in clause (a) above toward the repayment of Term Loans or the reduction of the Total Revolving Loan Commitment to the extent required by Section 4.02 or 3.03(e), as the case may be.
8.19 Year 2000 Compliance. Holdings and the Borrower will, and will cause each of their respective Subsidiaries to, ensure that its Information Systems and Equipment are at all times after September 30, 1999 Year 2000 Compliant, except insofar as the failure to do so will not result in a Material Adverse Effect, and shall notify the Administrative Agent and the Lenders promptly upon detecting any failure of the Information Systems and Equipment to be Year 2000 Compliant after such date. In addition, Holdings and the Borrower will provide the Administrative Agent and the Lenders with such information about their year 2000 computer readiness (including, without limitation, information as to contingency plans, budgets and testing results) as the Administrative Agent or any such Lender shall reasonably request.
8.20 Seller Subordinated Notes. Holdings will pay all interest on the Seller Subordinated Notes through the issuance of additional Seller Subordinated Notes rather than in cash; provided, however, from and after January 1, 2004 Holdings may make regularly scheduled interest payments on the Seller Subordinated Notes in cash so long as no Default or Event of Default then exists or would result therefrom.
SECTION 9. Negative Covenants. Holdings and the Borrower hereby covenant and agree that as of the Effective Date and thereafter for so long as this Agreement is in effect and until the Total Commitment has terminated, no Letters of Credit or Notes are outstanding and the Loans, together with interest, Fees and all other Obligations (other than any indemnities described in Section 13.13 which are not then due and payable) incurred hereunder, are paid in full:
9.01 Changes in Business. (a) Holdings and its Subsidiaries will not engage in any business other than the businesses in which they are engaged in as of the Effective Date and activities directly related thereto, and similar or related businesses.
(b) Notwithstanding the foregoing, (i) Holdings will not engage in any business activities and will not have any significant assets (other than its ownership of the capital stock of the Borrower and those obligations of officers and employees of Holdings permitted by Section 9.05(viii)), or liabilities (other than those liabilities which it is responsible for (or permitted to incur) under this Agreement and the other Transaction Documents to which it is a
party); provided that Holdings may engage in those activities that are incidental to (1) the maintenance of its corporate existence in compliance with applicable law, (2) legal, tax and accounting matters in connection with any of the foregoing activities and (3) the entering into, and performance of its obligations under, this Agreement and the other Transaction Documents to which it is a party.
9.02 Consolidation; Merger; Sale or Purchase of Assets; etc. Holdings will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than inventory in the ordinary course of business), or enter into any partnerships, joint ventures or sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person or agree to do any of the foregoing at any future time, except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may, as lessee, enter into operating leases in the ordinary course of business with respect to real or personal property;
(ii) Capital Expenditures by the Borrower and its Subsidiaries to the extent not in violation of Section 9.08;
(iii) Investments permitted pursuant to Section 9.05;
(iv) the Borrower and its Subsidiaries may, in the ordinary course of business, sell or otherwise dispose of assets (excluding capital stock of Subsidiaries) which, in the reasonable opinion of such Person, are obsolete, uneconomic or worn-out;
(v) the Borrower and its Subsidiaries may sell assets (other than the capital stock of any Subsidiary), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) each such sale is in an arm's-length transaction and the Borrower or the respective Subsidiary receives at least fair market value (as determined in good faith by the Borrower or such Subsidiary, as the case may be), (x) the total consideration received by the Borrower or such Subsidiary is at least 80% cash and is paid at the time of the closing of such sale, (y) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 4.02(d) and (z) the aggregate amount of the proceeds received from all assets sold pursuant to this clause (v) shall not exceed $1,000,000 in any fiscal year of the Borrower;
(vi) each of the Borrower and its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and not as part of any financing transaction;
(vii) each of the Borrower and its Subsidiaries may grant leases or subleases to other Persons not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries;
(viii) any Subsidiary of the Borrower may transfer assets to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor, so long as the security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer);
(ix) any Subsidiary of the Borrower may merge with and into, or be dissolved or liquidated into, the Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor, so long as (i) in the case of any such merger, dissolution or liquidation involving the Borrower, the Borrower is the surviving corporation of any such merger, dissolution or liquidation, (ii) in all other cases, the Wholly-Owned Domestic Subsidiary which is a Subsidiary Guarantor is the surviving corporation of any such merger, dissolution or liquidation and (iii) in all cases, the security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of such Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, dissolution or liquidation);
(x) the Borrower and its Subsidiaries may sell or exchange specific items of equipment, so long as the purpose of each such sale or exchange is to acquire (and results within 90 days of such sale or exchange in the acquisition of) replacement items of equipment which are the functional equivalent of the item of equipment so sold or exchanged;
(xi) the Borrower and the Subsidiary Guarantor shall be permitted to make Permitted Acquisitions, so long as such Permitted Acquisitions are effected in accordance with the requirements of Section 8.14; and
(xii) the Recapitalization shall be permitted.
To the extent the Required Lenders waive the provisions of this Section 9.02 with respect to the sale or other disposition of any Collateral, or any Collateral is sold or otherwise disposed of as permitted by this Section 9.02, such Collateral (unless transferred to the Borrower or a Subsidiary thereof) shall be sold or otherwise disposed of free and clear of the Liens created by the Security Documents and the Administrative Agent shall take such actions (including, without limitation, directing the Collateral Agent to take such actions) as are appropriate in connection therewith.
9.03 Liens. Holdings will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets of any kind (real or personal, tangible or intangible) of Holdings or any of its Subsidiaries, whether
now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable or notes with recourse to Holdings or any of its Subsidiaries) or assign any right to receive income, except for the following (collectively, the "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
(ii) Liens in respect of property or assets of the Borrower or any of its Subsidiaries imposed by law which were incurred in the ordinary course of business and which have not arisen to secure Indebtedness for borrowed money, such as carriers', warehousemen's and mechanics' Liens, statutory landlord's Liens, and other similar Liens arising in the ordinary course of business, and which either (x) do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Borrower or any of its Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or asset subject to such Lien;
(iii) Liens created by or pursuant to this Agreement and the Security Documents;
(iv) Liens in existence on the Initial Borrowing Date which are listed, and the property subject thereto described, in Annex VIII, without giving effect to any extensions or renewals thereof except to the extent expressly permitted by Annex VIII, provided that (x) the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding at the time of any such renewal, replacement or extension and (y) any such renewal, replacement or extension does not encumber any additional assets or properties of Holdings or any of its Subsidiaries;
(v) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 10.09, provided that no cash or other property shall be pledged by Holdings or any of its Subsidiaries as security therefor;
(vi) Liens (other than any Lien imposed by ERISA) (x) incurred or deposits made in the ordinary course of business of the Borrower and its Subsidiaries in connection with workers' compensation, unemployment insurance and other types of social security, (y) to secure the performance by the Borrower and its Subsidiaries of tenders, statutory obligations (other than excise taxes), surety, stay and customs bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (z) to secure the performance by the Borrower and its Subsidiaries of leases of Real Property, to the extent incurred or made in the ordinary course of business consistent with past practices, provided that the aggregate amount of deposits at any time pursuant to preceding sub-clause (y) and sub-clause (z) shall not exceed $500,000 in the aggregate;
(vii) licenses, leases or subleases granted to third Persons in the ordinary course of business not interfering in any material respect with the business of the Borrower or any of its Subsidiaries;
(viii) easements, rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in title and other similar charges or encumbrances, in each case not securing Indebtedness and not interfering in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statements regarding operating leases;
(x) Liens created pursuant to Capital Leases permitted pursuant to
Section 9.04(iv), provided that (x) such Liens only serve to secure the
payment of Indebtedness arising under such Capitalized Lease Obligation
and (y) the Lien encumbering the asset giving rise to the Capitalized
Lease Obligation does not encumber any other asset of the Borrower or any
of its Subsidiaries;
(xi) Liens arising pursuant to purchase money mortgages or security interests securing Indebtedness representing the purchase price (or financing of the purchase price within 30 days after the respective purchase) of assets acquired after the Initial Borrowing Date, provided that (i) any such Liens attach only to the assets so purchased, (ii) the Indebtedness secured by any such Lien does not exceed 100%, nor is less than 80%, of the lesser of the fair market value or the purchase price of the property being purchased at the time of the incurrence of such Indebtedness and (iii) the Indebtedness secured thereby is permitted to be incurred pursuant to Section 9.04(iv);
(xii) Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Subsidiary of the Borrower in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition, provided that (i) any Indebtedness that is secured by such Liens is permitted to exist under Section 9.04(vi), and (ii) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any other asset of the Borrower or any of its Subsidiaries;
(xiii) restrictions imposed in the ordinary course of business and consistent with past practices on the sale or distribution of designated inventory pursuant to agreements with customers under which such inventory is consigned by the customer or such inventory is designated for sale to one or more customers;
(xiv) Liens in favor of customs or revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(xv) Liens on the assets of a Foreign Subsidiary which is not a Subsidiary Guarantor securing Indebtedness incurred by such Foreign Subsidiary in accordance with the terms of Section 9.04; and
(xvi) other Liens incidental to the conduct of the business or the ownership of the assets of the Borrower or any Subsidiary of the Borrower that (x) were not incurred in connection with borrowed money, (y) do not encumber any Collateral or any Real Property owned by the Borrower or any Subsidiary of the Borrower and do not in the aggregate materially detract from the value of the assets subject thereto or materially impair the use thereof in the operation of such business and (z) do not secure obligations in excess of $150,000 in the aggregate for all such Liens.
9.04 Indebtedness. Holdings will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
(ii) Existing Indebtedness outstanding on the Initial Borrowing Date and listed on Annex VI, without giving effect to any subsequent extension, renewal or refinancing thereof except to the extent expressly permitted by Annex VI, provided that the aggregate principal amount of the Indebtedness to be extended, renewed or refinanced does not increase from that amount outstanding at the time of any such extension, renewal or refinancing;
(iii) Indebtedness under Interest Rate Protection Agreements entered into to protect the Borrower against fluctuations in interest rates in respect of Indebtedness otherwise permitted under this Agreement;
(iv) Capitalized Lease Obligations and Indebtedness of the Borrower and its Subsidiaries representing purchase money Indebtedness secured by Liens permitted pursuant to Section 9.03(xi), provided that (i) all such Capitalized Lease Obligations are permitted under Section 9.08 and (ii) the sum of (x) the aggregate Capitalized Lease Obligations outstanding at any time plus (y) the aggregate principal amount of such purchase money Indebtedness outstanding at such time shall not exceed $5,000,000;
(v) Indebtedness constituting Intercompany Loans to the extent permitted by Section 9.05(vi);
(vi) Indebtedness of a Subsidiary acquired pursuant to a Permitted Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness), provided that (i) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition and (ii) at the time of such Permitted Acquisition, such Indebtedness does not exceed 10% of the total value of the assets of the Subsidiary so acquired, or of the assets so acquired, as the case may be;
(vii) Indebtedness of the Borrower and the Guarantors under the Senior Subordinated Notes and the other Senior Subordinated Note Documents in an aggregate principal amount not to exceed $125,000,000 (as reduced by any repayments of principal thereof);
(viii) Indebtedness of Holdings under the Seller Subordinated Notes and the other Seller Subordinated Note Documents in an aggregate principal amount not to exceed $20,000,000 (as reduced by any repayments of principal thereof and as same may be increased through the issuance of additional Seller Subordinated Notes in respect of regularly scheduled interest payments made in accordance with the terms thereof and hereof);
(ix) Indebtedness of Holdings under Shareholder Subordinated Notes issued pursuant to Section 9.06(ii);
(x) guaranties by the Borrower and the Subsidiary Guarantors of each other's Indebtedness to the extent that such Indebtedness is otherwise permitted under this Section 9.04;
(xi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business so long as such Indebtedness is extinguished within three Business Days of the incurrence thereof;
(xii) Indebtedness in respect of Other Hedging Agreements to the extent permitted by Section 9.05(xiv);
(xiii) Indebtedness of the Borrower or any of its Subsidiaries evidenced by completion guarantees, performance bonds and surety bonds incurred in the ordinary course of business for purposes of insuring the performance of the Borrower or such Subsidiary in an aggregate principal amount not to exceed at any time outstanding $500,000;
(xiv) Indebtedness of the Borrower or any Subsidiary of the Borrower arising from agreements of the Borrower or a Subsidiary of the Borrower providing for indemnification, adjustment of purchase price, earn out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the Borrower permitted under this Agreement, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition, provided that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Borrower and its Subsidiaries in connection with such disposition;
(xv) so long as no Default or Event of Default then exists or would result therefrom, subordinated Indebtedness of Holdings or the Borrower issued to finance a Permitted Acquisition to the extent that such subordinated Indebtedness is permitted to be issued at such time pursuant to clause (ix) of Section 8.14(a), so long as (i) all of the terms and conditions of, and the documentation for, such subordinated Indebtedness is on substantially similar terms and conditions, and evidenced by substantially similar documentation, as the Senior Subordinated Notes to the extent that such Indebtedness is
issued by the Borrower or the Seller Subordinated Notes to the extent that such Indebtedness is issued by Holdings or is otherwise in form and substance reasonably satisfactory to the Administrative Agent and (ii) the aggregate principal amount of all such subordinated Indebtedness outstanding any time does not exceed that amount permitted to be issued at such time pursuant to such Section 8.14(a) (all such subordinated Indebtedness issued pursuant to this clause (xv) is referred to as "Additional Subordinated Debt"); and
(xvi) additional Indebtedness of the Borrower and its Subsidiaries not otherwise permitted hereunder not exceeding $5,000,000 in aggregate principal amount at any time outstanding.
9.05 Advances; Investments; Loans. Holdings will not, and will not permit any of its Subsidiaries to, lend money or extend credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or hold any cash or Cash Equivalents (each of the foregoing an "Investment" and, collectively, "Investments"), except:
(i) the Borrower and its Subsidiaries may hold or invest in cash and Cash Equivalents;
(ii) the Borrower and its Subsidiaries may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms (including the dating of receivables) of the Borrower or such Subsidiary;
(iii) the Borrower and its Subsidiaries may acquire and own investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;
(iv) Interest Rate Protection Agreements entered into in compliance with Section 9.04(iii) shall be permitted;
(v) Investments in existence on the Initial Borrowing Date and listed on Annex IX shall be permitted, without giving effect to any additions thereto or replacements thereof;
(vi) (x) the Borrower may make intercompany loans and advances to any Subsidiary Guarantor, (y) any Subsidiary Guarantor may make intercompany loans and advances to the Borrower or any other Subsidiary Guarantor and (iii) the Borrower may make intercompany loans to Holdings for the purpose of making payments permitted pursuant to Sections 9.06(ii) and (iv) (loans pursuant to clauses (x), (y) and (z) of this clause (vi) collectively, "Intercompany Loans"), provided that (x) each Intercompany
Loan shall be evidenced by an Intercompany Note and (y) each such Intercompany Note shall be pledged to the Collateral Agent pursuant to the Pledge Agreement;
(vii) loans and advances by the Borrower and its Subsidiaries to officers and employees of Holdings and its Subsidiaries for moving and travel expenses and other similar expenses, in each case incurred in the ordinary course of business, in an aggregate outstanding principal amount not to exceed $2,500,000 at any time (determined without regard to any write-downs or write-offs of such loans and advances) shall be permitted;
(viii) Holdings may acquire and hold obligations of one or more officers or other employees of Holdings or its Subsidiaries in connection with such officers' or employees' acquisition of shares of Holdings Common Stock, so long as no cash is actually advanced by Holdings or any of its Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;
(ix) Holdings may make equity contributions to the capital of the Borrower and the Borrower and the Subsidiary Guarantors may make cash equity contributions to their respective Subsidiaries which are Subsidiary Guarantors;
(x) the Borrower and the Subsidiary Guarantors may make Permitted Acquisitions in accordance with the relevant requirements of Section 8.14 and the component definitions therein;
(xi) Holdings and its Subsidiaries may own the capital stock of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement;
(xii) the Borrower and the Subsidiary Guarantors may make cash Investments in Wholly Owned Foreign Subsidiaries which are not Subsidiary Guarantors not to exceed $2,000,000 in the aggregate (determined without giving effect to any write-downs or write-offs thereof), net of any repayments to the Borrower or any such Subsidiary Guarantor;
(xiii) the Borrower and its Subsidiaries may acquire and hold non-cash consideration issued by the purchaser of assets in connection with a sale of such assets to the extent permitted by Section 9.02(v);
(xiv) the Borrower and its Subsidiaries may enter into Other Hedging Agreements in the ordinary course of business providing protection against fluctuations in currency values in connection with the Borrower's or any of its Subsidiaries' operations so long as management of the Borrower or such Subsidiary, as the case may be, has determined in good faith that the entering into of such Other Hedging Agreements are bona fide hedging activities and are not for speculative purposes; and
(xv) the Borrower and its Subsidiaries may make Investments not otherwise permitted by clauses (i) through (xiv) of this Section 9.05 in an aggregate amount not to exceed $10,000,000 (determined without regard to any write-downs or write-offs thereof), net of
cash payments of principal in the case of loans and cash equity returns (whether as a dividend or redemption) in the case of equity investments.
9.06 Dividends; etc. Holdings will not, and will not permit any of its Subsidiaries to, declare or pay any dividends (other than dividends payable solely in common stock of Holdings or any such Subsidiary, as the case may be) or return any capital to, its stockholders, partners or other equity holders or authorize or make any other distribution, payment or delivery of property or cash to its stockholders, partners or other equity holders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration, any shares of any class of its capital stock or other equity interests, now or hereafter outstanding (or any warrants for or options or stock appreciation rights in respect of any of such shares), or set aside any funds for any of the foregoing purposes, and Holdings will not permit any of its Subsidiaries to purchase or otherwise acquire for consideration any shares of any class of the capital stock or other equity interests of Holdings or any other Subsidiary, as the case may be, now or hereafter outstanding (or any options or warrants or stock appreciation rights issued by such Person with respect to its capital stock or other equity interests) (all of the foregoing "Dividends"), except that:
(i) (x) any Subsidiary of the Borrower may pay Dividends to the Borrower or any Wholly-Owned Subsidiary of the Borrower and (y) any non-Wholly-Owned Subsidiary of the Borrower may pay cash Dividends to its shareholders generally so long as the Borrower or its respective Subsidiary which owns the equity interest in the Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holding of the equity interest in the Subsidiary paying such Dividends and taking into account the relative preferences, if any, of the various classes of equity interests of such Subsidiary);
(ii) Holdings may redeem or purchase shares of Holdings Common Stock or options to purchase Holdings Common Stock, as the case may be, held by former officers or employees of Holdings or any of its Subsidiaries (or corporations owned by former officers or employees) following the termination of their employment and may make payments to former officers or employees of Holdings or any of its Subsidiaries in respect of certain tax liabilities arising from the exercise of options to purchase Holdings Common Stock, provided that (w) the only consideration paid by Holdings in respect of such redemptions, purchases and/or payments shall be cash and Shareholder Subordinated Notes, (x) the sum of (A) the aggregate amount paid by Holdings in cash in respect of all such redemptions purchases and/or payments plus (B) the aggregate amount of all cash payments made on Shareholder Subordinated Notes shall not exceed $2,000,000 in any fiscal year of Holdings, provided that any unused amount thereof may be carried forward and utilized for such purposes in any succeeding fiscal year of Holdings, and (y) at the time of any cash payment permitted to be made pursuant to this Section 9.06(ii), including any cash payment under a Shareholder Subordinated Note, no Default or Event of Default shall then exist or result therefrom;
(iii) so long as no Default or Event of Default then exists or would result therefrom, the Borrower may pay cash Dividends to Holdings so long as the cash proceeds thereof are promptly used by Holdings for the purposes described in clause (ii) of this Section 9.06;
(iv) so long as no Default or Event of Default then exists or would
result therefrom, from and after January 1, 2004, the Borrower may pay
cash Dividends to Holdings at the times, and in the amounts, necessary to
enable Holdings to make regularly scheduled interest payments that are due
and payable on the Seller Subordinated Notes to the extent that such cash
interest payments are permitted to be made at such time pursuant to
Section 8.20;
(v) cash Dividends may be paid to Holdings so long as the proceeds thereof are promptly used by Holdings to pay operating expenses in the ordinary course of business (including, without limitation, professional fees and expenses) and other similar corporate overhead costs and expenses, provided that the aggregate amount of cash Dividends paid pursuant to this clause (v) shall at no time during any fiscal year of the Borrower exceed $1,000,000;
(vi) the Borrower may pay cash Dividends to Holdings in the amounts and at the times of any payment by Holdings in respect of its taxes (or taxes of its consolidated group), provided that (x) the amount of cash Dividends paid pursuant to this clause (vi) to enable Holdings to pay taxes at any time shall not exceed the amount of such taxes owing by Holdings at such time for the respective period and (y) any refunds received by Holdings shall be promptly returned by Holdings to the Borrower;
(vii) repurchases of capital stock of Holdings deemed to occur upon the exercise of stock options if such capital stock represents a portion of the exercise price thereof and so long as no cash is otherwise paid or distributed by Holdings or any of its Subsidiaries in connection therewith;
(viii) Holdings may pay Dividends on its Qualified Preferred Stock solely through the issuance of additional shares of Qualified Preferred Stock and not in cash; and
(ix) the Recapitalization shall be permitted.
9.07 Transactions with Affiliates. Holdings will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of transactions with any Affiliate other than on terms and conditions substantially as favorable to Holdings or such Subsidiary as would be reasonably expected to be obtainable by Holdings or such Subsidiary at the time in a comparable arm's-length transaction with a Person other than an Affiliate; provided that the following shall in any event be permitted:
(i) the Transaction;
(ii) transactions by Holdings and its Subsidiaries to the extent expressly permitted by Sections 8.18, 9.02, 9.04, 9.05 and 9.06;
(iii) Odyssey may be paid an advisory fee in connection with the Transaction no later than 45 days after the Initial Borrowing Date in an aggregate amount not to exceed $4,000,000;
(iv) customary fees may be paid to non-officer directors of Holdings;
(v) Holdings and its Subsidiaries may enter into, and may make payments and perform its obligations (including by issuing and purchasing stock, making loans and incurring Indebtedness) under employment agreements, employee benefit plans, indemnification provisions, equity incentive plans and other similar compensatory arrangements with officers and directors of Holdings and its Subsidiaries in the ordinary course of business, in each case to the extent that such transactions are otherwise permitted by this Agreement; and
(vi) the Borrower and its Wholly-Owned Subsidiaries may engage in any transaction among themselves to the extent otherwise expressly permitted under this Agreement.
In no event shall any management, consulting or similar fee be paid or payable by Holdings or any of its Subsidiaries to any Affiliate (other than the Borrower) except as specifically provided in clause (iii) of this Section 9.07.
9.08 Capital Expenditures. (a) Holdings will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
(i) during the period from the Initial Borrowing Date through and including
September 30, 1999, the Borrower and its Subsidiaries may make Capital
Expenditures in an aggregate amount not to exceed $6,500,000 and (ii) during any
fiscal year of the Borrower set forth below (taken as one accounting period),
the Borrower and its Subsidiaries may make Capital Expenditures so long as the
aggregate amount of such Capital Expenditures does not exceed the amount set
forth below opposite such fiscal year:
Fiscal Year Ending Amount ------------------ ------ September 30, 2000 $6,500,000 September 30, 2001 $6,500,000 September 30, 2002 $6,500,000 September 30, 2003 $6,500,000 September 30, 2004 $6,500,000 September 30, 2005 $7,500,000 September 30, 2006 $8,000,000 |
From and after the consummation of any Permitted Acquisition, each of the Capital Expenditure amounts set forth above in this clause (a) shall be increased by an amount equal to 20% of the Acquired EBITDA of the respective Acquired Entity or Business acquired in each such Permitted Acquisition for the most recently ended 12 month period for which financial statements are available for such Acquired Entity or Business (as certified in the respective
officer's certificate delivered pursuant to clause (xi) of Section 8.14(a)), provided that the Capital Expenditure amount for the fiscal year in which such Permitted Acquisition is consummated shall only be increased by the amount set forth above in this sentence multiplied by a fraction the numerator of which is the number of days remaining in such fiscal year and the denominator of which is 365.
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Borrower and its Subsidiaries
pursuant to clause (a) above in any fiscal year of the Borrower (before giving
effect to any increase in such permitted Capital Expenditure amount pursuant to
this clause (b)) is greater than the amount of Capital Expenditures actually
made by the Borrower and its Subsidiaries during such fiscal year, the lesser of
(x) such excess and (y) 50% of the applicable permitted scheduled Capital
Expenditure amount as set forth in such clause (a) may be carried forward and
utilized to make Capital Expenditures in the immediately succeeding fiscal year,
provided that no amounts once carried forward pursuant to this Section 9.08(b)
may be carried forward to any fiscal year thereafter and such amounts may only
be utilized after the Borrower and its Subsidiaries have utilized in full the
permitted Capital Expenditure amount for such fiscal year as set forth in the
table in clause (a) above (without giving effect to any increase in such amount
pursuant to this clause (b)).
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make additional Capital Expenditures (which Capital Expenditures will not be
included in any determination under Section 9.08(a)) with the Net Sale Proceeds
of Asset Sales to the extent such proceeds are not required to be applied to
repay Term Loans or reduce the Total Revolving Loan Commitment pursuant to
Section 4.02(d) or Section 3.03(e), as the case may be.
(d) Notwithstanding the foregoing, the Borrower and its Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 9.08(a)) with the insurance proceeds received by the Borrower or any of its Subsidiaries from any Recovery Event so long as such Capital Expenditures are to replace or restore any properties or assets in respect of which such proceeds were paid within one year following the date of the receipt of such insurance proceeds to the extent such insurance proceeds are not required to be applied to repay Term Loans or reduce the Total Revolving Loan Commitment pursuant to Section 4.02(g) or Section 3.03(e), as the case may be.
(e) Notwithstanding the foregoing, the Borrower and the Subsidiary Guarantors may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 9.08(a)) constituting Permitted Acquisitions effected in accordance with the requirements of Section 8.14.
9.09 Minimum Consolidated EBITDA. Holdings and the Borrower will not permit Consolidated EBITDA for any Test Period ending on the last day of a fiscal quarter of Holdings set forth below to be less than the respective amount set forth opposite such fiscal quarter below:
Fiscal
Quarter Ending
Closest to Amount
---------- ------
December 31, 1998 $40,000,000
March 31, 1999 $40,000,000
June 30, 1999 $40,000,000
September 30, 1999 $44,000,000
December 31, 1999 $44,000,000
March 31, 2000 $44,000,000
June 30, 2000 $44,000,000
September 30, 2000 $47,000,000
December 31, 2000 $47,000,000
March 31, 2001 $47,000,000
June 30, 2001 $47,000,000
September 30, 2001 $50,000,000
December 31, 2001 $50,000,000
March 31, 2002 $50,000,000
June 30, 2002 $50,000,000
September 30, 2002 $55,000,000
December 31, 2002 $55,000,000
March 31, 2003 $55,000,000
June 30, 2003 $55,000,000
September 30, 2003
and the last day of each fiscal quarter of
Holdings ending thereafter $60,000,000
|
From and after the consummation of any Permitted Acquisition, each of the amounts set forth above in this Section 9.09 shall be increased by an amount equal to 80% of the Acquired EBITDA of the respective Acquired Entity or Business acquired in each such Permitted Acquisition for the most recently ended 12 month period for which financial statements are available for such Acquired Entity or Business (as certified in the respective officer's certificate delivered pursuant to clause (xi) of Section 8.14(a)), provided that each of the amounts set forth above in this Section 9.09 in respect of each Test Period ending prior to the 12 month anniversary of such Permitted Acquisition shall only be increased by the product of 80% of such Acquired EBITDA multiplied by a fraction the numerator of which is the number of days between the date of the consummation of such Permitted Acquisition and the last day of each such Test Period and the denominator of which is 365.
9.10 Consolidated Interest Coverage Ratio. Holdings and the Borrower will not permit the Consolidated Interest Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of Holdings set forth below to be less than the ratio set forth opposite such fiscal quarter below:
Fiscal Quarter
Ending Closest to Ratio
----------------- -----
March 31, 1999 1.75:1.00
June 30, 1999 1.75:1.00
September 30, 1999 1.75:1.00
December 31, 1999 1.75:1.00
March 31, 2000 2.00:1.00
June 30, 2000 2.00:1.00
September 30, 2000 2.00:1.00
December 31, 2000 2.00:1.00
March 31, 2001 2.00:1.00
June 30, 2001 2.00:1.00
September 30, 2001 2.25:1.00
December 31, 2001 2.25:1.00
March 31, 2002 2.25:1.00
June 30, 2002 2.25:1.00
September 30, 2002
and the last day of each fiscal quarter of
Holdings ending thereafter 2.50:1.00
|
9.11 Total Leverage Ratio. Holdings and the Borrower will not permit the Total Leverage Ratio at any time during a period set forth below to exceed the respective ratio set forth opposite such period below:
Period Ratio
------ -----
Initial Borrowing Date through and
including the day before the last day of
Holdings' fiscal quarter ending closest
to March 31, 1999 5.75:1.00
The last day of Holdings' fiscal quarter
ending closest to March 31, 1999
through and including the day before the
last day of Holdings' fiscal quarter
ending closest to September 30, 1999 5.50:1.00
The last day of Holdings' fiscal quarter
ending closest to September 30, 1999
through and including the day before the
last day of Holdings' fiscal quarter ending
closest to December 31, 1999 5.25:1.00
The last day of Holdings' fiscal quarter
|
ending closest to December 31, 1999 through and including the day before the last day of Holdings' fiscal quarter ending closest to September 30, 2000 5.00:1.00 The last day of Holdings' fiscal quarter ending closest to September 30, 2000 through and including the day before the last day of Holdings' fiscal quarter ending closest to September 30, 2001 4.75:1.00 The last day of Holdings' fiscal quarter ending closest to September 30, 2001 through and including the day before the last day of Holdings' fiscal quarter ending closest to September 30, 2002 4.00:1.00 Thereafter 3.50:1.00 |
9.12 Limitation on Voluntary Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements etc. (a) Holdings will not, and will not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of (including in each case, without limitation, by way of depositing with the trustee with respect thereto or any other Person money or securities before due for the purpose of paying when due), any Senior Subordinated Notes;
(ii) make (or give any notice in respect of) any voluntary, optional or mandatory payment or prepayment on or redemption or acquisition for value of (including, in each case, without limitation, by way of depositing with the trustee with respect thereto or any other Person money or securities before due for the purposes of paying when due), any Seller Subordinated Notes, Shareholder Subordinated Notes or Additional Subordinated Debt or make any other payment in respect thereof (whether for principal, interest or other amounts) except as otherwise expressly permitted by Section 8.20 or 9.06(ii), as applicable;
(iii) amend or modify, or permit the amendment or modification of, any provision of any Senior Subordinated Note Document, any Seller Subordinated Note Document, any Shareholder Subordinated Note or any Additional Subordinated Debt;
(iv) amend, modify or change its certificate or articles of incorporation (including, without limitation, by the filing or modification of any certificate or articles of designation) or by-laws (or the equivalent organizational documents) or any agreement entered into by it with respect to its capital stock (including any Shareholders' Agreement), or enter into any new agreement with respect to its capital stock, unless such amendment, modification, change or other action contemplated by this clause (iv) could not reasonably be expected to be adverse to the interests of the Lenders in any material respect; or
(v) amend, modify or change any provision of (x) any Management
Agreement, unless such amendment, modification or change could not
reasonably be expected to be adverse to the interests of the Lenders
(although no amendment or change may be made to any monetary term thereof)
or (y) any Tax Allocation Agreement or enter into any new tax sharing
agreement, tax allocation agreement or similar agreement without the prior
written consent of the Administrative Agent.
(b) Neither Holdings nor any of its Subsidiaries shall designate any Indebtedness, other than the Obligations, as "Designated Senior Debt" for purposes of the Senior Subordinated Notes, the other Senior Subordinated Note Documents, the Seller Subordinated Notes and the other Seller Subordinated Note Documents.
9.13 Limitation on Issuance of Capital Stock. (a) Holdings will not, and will not permit any of its Subsidiaries to, issue (i) any preferred stock (or any options, warrants or rights to purchase preferred stock) other than Qualified Preferred Stock of Holdings or (ii) any redeemable common stock (other than common stock that is redeemable at the sole option of Holdings or such Subsidiary).
(b) Holdings will not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and additional issuances which do not decrease
the percentage ownership of Holdings or any of its Subsidiaries in any class of
the capital stock of such Subsidiaries, (iii) to qualify directors to the extent
required by applicable law, (iv) Subsidiaries formed after the Initial Borrowing
Date pursuant to Section 9.15 may issue capital stock in accordance with the
requirements of Section 9.15 and (v) for additional issuances of capital stock
as a result of capital contributions made pursuant to Sections 9.05 (ix) and
(xii). All capital stock issued in accordance with this Section 9.13(b) shall,
to the extent required by the Pledge Agreement, be delivered to the Collateral
Agent for pledge pursuant to the Pledge Agreement.
9.14 Limitation on Certain Restrictions on Subsidiaries. Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective, any encumbrance or restriction on the ability of any such Subsidiary to (x) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by Holdings or any of its Subsidiaries, or pay any Indebtedness
owed to Holdings or a Subsidiary of Holdings, (y) make loans or advances to Holdings or any Subsidiary of Holdings or (z) transfer any of its properties or assets to Holdings or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) the Senior Subordinated Note Documents and the Seller Subordinated Note Documents, (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or a Subsidiary of the Borrower, (v) customary provisions restricting assignment of any licensing agreement entered into by the Borrower or any Subsidiary of the Borrower in the ordinary course of business and (vi) restrictions on the transfer of any assets subject to a Lien permitted by Sections 9.03(iv), (x), (xi), (xii) and (xv).
9.15 Limitation on the Creation of Subsidiaries and Joint Ventures.
(a) Notwithstanding anything to the contrary contained in this Agreement,
Holdings will not, and will not permit any of its Subsidiaries to, establish,
create or acquire after the Effective Date any Subsidiary; provided that the
Borrower and its Wholly-Owned Subsidiaries shall be permitted to establish,
create and, to the extent permitted by Section 8.14, acquire Wholly-Owned
Subsidiaries so long as, in each case, (i) at least 10 Business Days' prior
written notice thereof is given to the Administrative Agent, (ii) the capital
stock of such new Subsidiary is promptly pledged pursuant to, and to the extent
required by, this Agreement and the Pledge Agreement and the certificates, if
any, representing such stock, together with stock powers duly executed in blank,
are delivered to the Collateral Agent, (iii) such new Subsidiary (other than a
Foreign Subsidiary except to the extent otherwise required pursuant to Section
8.12) promptly executes a counterpart of the Subsidiaries Guaranty, the Pledge
Agreement and the Security Agreement, and (iv) to the extent requested by the
Administrative Agent or the Required Lenders, takes all actions required
pursuant to Section 8.11. In addition, each new Subsidiary that is required to
execute any Credit Document shall execute and deliver, or cause to be executed
and delivered, all other relevant documentation of the type described in Section
5 as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Initial Borrowing Date.
(b) Holdings will not, and will not permit any of its Subsidiaries to, enter into any partnerships (except to the extent that such partnership is a Wholly-Owned Subsidiary of the Borrower) or joint ventures, except as otherwise permitted by Section 9.05(xv).
SECTION 10. Events of Default. Upon the occurrence of any of the following specified events (each, an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment when due of any principal of the Loans or (ii) default, and such default shall continue for three or more Business Days, in the payment when due of any Unpaid Drawing, any interest on the Loans or Unpaid Drawings or any Fees or any other amounts owing hereunder or under any other Credit Document; or
10.02 Representations, etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or in any statement or
certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or
10.03 Covenants. Any Credit Party shall (a) default in the due performance or observance by it of any term, covenant or agreement contained in Sections 8.01(f)(i), 8.10, 8.13, 8.14, 8.18, 8.20 or 9, or (b) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 10.01, 10.02 or clause (a) of this Section 10.03) contained in this Agreement and such default shall continue unremedied for a period of at least 30 days after notice to the defaulting party by the Administrative Agent or the Required Lenders; or
10.04 Default Under Other Agreements. (a) Holdings or any of its Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in the instrument or agreement under which Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity or (b) any Indebtedness (other than the Obligations) of Holdings or any of its Subsidiaries shall be declared to be due and payable, or shall be required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment (unless such required prepayment or mandatory prepayment results from a default thereunder or an event of the type that constitutes an Event of Default), prior to the stated maturity thereof; provided that it shall not constitute an Event of Default pursuant to clause (a) or (b) of this Section 10.04 unless the principal amount of any one issue of such Indebtedness, or the aggregate amount of all such Indebtedness referred to in clauses (a) and (b) above, equals or exceeds $2,000,000 at any one time; or
10.05 Bankruptcy, etc. Holdings or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced against Holdings or any of its Subsidiaries and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Holdings or any of its Subsidiaries; or Holdings or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings or any of its Subsidiaries; or there is commenced against Holdings or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days; or Holdings or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings or any of its Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or Holdings or any of its Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by Holdings or any of its Subsidiaries for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days, any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, the PBGC shall have requested orally or in
writing that Holdings or any Subsidiary of Holdings or any ERISA Affiliate post
a bond or furnish security to the PBGC or make additional contributions to a
Plan on account of a Reportable Event which has occurred with respect to a Plan,
or the PBGC shall have notified Holdings or any Subsidiary of Holdings or any
ERISA Affiliate orally or in writing that the PBGC intends to take any action as
a result of a Reportable Event, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan or
Multiemployer Plan or a Foreign Pension Plan has not been timely made, Holdings
or any Subsidiary of Holdings or any ERISA Affiliate has incurred or is likely
to incur any liability to or on account of a Plan or Multiemployer Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) under Section 4980B of the Code, or Holdings or any Subsidiary of Holdings
has incurred or is likely to incur liabilities pursuant to one or more employee
welfare benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or Plans or Foreign Pension Plans, a "default" within
the meaning of Section 4219(c)(5) of ERISA, shall occur with respect to any Plan
or Multiemployer Plan, any applicable law, rule or regulation is adopted,
changed or interpreted, or the interpretation or administration thereof is
changed, in each case after the date hereof, by any governmental authority or
agency or by any court (a "Change of Law"), or, as a result of a Change in Law,
an event occurs following a Change in Law, with respect to or otherwise
affecting any Plan or Multiemployer Plan; (b) there shall result from any such
event or events the imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually and/or in the aggregate, in the
reasonable opinion of the Required Lenders, has had, or could reasonably be
expected to have, a Material Adverse Effect; or
10.07 Security Documents. (a) Except in each case to the extent resulting from the failure of the Collateral Agent to retain possession of the applicable Certificated Securities (as defined in the Pledge Agreement), any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent the Liens, rights, powers and privileges
purported to be created thereby in favor of the Collateral Agent, superior to
and prior to the rights of all third Persons (except as permitted by Section
9.03), and subject to no other Liens (except as permitted by Section 9.03), (b)
any Credit Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to
Section 3.2, 3.3, 5, 15 or 17 of the Pledge Agreement or Section 2.3, 2.4, 2.5,
2.7, 3.6, 4.2, 4.6, 5.2, 5.6 or 6.1 of the Security Agreement and such default
shall continue unremedied for a period of at least 30 days or (c) any Credit
Party shall default in the due performance or observance of any other term,
covenant or agreement on its part to be performed or observed pursuant to any
such Security Document and such default shall continue unremedied for a period
of at least 30 days after notice to the defaulting party by the Administrative
Agent or the Required Lenders; or
10.08 Guaranties. Any Guaranty or any provision thereof shall cease to be in full force and effect, or any Guarantor or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations under any Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered against Holdings or any of its Subsidiaries involving a liability (to the extent not paid or not fully covered by a reputable and solvent insurance company) of $2,000,000 or more for all such judgments and decrees and all such judgments or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or
10.10 Change of Control. A Change of Control shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against any Guarantor or the Borrower, except as otherwise specifically provided for in this Agreement (provided that if an Event of Default specified in Section 10.05 shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Total Commitment terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately and any Commitment Fees shall forthwith become due and payable without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans and all Obligations owing hereunder (including Unpaid Drawings) to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or all of the Liens and security interests created pursuant to the Security Documents; (iv) terminate any Letter of Credit which may be terminated in accordance with its terms; (v) direct the Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Section 10.05, to pay) to the Collateral Agent at the Payment Office such additional amounts of cash, to be held as security for the Borrower's reimbursement obligations in respect of Letters of Credit then outstanding, equal to the aggregate Stated Amount of all Letters of Credit then outstanding; and (vi) apply any cash collateral as provided in Section 4.02.
SECTION 11. Definitions. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms in this Agreement shall include in the singular number the plural and in the plural the singular:
"A Term Loan" shall have the meaning provided in Section 1.01(a).
"A Term Loan Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "A Term Loan Commitment," as the same may be terminated pursuant to Sections 3.03 and/or Section 10.
"A Term Loan Maturity Date" shall mean November 15, 2004.
"A Term Note" shall have the meaning provided in Section 1.05(a).
"Acquired EBITDA" of any Acquired Entity or Business acquired pursuant to a Permitted Acquisition shall mean the consolidated "EBITDA" of such Acquired Entity or Business calculated on a basis consistent with the calculation of Consolidated EBITDA under this Agreement and reasonably approved by the Administrative Agent.
"Acquired Entity or Business" shall have the meaning provided in the definition of "Permitted Acquisition."
"Additional Security Documents" shall have the meaning provided in
Section 8.11.
"Additional Subordinated Debt" shall have the meaning provided in
Section 9.04(xv).
"Adjusted Consolidated Net Income" shall mean, for any period, Consolidated Net Income for such period plus, without duplication, the sum of the amount of all net non-cash charges (including, without limitation, depreciation, amortization, deferred tax expense and non-cash interest expense) and net non-cash losses which were included in arriving at Consolidated Net Income for such period, less the amount of all net non-cash gains (exclusive of items reflected in Adjusted Consolidated Working Capital) which were included in arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" shall mean, at any time, Consolidated Current Assets (but excluding therefrom all cash, Cash Equivalent and deferred income taxes to the extent otherwise included therein) less Consolidated Current Liabilities.
"Administrative Agent" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Administrative Agent appointed pursuant to Section 12.10.
"Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited, to all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person; provided, however,
that for purposes of Section 9.07, an Affiliate of Holdings shall include any Person that directly or indirectly owns more than 5% of any class of the capital stock of Holdings and any officer or director of Holdings or any such Person.
"Agent" shall mean and include the Administrative Agent and the Syndication Agent.
"Agreement" shall mean this Credit Agreement, as the same may be from time to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean:
(a) in the case of A Term Loans, Revolving Loans and Swingline Loans maintained as Base Rate Loans, (i) for the period from the Initial Borrowing Date through but not including the first Start Date after the Initial Borrowing Date, 2.50% and (ii) from and after any Start Date to and including the corresponding End Date, the respective percentage per annum set forth in clause (A), (B), (C) or (D) below if, but only if, as of the Test Date for such Start Date the applicable condition set forth in clause (A), (B), (C), or (D) below, as the case may be, is met:
(A) 2.50% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be greater than or equal to 4.00:1.00;
(B) 2.25% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 4.00:1.00 and greater than or equal to 3.00:1.00;
(C) 2.00% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 3.00:1.00 but greater than or equal to 2.50:1.00; or
(D) 1.75% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 2.50:1.00
Notwithstanding anything to the contrary contained above in this clause (a), (x) each of the percentages set forth above in this definition which would otherwise be in effect for any Applicable Margin Period shall be reduced by .25% from and after the respective Start Date to and including the corresponding End Date for such Applicable Margin Period if, but only if, as of the Test Date for such Start Date both the Senior Leverage Ratio for the Test Period ended on such Test Date shall be less than 2.75:1.00 and the Consolidated Interest Coverage Ratio for such Test Period shall be greater than 1.80:1.00 and (y) the Applicable Base Rate Margin for A Term Loans, Revolving Loans and Swingline Loans shall be 2.50% at all times when a Default or an Event of Default shall exist; and
(b) in the case of B Term Loans maintained as Base Rate Loans, 3.00%.
"Applicable Eurodollar Rate Margin" shall mean:
(a) in the case of A Term Loans and Revolving Loans maintained as Eurodollar Loans, (i) for the period from the Initial Borrowing Date through but not including the first Start Date after the Initial Borrowing Date, 3.50% and (ii) from and after any Start Date to and including the corresponding End Date, the respective percentage per annum set forth in clause (A), (B), (C) or (D) below if, but only if, as of the Test Date for such Start Date the applicable condition set forth in clause (A), (B), (C) or (D) below, as the case may be, is met:
(A) 3.50% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be greater than or equal to 4.00:1.00;
(B) 3.25% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 4.00:1.00 and greater than or equal to 3.00:1.00;
(C) 3.00% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 3.00:1.00 and greater than or equal to 2.50:1.00; or
(D) 2.75% if, but only if, as of the Test Date for such Start Date the Total Leverage Ratio for the Test Period ended on such Test Date shall be less than 2.50:1.00.
Notwithstanding anything to the contrary contained above in this clause (a), (x) each of the percentages set forth above in this definition which would otherwise be in effect for any Applicable Margin Period shall be reduced by .25% from and after the respective Start Date to and including the corresponding End Date for such Applicable Margin Period if, but only if, as of the Test Date for such Start Date both the Senior Leverage Ratio for the Test Period ended on such Test Date shall be less than 2.75:1.00 and the Consolidated Interest Coverage Ratio for such Test Period shall be greater than 1.80:1.00 and (y) the Applicable Eurodollar Rate Margin for A Term Loans and Revolving Loans maintained as Eurodollar Loans shall be 3.50% at all times when a Default or an Event of Default shall exist; and
(b) in the case of B Term Loans maintained as Eurodollar Loans, 4.00%.
"Applicable Margin Period" shall mean each period which shall
commence on a date on which the financial statements are delivered pursuant to
Section 8.01(b) or (c), as the case may be, and which shall end on the earlier
of (i) the date of actual delivery of the next financial statements pursuant to
Section 8.01(b) or (c), as the case may be, and (ii) the latest date on which
the next financial statements are required to be delivered to Section 8.01(b) or
(c), as the case may be, provided that the first Applicable Margin Period shall
commence with the
delivery of the financial statements in respect of the Test Period ending on (x) in the case of determining the Senior Leverage Ratio and the Consolidated Interest Coverage Ratio for any Test Period, the last day of Holdings' fiscal quarter ending closest to March 31, 1999, and (y) in the case of determining the Total Leverage Ratio for any Test Period, the last day of Holdings' fiscal quarter ending closest to June 30, 1999.
"Asset Sale" shall mean any sale, transfer or other disposition by Holdings or any of its Subsidiaries to any Person other than Holdings or any Wholly-Owned Subsidiary of Holdings of any asset (including, without limitation, any capital stock or other securities of another Person, but excluding the sale by such Person of its own capital stock) of Holdings or such Subsidiary other than (i) sales, transfers or other dispositions of inventory made in the ordinary course of business and (ii) sales of assets pursuant to Sections 9.02(iv), (vi), (vii) and (x).
"Assignment and Assumption Agreement" shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit K (appropriately completed).
"Authorized Officer" shall mean, with respect to (i) delivering Notices of Borrowing, Notices of Conversion, Letter of Credit Requests and similar notices, the treasurer or other financial officer of the Borrower, (ii) delivering financial information and officer's certificates pursuant to this Agreement, the treasurer or other senior financial officer of Holdings or the Borrower, as appropriate, and (iii) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of Holdings or the Borrower, in each case to the extent reasonably acceptable to the Administrative Agent.
"B Term Loan" shall have the meaning provided in Section 1.01(b).
"B Term Loan Commitment" shall mean, with respect to each Lender, the amount set forth opposite such Lender's name in Annex I directly below the column entitled "B Term Loan Commitment," as the same may be terminated pursuant to Sections 3.03 and/or Section 9.
"B Term Loan Maturity Date" shall mean May 15, 2006.
"B Term Note" shall have the meaning provided in Section 1.05(a).
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" shall mean at any time, the higher of (x) the rate which is 1/2 of 1% in excess of the Federal Funds Rate and (y) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each other Loan designated or deemed designated as such by the Borrower at the time of the incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of this Agreement.
"Borrowing" shall mean and include (i) the borrowing of Swingline Loans from BTCo on a given date and (ii) the borrowing of one Type of Loan pursuant to a single Tranche by the Borrower from all of the Lenders having Commitments with respect to such Tranche on a pro rata basis on a given date (or resulting from conversions on a given date), having in the case of Eurodollar Loans the same Interest Period; provided that Base Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which shall be in the
City of New York a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close and (ii) with respect
to all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in U.S.
dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall have the meaning provided in Section 8.14.
"Capital Expenditures" shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP, including all such expenditures with respect to fixed or capital assets (including, without limitation, expenditures for maintenance and repairs which should be capitalized in accordance with GAAP) and the amount of all Capitalized Lease Obligations incurred by such Person.
"Capital Lease," as applied to any Person, shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean, with respect to any Person, all obligations under Capital Leases of such Person and or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's, (iii) time deposits, certificates of deposit and bankers' acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding
company organized under the laws of the United States, any State thereof, the District of Columbia or any foreign jurisdiction having capital, surplus and undivided profits aggregating in excess of $500,000,000 and having a long-term unsecured debt rating of at least "A" or the equivalent thereof from S&P's or "A2" or the equivalent thereof from Moody's, with maturities of not more than one year from the date of acquisition by such Person, (iv) repurchase agreements with a term of not more than 30 days, involving securities of the types described in preceding clause (i), and entered into with commercial banks meeting the requirements of preceding clause (iii), (v) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's and in each case maturing not more than one year after the date of acquisition by such Person, (vi) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above and (vii) demand deposit accounts maintained in the ordinary course of business.
"Change of Control" shall mean, at any time and for any reason
whatsoever, (i) Holdings shall cease to own directly 100% on a fully diluted
basis of the economic and voting interest in the Borrower's capital stock or
(ii) Odyssey and its Affiliates shall cease to own on a fully diluted basis in
the aggregate at least 51% of the economic and voting interest in Holdings'
capital stock or (iii) a "change of control" or similar event shall occur as
provided in the Senior Subordinated Note Documents or the Seller Subordinated
Note Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting as collateral agent for the Secured Creditors.
"Collective Bargaining Agreements" shall have the meaning provided in Section 5.13.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Current Assets" shall mean, at any time, the current assets of Holdings and its Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the current liabilities of Holdings and its Subsidiaries determined on a consolidated basis, but excluding deferred income taxes, and the current portion of and accrued but unpaid interest on any Indebtedness under this Agreement and any other long-term Indebtedness which would otherwise be included therein.
"Consolidated Debt" shall mean, at any time, the sum of (without
duplication) (i) all Indebtedness of Holdings and its Subsidiaries as would be
required to be reflected on the liability side of a balance sheet of such Person
in accordance with GAAP as determined on a consolidated basis, (ii) all
Indebtedness of Holdings and its Subsidiaries of the type described in clause
(iii) of the definition of Indebtedness and (iii) all Contingent Obligations of
Holdings and its Subsidiaries in respect of Indebtedness of other Persons of the
type referred to in preceding clauses (i) and (ii) of this definition; provided
that for purposes of this definition, (x) the amount of Indebtedness in respect
of Interest Rate Protection Agreements shall be at any time the unrealized net
loss position, if any, of Holdings and/or its Subsidiaries thereunder on a
marked-to-market basis determined no more than one month prior to such time, and
(y) the Seller Subordinated Notes and the Shareholder Subordinated Notes shall
not be treated as Consolidated Debt.
"Consolidated EBIT" shall mean, for any period, Consolidated Net Income for such period before consolidated interest expense of Holdings and its Subsidiaries for such period (to the extent deducted in arriving at Consolidated Net Income) and provision for taxes based on income that were included in arriving at Consolidated Net Income for such period without giving effect (x) to any extraordinary gains or losses and (y) to any gains or losses from sales of assets other than from sales of inventory in the ordinary course of business.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
for such period, adjusted by (x) adding thereto the amount of all amortization
and depreciation that were deducted in arriving at Consolidated EBIT for such
period and determined without giving effect to (without duplication) (i) any
expenses incurred in connection with the Transaction before the six month
anniversary of the Initial Borrowing Date and otherwise disclosed in the Senior
Subordinated Note Offering Memorandum, (ii) any non-cash charges incurred in
such period to the extent that such non-cash charges do not give rise to a
liability that would be required to be reflected on the consolidated balance
sheet of the Borrower and so long as no cash payments or cash expenses will be
associated therewith (whether in the current period or any future period) and
(iii) any non-cash compensation charges incurred in such period, in each case to
the extent that same were deducted in arriving at Consolidated EBIT for such
period and (y) subtracting therefrom the amount of all cash payments made in
such period to the extent that same relate to a non-cash compensation charge
incurred in a previous period; it being understood that (x) Consolidated EBITDA
for Holdings' fiscal quarters ended closest to September 30, 1998, June 30,
1998, March 31, 1998 and December 31, 1997, was $11,000,000, $11,300,000,
$11,500,000 and $9,700,000, respectively, and (y) in determining the Total
Leverage Ratio and the Senior Leverage Ratio only, Consolidated EBITDA for any
period shall be calculated on a Pro Forma Basis to give effect to any Acquired
Entity or Business acquired during such period pursuant to a Permitted
Acquisition and not subsequently sold or otherwise disposed of by Holdings or
any of its Subsidiaries during such period.
"Consolidated Interest Coverage Ratio" shall mean, for any period the ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total consolidated interest expense of Holdings and its Subsidiaries for such period (calculated without regard to any limitations on the payment thereof) plus, without duplication, that portion of Capitalized Lease Obligations of Holdings and its Subsidiaries representing the interest factor for such period, and capitalized interest expense, plus the amount of all cash Dividend requirements (whether or not declared or paid) on preferred stock paid or accrued or scheduled to be paid or accrued during such period, but excluding (i) the amortization of any deferred financing costs or of any costs in respect of any Interest Rate Protection Agreement, (ii) any interest expense on the Shareholder Subordinated Notes, and (iii) any interest expense on the Seller Subordinated Notes to the extent that same is not paid or payable in cash for such period; provided, however, that (x) in the case of the Test Period ending closest to March 31, 1999, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on the first day of Holdings' fiscal quarter commencing closest to January 1, 1999 and ending on the last of Holdings' fiscal quarter ending closest to March 31, 1999 multiplied by 4, (y) in the case of the Test Period ending closest to June 30, 1999, Consolidated Interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on the fist day of Holdings' fiscal quarter commencing closest to January 1, 1999 and ending on the last day of Holdings' fiscal quarter ending closest to June 30, 1999 multiplied by 2, and (z) in the case of the Test Period ending on September 30, 1999, Consolidated interest Expense for such Test Period shall be the actual Consolidated Interest Expense for the period commencing on the first day of Holdings' fiscal quarter commencing closest to January 1, 1999 and ending on September 30, 1999 multiplied by a fraction the numerator of which is 4 and the denominator of which is 3.
"Consolidated Net Income" shall mean, for any period, the net after
tax income of Holdings and its Subsidiaries determined on a consolidated basis
for such period (after any deduction for minority interests), provided that (i)
in determining Consolidated Net Income, the net income of any other Person which
is not a Subsidiary of Holdings or is accounted for by Holdings by the equity
method of accounting shall be included only to the extent of the payment of cash
dividends or distributions by such other Person to Holdings or a Subsidiary
thereof during such period, (ii) the net income of any Subsidiary of Holdings
(other than the Borrower) shall be excluded to the extent that the declaration
or payment of cash dividends or similar distributions by that Subsidiary of that
net income is not at the date of determination permitted by operation of its
charter or any agreement, instrument or law applicable to such Subsidiary, and
(iii) the net income (or loss) of any other Person acquired by such specified
Person or a Subsidiary of such Person in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded.
"Contingent Obligations" shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of the other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection or standard contractual indemnities entered into, in each case in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a Revolving Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a Lender Default is in effect.
"Dividend" shall have the meaning provided in Section 9.06.
"Domestic Subsidiary" shall mean each Subsidiary of Holdings incorporated or organized in the United States or any State or territory thereof.
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank, financial institution, any fund that invests in loans or any other "accredited investor" (as defined in Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning set forth in Section 5.13.
"Employment Agreements" shall have the meaning provided in Section 5.13.
"End Date" shall mean, for any Applicable Margin Period, the last day of such Applicable Margin Period.
"Environmental Claims" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any violation (or alleged violation) by Holdings or any of its Subsidiaries under any Environmental Law (hereafter "Claims") or any permit issued to Holdings or any of its Subsidiaries under any such law, including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable federal, state or local statute, law, rule, regulation, ordinance, code or rule of common law now or hereafter in effect and in each case as amended, and any legally binding judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment (for purposes of this definition (collectively, "Laws")), relating to the environment, or Hazardous Materials or health and safety to the extent such health and safety issues relate to the occupational exposure to Hazardous Materials, or any such similar Laws.
"Equity Financing" shall mean the issuance by Holdings of Holdings Common Stock on the Initial Borrowing Date to Odyssey, its Affiliates and other investors reasonably satisfactory to the Agents.
"Equity Financing Documents" shall mean and include all of the agreements governing, or relating to, the Equity Financing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or a Subsidiary of Holdings would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of Holdings or a Subsidiary of
Holdings being or having been a general partner of such person.
"Eurodollar Loans" shall mean each Loan (other than a Swingline Loan) designated as such by the Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean with respect to each Interest Period for a Eurodollar Loan, (i) the offered quotation to first-class banks in the interbank Eurodollar market by BTCo for U.S. dollar deposits of amounts in same day funds comparable to the outstanding principal amount of the Eurodollar Loan of BTCo for which an interest rate is then being determined with maturities comparable to the Interest Period to be applicable to such Eurodollar Loan, determined
as of 10:00 A.M. (New York time) on the date which is two Business Days prior to the commencement of such Interest Period divided (and rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a) the sum of (i) Adjusted Consolidated Net Income for such period and (ii) the decrease, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period, minus (b) the sum of (i) the amount of all Capital Expenditures made by Holdings and its Subsidiaries on a consolidated basis during such period (except to the extent financed with equity proceeds, insurance proceeds, Asset Sale proceeds or the proceeds of Indebtedness), (ii) the aggregate amount of permanent principal payments of Indebtedness for borrowed money of Holdings and its Subsidiaries and the permanent repayment of the principal component of Capitalized Lease Obligations of Holdings and its Subsidiaries during such period (excluding (A) payments to the extent made with equity proceeds, insurance proceeds, Asset Sale proceeds or Indebtedness and (B) payments of Loans or other Obligations, provided that repayments of Loans shall be deducted in determining Excess Cash Flow if such repayments were (x) required as a result of a Scheduled Repayment under Section 4.02(b) or (c) or (y) made as a voluntary prepayment pursuant to Section 4.01 with internally generated funds (but in the case of a voluntary prepayment of Revolving Loans or Swingline Loan, only to the extent accompanied by a voluntary reduction to the Total Revolving Loan Commitment)), (iii) the increase, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period and (iv) in the case of the Excess Cash Flow Payment Period ending on September 30, 1999 only, $1,000,000.
"Excess Cash Flow Payment Date" shall mean the date occurring 90 days after the last day of a fiscal year of Holdings (beginning with its fiscal year ending on September 30, 1999).
"Excess Cash Flow Payment Period" shall mean, with respect to each Excess Cash Payment Date, the immediately preceding fiscal year of Holdings (or, in the case of the Excess Cash Payment Date in respect of Holdings' fiscal year ending on September 30, 1999, the period from the first day of Holdings' fiscal quarter commencing closest to January 1, 1999 through and including September 30, 1999).
"Existing Indebtedness" shall have the meaning provided in Section 7.22.
"Existing Indebtedness Agreements" shall have the meaning provided in Section 5.13.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest rate equal for each day during such period to 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 for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in, Section 3.01.
"Foreign Pension Plan" shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees of Holdings or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of Holdings other than a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being agreed that determinations in accordance with GAAP for purposes of Section 9, the Applicable Base Rate Margin and the Applicable Eurodollar Rate Margin, including (in each case) defined terms as used therein, are subject (to the extent provided therein) to Section 13.07(a).
"Guaranteed Creditors" shall mean and include each of the Administrative Agent, the Collateral Agent, the Lenders and each party (other than any Credit Party) party to an Interest Rate Protection Agreement or Other Hedging Agreement to the extent that such party constitutes a Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the principal and interest on each Note issued by the Borrower to each Lender, and Loans made, under this Agreement and all reimbursement obligations and Unpaid Drawings with respect to Letters of Credit, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities (including, without limitation, indemnities, fees and interest thereon) of the Borrower to such Lender, the Administrative Agent, each Letter of Credit Issuer and the Collateral Agent now existing or hereafter incurred under, arising out of or in connection with this Agreement and each other Credit Document for which the Borrower is a party and the due performance and compliance by the Borrower with all the terms, conditions and agreements contained in this Agreement and each such other Credit Document and (ii) all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities of the Borrower or any of its Subsidiaries owing under any Interest Rate Protection Agreement or Other Hedging
Agreement entered into by the Borrower or any of its Subsidiaries with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Lender or affiliate participate in such Interest Rate Protection Agreement or Other Hedging Agreement, and their subsequent assigns, if any, whether now in existence or hereafter arising, and the due performance and compliance by the Borrower or any of its Subsidiaries with all terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor.
"Guaranty" shall mean and include each of the Holdings Guaranty and the Subsidiaries Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum products, radioactive materials friable asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous wastes," "restrictive hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants," or words of similar meaning and regulatory effect where the relevant Governmental authority has jurisdiction over the operations of Holdings or any of its Subsidiaries.
"Holdings" shall have the meaning provided in the first paragraph of this Agreement.
"Holdings Common Stock" shall have the meaning provided in Section 7.14(a).
"Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 14.
"Indebtedness" of any Person shall mean, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) the deferred purchase price of assets or services payable to the sellers thereof or any of such seller's assignees which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person but excluding deferred rent as determined in accordance with GAAP, (iii) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all obligations under Interest Rate Protection Agreements and Other Hedging Agreements and (viii) all Contingent Obligations of such Person, provided that Indebtedness shall not include trade payables and accrued expenses, in each case arising in the ordinary course of business.
"Indebtedness to be Refinanced" shall mean all Indebtedness set forth on Annex X which is to be repaid in full on the Initial Borrowing Date as part of the Refinancing.
"Information Systems and Equipment" shall mean all computer hardware, firmware and software, as well as other information processing systems, or any equipment containing embedded microchips, whether directly owned, licensed, leased, operated or otherwise controlled by Holdings or any of its Subsidiaries, including through third-party service providers, and which, in whole or in part, are used, operated, relied upon, or integral to, Holdings or any of its Subsidiaries' conduct of their business including, without limitation, the administration of any Employee Benefit Plan.
"Initial Borrowing Date" shall mean the date on or after the Effective Date upon which the initial Borrowing of Loans occurs.
"Intercompany Loan" shall have the meaning provided in Section 9.05(vi).
"Intercompany Notes" shall mean promissory notes, in the form of Exhibit L, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any Eurodollar Loan, the second Business Day prior to the commencement of any Interest Period relating to such Eurodollar Loan.
"Interest Period," with respect to any Eurodollar Loan, shall mean the interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement.
"Investment" shall have the meaning provided in Section 9.05.
"L/C Supportable Obligations" shall mean obligations of the Borrower or any of its Wholly-Owned Subsidiaries incurred in the ordinary course of business and otherwise permitted to exist pursuant to the terms of this Agreement.
"Leasehold" of any Person shall mean all of the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of this Agreement.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.03 or (ii) a Lender having notified the Administrative Agent
and/or the Borrower that it does not intend to comply with the obligations under
Section 1.01(c), 1.01(e) or 2.03, in the case of either clause (i) or (ii) above
as a
result of the appointment of a receiver or conservator with respect to such Lender at the direction or request of any regulatory agency or authority.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fees" shall have the meaning provided in Section 3.01(b).
"Letter of Credit Issuer" shall mean BTCo and any other Lender which, at the request of the Borrower and with the consent of the Administrative Agent, agrees in such Lender's sole discretion to become a Letter of Credit Issuer for purposes of issuing Letters of Credit pursuant to Section 2. The sole Letter of Credit Issuer on the Initial Borrowing Date is BTCo. "Letter of Credit Outstandings" shall mean, at any time, the sum of, without duplication, (i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a).
"Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any similar recording or notice statute, and any lease having substantially the same effect as the foregoing).
"Loan" shall mean each A Term Loan, each B Term Loan, each Revolving Loan and each Swingline Loan.
"Majority Lenders" of any Tranche shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if all outstanding Obligations of the other Tranches under this Agreement were repaid in full and all Commitments with respect thereto were terminated.
"Management Agreements" shall have the meaning provided in Section 5.13.
"Mandatory Borrowing" shall have the meaning provided in Section 1.01(e).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean (i) a material adverse effect on the business, operations, properties, assets, liabilities or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or Holdings and its Subsidiaries taken as a whole or (ii) a material adverse effect (x) on the rights or remedies of the Lenders or the Administrative Agent hereunder or under any other Credit Document or (y) on the ability of any Credit Party to perform its obligations to the Lenders or the Administrative Agent hereunder or under any other Credit Document.
"Maturity Date," with respect to any Tranche of Loans, shall mean the A Term Loan Maturity Date, the B Term Loan Maturity Date, the Revolving Loan Maturity Date or the Swingline Expiry Date, as the case may be.
"Maximum Swingline Amount" shall mean $3,000,000.
"Mergeco" shall mean Phase II Acquisition Corp., a Delaware corporation established by Odyssey and its Affiliates to effect the Recapitalization.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated as of August 3, 1998, by and between Mergeco and Holdings, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans, $1,000,000, (ii) for Term Loans, $5,000,000, and (iii) for Swingline Loans, $100,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to
which there is an obligation to contribute of) Holdings or any Subsidiary of
Holdings or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings or any Subsidiary of
Holdings or an ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such plan.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such Asset Sale, net of reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions and reasonable legal, advisory and other fees and expenses, including title and recording expenses, associated therewith) and payments of unassumed liabilities relating to the assets sold at the time of, or within 30 days after, the date of such Asset Sale, the amount of such gross cash proceeds required to be used to repay any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) which is secured by the respective assets which were sold, and the estimated marginal increase in income and sales taxes which will be payable by Holdings' consolidated group with respect to the fiscal year in which the sale occurs as a result of such sale; but excluding any portion of any such gross cash proceeds which the Borrower determines in good faith should be reserved for post-closing adjustments (to the extent the Borrower delivers to the Lenders a certificate signed by its chief financial officer or other Authorized Officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than six months following the date of the respective Asset Sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by Holdings and/or any of its Subsidiaries from such sale, lease, transfer or other disposition.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting Lender.
"Note" shall mean each A Term Note, each B Term Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Administrative Agent located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 or such other office as the Administrative Agent may designate to the Borrower and the Lenders from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing to the Administrative Agent, the Collateral Agent, any Letter of Credit Issuer or any Lender pursuant to the terms of this Agreement or any other Credit Document.
"Odyssey" shall mean Odyssey Investment Partners, LCC, a Delaware limited liability company.
"Other Hedging Agreements" shall mean any foreign exchange contracts, currency swap agreements or other similar agreements or arrangements designed to protect against fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean the office of the Administrative Agent located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 or such other office as the Administrative Agent may designate to the Borrower and the Lenders from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean, at any time for each RL Lender, the percentage obtained by dividing such RL Lender's Revolving Loan Commitment at such time by the Total Revolving Loan Commitment then in effect, provided that if the Total Revolving Loan Commitment has been terminated, the Percentage of each RL Lender shall be determined by dividing such RL Lender's Revolving Loan Commitment as in effect immediately prior to such termination by the Total Revolving Loan Commitment as in effect immediately prior to such termination.
"Permitted Acquisition" shall mean the acquisition by the Borrower or a Subsidiary Guarantor of assets constituting a business, division or product line of any Person not already a Subsidiary of the Borrower or of 100% of the capital stock of any such Person, which Person shall, as a result of such stock acquisition, become a Wholly-Owned Domestic Subsidiary of the Borrower (such assets or Person are referred to as an "Acquired Entity or Business"), provided that (A) the consideration paid by the Borrower or such Subsidiary Guarantor consists
solely of cash (including proceeds of Revolving Loans and Swingline Loans), the
issuance or incurrence of Indebtedness otherwise permitted by Section 9.04, the
issuance of Holdings Common Stock or Qualified Preferred Stock of Holdings to
the extent no Default or Event of Default exists pursuant to Section 10.10 or
would result therefrom and the assumption/ acquisition of any Indebtedness
(calculated at face value) relating to such Acquired Entity or Business which is
permitted to remain outstanding in accordance with the requirements of Section
9.04, (B) in the case of the acquisition of 100% of the capital stock of any
Person, such Person shall own no capital stock of any other Person unless either
(x) such Person owns 100% of the capital stock of such other Person or (y) (1)
such Person and/or its Wholly-Owned Subsidiaries own at least 80% of the
consolidated assets of such Person and its Subsidiaries and (2) any non-Wholly
Owned Subsidiary of such Person was non-Wholly Owned prior to the date of such
Permitted Acquisition of such Person, (C) substantially all of the business,
division or product line acquired pursuant to the respective Permitted
Acquisition, or the business of the Person acquired pursuant to the respective
Permitted Acquisition and its Subsidiaries taken as a whole, is in the United
States, (D) the Acquired Entity or Business acquired is in a business permitted
by Section 9.01 and (E) all applicable requirements of Sections 8.14 and 9.02
applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to
the contrary contained in the immediately preceding sentence, an acquisition
which does not otherwise meet the requirements set forth above in the definition
of "Permitted Acquisition" shall constitute a Permitted Acquisition if, and to
the extent, the Required Lenders agree in writing that such acquisition shall
constitute a Permitted Acquisition for purposes of this Agreement.
"Permitted Liens" shall have the meaning provided in Section 9.03.
"Person" shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is maintained or contributed to by (or to which there is an obligation to contribute of) Holdings or a Subsidiary of Holdings or an ERISA Affiliate, and each such plan (other than a Multiemployer Plan) for the five year period immediately following the latest date on which Holdings, or a Subsidiary of Holdings or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.11(a).
"Pledge Agreement Collateral" shall mean all "Collateral" as defined in the Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces from time to time as its prime lending rate, the Prime Lending Rate to change when and as such prime lending rate changes. The Prime Lending Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. BTCo may make commercial loans or other loans at rates of interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (x) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to finance the Transaction, to refinance other outstanding Indebtedness or to finance Permitted Acquisitions) after the first day of the relevant Calculation Period as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of the relevant Calculation Period, (y) the permanent repayment of any Indebtedness (other than revolving Indebtedness) after the first day of the relevant Calculation Period as if such Indebtedness had been retired or redeemed on the first day of the relevant Calculation Period and (z) the Permitted Acquisition, if any, then being consummated as well as any other Permitted Acquisition consummated after the first day of the relevant Calculation Period and on or prior to the date of the respective Permitted Acquisition then being effected, with the following rules to apply in connection therewith:
(i) all Indebtedness (x) (other than revolving Indebtedness, except
to the extent same is incurred to finance the Transaction, to refinance
other outstanding Indebtedness or to finance Permitted Acquisitions)
incurred or issued after the first day of the relevant Calculation Period
(whether incurred to finance a Permitted Acquisition, to refinance
Indebtedness or otherwise) shall be deemed to have been incurred or issued
(and the proceeds thereof applied) on the first day of the respective
Calculation Period and remain outstanding through the date of
determination (and thereafter in the case of projections pursuant to
Section 8.14(a)(iv)) and (y) (other than revolving Indebtedness)
permanently retired or redeemed after the first day of the relevant
Calculation Period shall be deemed to have been retired or redeemed on the
first day of the respective Calculation Period and remain retired through
the date of determination (and thereafter in the case of projections
pursuant to Section 8.14(a)(iv));
(ii) all Indebtedness assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness or (y) the rates which would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); provided that for purposes of calculations pursuant to Section 8.14(a)(iv), all Indebtedness (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions; and
(iii) in making any determination of Consolidated EBITDA, pro forma effect shall be given to the Transaction and any Permitted Acquisition for the periods described above, taking into account, in the case of any Permitted Acquisition, factually supportable and identifiable cost savings and expenses which would otherwise be accounted for as an adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as if such cost savings or expenses were realized on the first day of the respective period.
"Projections" shall mean the projections which were prepared by or on behalf of Holdings in connection with the Transaction and set forth in the Confidential Information Memorandum, dated November 1998, prepared by the Agents in connection with the syndication of the Total Commitment.
"Qualified Preferred Stock" shall mean any preferred stock of Holdings so long as the terms of any such preferred stock (i) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision prior to June 30, 2007, (ii) do not require the cash payment of dividends at a time when such payment would be prohibited or not permitted under this Agreement, (iii) do not contain any covenants, (iv) do not grant the holders thereof any voting rights except for (x) voting rights required to be granted to such holders under applicable law and (y) limited customary voting rights on fundamental matters such as mergers, consolidations, sales of all or substantially all of the assets of Holdings, or liquidations involving Holdings, and (v) are otherwise reasonably satisfactory to the Administrative Agent.
"Quarterly Payment Date" shall mean the last Business Day of each March, June, September and December.
"Real Property" of any Person shall mean all of the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.
"Recapitalization" shall mean the merger of Mergeco with and into Holdings, with Holdings emerging as the surviving corporation of such merger, pursuant to and in accordance with the terms of the Recapitalization Documents.
"Recapitalization Documents" shall mean and include (i) the Merger Agreement and (ii) all other agreements and documents relating to the Recapitalization.
"Recovery Event" shall mean the receipt by Holdings or any of its Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of theft, physical destruction or damage or any other similar event with respect to any properties or assets of Holdings or any of its Subsidiaries, (ii) by reason of any condemnation, taking, seizing or similar event with respect to any properties or assets of Holdings or any of its Subsidiaries and (iii) under any policy of insurance required to be maintained under Section 8.03.
"Refinancing" shall mean the refinancing of the Indebtedness to the Refinanced in connection with the Recapitalization in accordance with the requirements of Section 5.09.
"Refinancing Documents" shall mean each of the agreements, documents and instruments entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of the Federal Reserve System as from to time in effect and any successor to all or any portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or any portion thereof.
"Release" shall mean the disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing, pouring and the like, into or upon any land or water or air, or otherwise entering into the environment.
"Replaced Lender" shall have the meaning provided in Section 1.13.
"Replacement Lender" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, or .28 of PBGC Regulation Section 4043.
"Required Lenders" shall mean collectively (and not individually)
Non-Defaulting Lenders the sum of whose outstanding Term Loans and Revolving
Loan Commitments (or, if after the Total Revolving Loan Commitment has been
terminated, outstanding Revolving Loans and Percentages of outstanding Swingline
Loans and Letter of Credit Outstandings) constitute at least 50.1% of the sum of
(i) the total outstanding Term Loans of Non-Defaulting Lenders and (ii) the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
Defaulting Lenders (or, if after the Total Revolving Loan Commitment has been
terminated, the total outstanding Revolving Loans of Non-Defaulting Lenders and
the aggregate Percentages of all Non-Defaulting Lenders of the total outstanding
Swingline Loans and Letter of Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 7.21.
"Revolving Loan" shall have the meaning provided in Section 1.01(c).
"Revolving Loan Commitment" shall mean, with respect to each RL Lender, the amount set forth opposite such RL Lender's name in Annex I directly below the column entitled "Revolving Loan Commitment," as the same may be reduced from time to time pursuant to Sections 3.02, 3.03 and/or Section 10.
"Revolving Loan Maturity Date" shall mean November 15, 2004.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Lender" shall mean, at any time, each Lender with a Revolving Loan Commitment or with outstanding Revolving Loans.
"S&P" shall mean Standard & Poor's Ratings Services, a division of McGraw Hill, Inc.
"SEC" shall mean the Securities and Exchange Commission or any successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security Documents.
"Security Agreement" shall have the meaning provided in Section 5.11(b).
"Security Agreement Collateral" shall mean all "Collateral" as defined in the Security Agreement.
"Security Documents" shall mean and include the Security Agreement, the Pledge Agreement and each Additional Security Document, if any.
"Seller Subordinated Note Documents" shall mean the Seller Subordinated Notes, the Seller Subordinated Note Indenture and each other document or agreement relating to the issuance of the Seller Subordinated Notes.
"Seller Subordinated Note Indenture" shall mean the Indenture, dated as of December 3, 1998, by and between Holdings and State Street Bank and Trust Company, as trustee.
"Seller Subordinated Notes" shall mean Holdings' 12% Pay-in-Kind Notes due 2009.
"Senior Leverage Ratio" shall mean, at any time, the ratio of (i) Total Senior Debt at such time to (ii) Consolidated EBITDA for the Test Period then most recently ended.
"Senior Subordinated Note Documents" shall mean the Senior Subordinated Note Indenture, the Senior Subordinated Notes, the Senior Subordinated Note Offering Memorandum and each other document or agreement relating to the issuance of the Senior Subordinated Notes.
"Senior Subordinated Note Indenture" shall mean the Indenture, dated as of December 3, 1998 by and among the Borrower, Holdings, the Subsidiary Guarantors and State Street Bank and Trust Company, as trustee.
"Senior Subordinated Note Offering Memorandum" shall mean the Offering Memorandum, dated November 24, 1998, prepared in connection with the issuance of the Senior Subordinated Notes.
"Senior Subordinated Notes" shall mean the Borrower's 10-3/8% Senior Subordinated Notes due 2008.
"Shareholder Subordinated Note" shall mean an unsecured junior subordinated note issued by Holdings (and not guaranteed or supported in any way by the Borrower or any of its Subsidiaries), which note shall be in the form of Exhibit M, provided that additional provisions may be included so long as such provisions do not adversely affect the interests of the Lenders and are not in conflict with the provisions of this Agreement or any other Credit Document.
"Shareholders' Agreements" shall have the meaning provided in
Section 5.13.
"Start Date" shall mean, with respect to any Applicable Margin Period, the first day of such Applicable Margin Period.
"Stated Amount" of each Letter of Credit shall mean the maximum amount available to be drawn thereunder (regardless of whether any conditions for drawing could then be met).
"Subsidiaries Guaranty" shall have the meaning provided in Section 5.12.
"Subsidiary" of any Person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (ii) any partnership, association, joint venture or other entity (other than a corporation) in which such Person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of the Borrower and, to the extent provided in Section 8.12, each Foreign Subsidiary of the Borrower.
"Supermajority Lenders" of any Tranche shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if (x) all outstanding Obligations of the other Tranches under this Agreement were repaid in full and all Commitments with respect thereto were terminated and (y) the percentage "50.1%" contained therein were changed to "66-2/3%."
"Swingline Expiry Date" shall mean the date which is five Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(d).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall have the meaning provided in the first paragraph of this Agreement.
"Syndication Date" shall mean that date upon which the Administrative Agent determines (and notifies the Borrower and the Lenders) that the primary syndication (and resultant addition of Persons as Lenders pursuant to Section 13.04(b)) has been completed.
"Tax Allocation Agreements" shall have the meaning provided in
Section 5.13.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall have the meaning provided in Section 1.01(b).
"Test Date" shall mean, with respect to any Start Date, the last day of the most recent fiscal quarter of Holdings ended immediately prior to such Start Date.
"Test Period" shall mean each period of four consecutive fiscal quarters of Holdings then last ended (in each case taken as one accounting period), subject to the proviso contained in the definition of Consolidated Interest Expense.
"Total A Term Loan Commitment" shall mean the sum of the A Term Loan Commitments of each of the Lenders.
"Total B Term Loan Commitment" shall mean the sum of the B Term Loan Commitments of each of the Lenders.
"Total Commitment" shall mean the sum of the Total A Term Loan Commitment, the Total B Term Loan Commitment and the Total Revolving Loan Commitment.
"Total Leverage Ratio" shall mean, at any time, the ratio of (i) Consolidated Debt at such time to (ii) Consolidated EBITDA for the Test Period then most recently ended.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving Loan Commitments of each of the Lenders.
"Total Senior Debt" shall mean, at any time, the amount of all Consolidated Debt at such time less the aggregate principal amount of the Senior Subordinated Notes and the Additional Subordinated Debt outstanding at such time.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time, (i) the Total Revolving Loan Commitment at such time less (ii) the sum of the aggregate principal amount of all Revolving Loans and Swingline Loans outstanding at such time plus the Letter of Credit Outstandings at such time.
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being four separate Tranches,
i.e., A Term Loans, B Term Loans, Revolving Loans and Swingline Loans.
"Tranche A Scheduled Repayment" shall have the meaning provided in
Section 4.02(b).
"Tranche B Scheduled Repayment" shall have the meaning provided in
Section 4.02(c).
"Transaction" shall mean, collectively, (i) the Recapitalization,
(ii) the Equity Financing, (iii) the Refinancing, (iv) the entering into of the
Credit Documents and the incurrence of all Loans and issuance of all Letters of
Credit on the Initial Borrowing Date, (v) the issuance of the Senior
Subordinated Notes and the Seller Subordinated Notes and (vi) the payment of
fees and expenses in connection with the foregoing.
"Transaction Documents" shall mean the Credit Documents, the Recapitalization Documents, the Equity Financing Documents, the Refinancing Documents, the Senior Subordinated Note Documents and the Seller Subordinated Note Documents.
"Type" shall mean any type of Loan determined with respect to the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the value of the accumulated plan benefits under the Plan
determined on a plan termination basis in accordance with actuarial assumptions
at such time consistent with those prescribed by the PBGC for purposes of
Section 4044 of ERISA, exceeds the fair market value of all plan assets
allocable to such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contribution).
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Loan Commitment" with respect to any RL Lender at any time shall mean such RL Lender's Revolving Loan Commitment at such time less the sum of (i) the aggregate outstanding principal amount of all Revolving Loans made by such RL Lender and (ii) such RL Lender's Percentage of the Letter of Credit Outstandings at such time.
"U.S. Dollars" and the sign "$" shall each mean freely transferable lawful money of the United States of America.
"Waivable Mandatory Repayment" shall have the meaning provided in
Section 4.02(l).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any corporation 100% of whose capital stock (other than director's qualifying shares and/or other nominal amounts of shares required to be held other than by such Person under applicable law) is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time.
"Written" (whether lower or upper case) or "in writing" shall mean any form of written communication or a communication by means of telex, facsimile device, telegraph or cable.
"Year 2000 Compliant" shall mean that all Information Systems and Equipment accurately process date data (including, but not limited to, calculating, comparing and sequencing), before, during and after the year 2000, as well as same and multi-century dates, or between the years 1999 and 2000, taking into account all leap years, including the fact that the year 2000 is a leap year, and further, that when used in combination with, or interfacing with, other Information Systems and Equipment, shall accurately accept, release and exchange date data, and shall in all material respects continue to function in the same manner as it performs today and shall not otherwise impair the accuracy or functionality of Information Systems and Equipment.
SECTION 12. The Administrative Agent.
12.01 Appointment. Each Lender hereby irrevocably designates and appoints BTCo as Administrative Agent on behalf of such Lender (such term to include for purposes of this Section 12, BTCo acting as Collateral Agent) to act as specified herein and in the other Credit Documents, and each such Lender hereby irrevocably authorizes BTCo as the Administrative Agent to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent agrees to act as such upon the express conditions contained in this Section 12. Notwithstanding any provision to the contrary elsewhere in this Agreement or in any other Credit Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Credit Documents, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. The provisions of this Section 12 are solely for the benefit of the Administrative Agent and the Lenders, and neither Holdings nor any of its Subsidiaries shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Administrative Agent shall act solely as agent of the Lenders and the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for Holdings or any of its Subsidiaries.
12.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents or attorneys-in-
fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
12.03 Exculpatory Provisions. Neither the Administrative Agent nor any of its 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 in its capacity as Administrative Agent under or in connection with this Agreement or the other Credit Documents (except for 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 Holdings, any of its Subsidiaries or any of their respective officers contained in this Agreement or in the other Credit Documents, any other Transaction Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Transaction Document or for any failure of Holdings or any of its Subsidiaries or any of their respective officers to perform its obligations hereunder or thereunder. The Administrative Agent 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 the other Transaction Documents, or to inspect the properties, books or records of Holdings or any of its Subsidiaries. The Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any other Transaction Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Administrative Agent to the Lenders or by or on behalf of Holdings or any of its Subsidiaries to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default.
12.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Holdings or any of its Subsidiaries), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
12.05 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has actually 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 the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that, unless and until the Administrative Agent shall have received such directions, the Administrative 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.
12.06 Nonreliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of Holdings or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other condition, prospects and creditworthiness of Holdings and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent 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 analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other condition, prospects and creditworthiness of Holdings and its Subsidiaries. The Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial and other condition, prospects or creditworthiness of Holdings, the Borrower or any of its Subsidiaries which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
12.07 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such ratably according to their respective "percentages" as used in determining the Required Lenders at such time or, if the Commitments have terminated and all Loans have been repaid in full, as determined immediately prior to such termination and repayment (with such "percentages" to be determined as if there are no Defaulting Lenders), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against the Administrative Agent in its capacity as such in any way relating to or arising out of this Agreement or any other Credit Document, or any
documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted to be taken by the Administrative Agent under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by Holdings or any of its Subsidiaries; provided that no Lender shall be liable to the Administrative Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Administrative Agent (as finally determined by a court of competent jurisdiction). If any indemnity furnished to the Administrative Agent for any purpose shall, in the opinion of the Administrative Agent be insufficient or become impaired, the Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section 12.07 shall survive the payment of all Obligations.
12.08 Administrative Agent in its Individual Capacity. The Administrative Agent and its affiliates may make loans to, investments in, accept deposits from and generally engage in any kind of business with Holdings and its Subsidiaries as though the Administrative Agent were not the Administrative Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, the Administrative Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Administrative Agent and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity.
12.09 Holders. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or indorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.10 Resignation of the Administrative Agent. (a) The Administrative Agent may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents at any time by giving 20 Business Days' prior written notice to the Borrower and the Lenders. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so appointed within such 20 Business Day period, the Administrative Agent, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), shall then appoint a successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until
such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 20th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent's resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Lenders appoint a successor Administrative Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and disbursements of White & Case LLP and local counsel) in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto and in connection with the Administrative Agent's syndication efforts with respect to this Agreement; (ii) pay all reasonable out-of-pocket costs and expenses of the Administrative Agent, each Letter of Credit Issuer and each of the Lenders in connection with the enforcement of the Credit Documents and the documents and instruments referred to herein or therein or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings and, after an Event of Default shall have occurred and be continuing, the protection of the rights of the Administrative Agent, each Letter of Credit Issuer and each of the Lenders thereunder (including, without limitation, in each case the reasonable fees and disbursements of counsel (including in-house counsel) for the Administrative Agent, for each Letter of Credit Issuer and for each of the Lenders); (iii) pay and hold each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (iv) indemnify the Administrative Agent, the Collateral Agent, each Letter of Credit Issuer and each Lender, their respective officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified (as finally determined by a court of competent jurisdiction)), as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not the Administrative Agent, the Collateral Agent, any Letter of Credit Issuer or any Lender is a party thereto and whether or not any such investigation, litigation or other proceeding is between or among the Administrative Agent, the Collateral Agent, any Letter of Credit Issuer, any Lender, any Credit Party or any third Person or otherwise) related to the entering into and/or performance of this Agreement or any other Transaction Document or the use of the proceeds of any Loans hereunder or the Transaction or the consummation of any other
transactions contemplated in any Transaction Document or (b) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property or any Environmental Claim, in each case, including, without limitation, the reasonable fees and disbursements of counsel and independent consultants incurred in connection with any such investigation, litigation or other proceeding.
13.02 Right of Setoff. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, the Administrative Agent, the Collateral Agent, each Letter of Credit Issuer and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to Holdings or any of its Subsidiaries or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by the Administrative Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender (including, without limitation, by branches and agencies of the Administrative Agent, the Collateral Agent, such Letter of Credit Issuer and such Lender wherever located) to or for the credit or the account of Holdings or any of its Subsidiaries against and on account of the Obligations of Holdings or any of its Subsidiaries to the Administrative Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations of Holdings or any of its Subsidiaries purchased by such Lender pursuant to Section 13.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not the Administrative Agent, the Collateral Agent, such Letter of Credit Issuer or such Lender shall have made any demand hereunder and although said Obligations shall be contingent or unmatured. Notwithstanding anything to the contrary contained in this Section 13.02, no Lender shall exercise any such right of set-off without the prior consent of the Administrative Agent or the Required Lenders if, and so long as, the Obligations shall be secured by any Real Property located in the State of California, it being understood and agreed, however, that this sentence is for the sole benefit of the Lenders and may be amended, modified or waived in any respect by the Required Lenders without the requirement of prior notice to or consent by any Credit Party and does not constitute a waiver of any rights against any Credit Party or against any Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, facsimile or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party, at the address specified opposite its signature below or in the other relevant Credit Documents, as the case may be; if to any Lender, at its address specified for such Lender on Annex II; or, at such other address as shall be designated by any party in a written notice to the other parties hereto. All such notices and communications shall be mailed, telegraphed, telexed, telecopied or cabled or sent by overnight courier, and shall be effective when received.
13.04 Benefit of Agreement. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties
hereto; provided, however, the Borrower may not assign or transfer any of its rights, obligations or interest hereunder or under any other Credit Document without the prior written consent of the Lenders and, provided further, that, although any Lender may transfer, assign or grant participations in its rights hereunder, such Lender shall remain a "Lender" for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments or Loans hereunder except as provided in Section 13.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a "Lender" hereunder and, provided further, that no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Loan Maturity Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 13.07(a) shall not constitute a reduction in the rate of interest or Fees for purposes of this clause (i)), or increase the amount of the participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Total Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant's participation is not increased as a result thereof), (ii) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its Revolving Loan Commitment (and related outstanding Obligations hereunder) and/or its outstanding Term Loans (or, if prior to the Initial Borrowing Date, Term Loan Commitments) to (i) its parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or to one or more Lenders or (ii) in the case of any Lender that is a fund that invests in loans, any other fund that invests in loans and is managed or advised by the same investment advisor of such Lender or by an Affiliate of such investment advisor or (y) assign all, or if less than all, a portion equal to at least $5,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Revolving Loan Commitments (and related outstanding Obligations hereunder) and/or outstanding principal amount of Term Loans (or, if prior to the Initial Borrowing Date, Term Loan Commitments) to one or more Eligible Transferees (treating any fund that invests in loans and any other fund that invests in loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment adviser as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an
Assignment and Assumption Agreement, provided that (i) at such time Annex I
shall be deemed modified to reflect the Commitments (and/or outstanding Term
Loans, as the case may be) of such new Lender and of the existing Lenders, (ii)
upon surrender of the old Notes (or the furnishing of a standard indemnity
letter from the respective assigning Lender in respect of any lost Notes), new
Notes will be issued, at the Borrower's expense and at the request of the
respective Lenders, to such new Lender and to the assigning Lender, such new
Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may be), (iii) the
consent of the Administrative Agent and, so long as no Default or Event of
Default then exists and only with respect to assignments effected after the
Syndication Date, the consent of the Borrower shall (in either case) be required
in connection with any such assignment pursuant to clause (y) of this Section
13.04(b) (each of which consents shall not be unreasonably withheld or delayed),
(iv) the consent of BTCo and each Letter of Credit Issuer shall be required in
connection with any assignment of Revolving Loan Commitments pursuant to clause
(y) of this Section 13.04(b) (which consent shall not be unreasonably withheld
or delayed) and (v) the Administrative Agent shall receive at the time of each
assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500; and, provided further, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Register pursuant to Section 13.17. To the extent of
any assignment pursuant to this Section 13.04(b), the assigning Lender shall be
relieved of its obligations hereunder with respect to its assigned Commitments
and/or Loans. At the time of each assignment pursuant to this Section 13.04(b)
to a Person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable a Section 4.04(b)(ii) Certificate) described in
Section 4.04(b). To the extent that an assignment of all or any portion of a
Lender's Commitment and related outstanding Obligations pursuant to Section 1.13
or this Section 13.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.05 or 4.04 from those being charged
by the respective assigning Lender prior to such assignment, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
Notwithstanding anything to the contrary contained above, at any time after the
termination of the Total Revolving Loan Commitment, if any Revolving Loans or
Letters of Credit remain outstanding, assignments may be made as provided above,
except that the respective assignment shall be of a portion of the outstanding
Revolving Loans of the respective RL Lender and its participation in Letters of
Credit and its obligation to make Mandatory Borrowings, although any such
assignment effected after the termination of the Total Revolving Loan Commitment
shall not release the assigning RL Lender from its obligations as a Participant
with respect to outstanding Letters of Credit or to fund its share of any
Mandatory Borrowing (although the respective assignee may agree, as between
itself and the respective assigning RL Lender, that it shall be responsible for
such amounts).
(c) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank and, with the consent of the Administrative Agent, any Lender which is a fund may pledge all or any portion of its Loans and Notes to its trustee in support of its obligations to its trustee. No pledge pursuant to this clause (c) shall release the transferor lender from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between any Credit Party and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) The Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of any Credit Party in respect of any Obligations of such Credit Party, it shall, except as otherwise provided in this Agreement, distribute such payment to the Lenders (other than any Lender that has consented in writing to waive its pro rata share of such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise) which is applicable to the payment of the principal of, or interest on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
13.07 Calculations; Computations. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by Holdings or the Borrower to the Lenders); provided that except otherwise specifically provided herein, all computations used in
determining compliance with Sections 4.02, 8.14 and 9, including definitions used therein and all computations used in determining the Applicable Base Rate Margin and the Applicable Eurodollar Rate Margin shall, in each case, utilize accounting principles and policies in effect at the time of the preparation of, and in conformity with those used to prepare, the September 30, 1998 financial statements of Holdings delivered to the Lenders pursuant to Section 7.10(b); provided further, that to the extent expressly required pursuant to the provisions of this Agreement, certain calculations shall be made on a Pro Forma Basis.
(b) All computations of interest and Fees hereunder shall be made on the actual number of days elapsed over a year of 360 days.
13.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each of
Holdings and the Borrower hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of Holdings and the Borrower hereby further irrevocably
waives any claim that any such courts lack jurisdiction over such Credit Party,
and agrees not to plead or claim, in any legal action or proceeding with respect
to this Agreement or any other Credit Document brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such Credit Party. Each of
Holdings and the Borrower further irrevocably consents to the service of process
in any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such Credit Party, at its address for
notices pursuant to Section 13.03, such service to become effective 30 days
after such mailing. Each of Holdings and the Borrower hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced hereunder or
under any other Credit Document that service of process was in any way invalid
or ineffective. Nothing herein shall affect the right of the Administrative
Agent, any Lender or the holder of any Note to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any Credit Party in any other jurisdiction.
(b) Each of Holdings and the Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
13.09 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the
same instrument. A complete set of counterparts executed by all the parties hereto shall be lodged with Holdings, the Borrower and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the date (the "Effective Date") on which Holdings, the Borrower, the Administrative Agent and each of the Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent at the Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written, telex or facsimile notice (actually received) at such office that the same has been signed and mailed to it. The Administrative Agent will give Holdings, the Borrower and each Lender prompt written notice of the occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Lenders, provided that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender) (with
Obligations being directly affected thereby in the case of the following clause
(i)), (i) extend the final scheduled maturity of any Loan or Note or extend the
stated maturity of any Letter of Credit beyond the Revolving Loan Maturity Date,
or reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement or to Section
13.07(a) shall not constitute a reduction in the rate of interest or fees for
purposes of this clause (i)), (ii) release all or substantially all of the
Collateral (except as expressly provided in the Security Documents) under all
the Security Documents, (iii) amend, modify or waive any provision of this
Section 13.12 (except for technical amendments with respect to additional
extensions of credit pursuant to this Agreement which afford the protections to
such additional extensions of credit of the type provided to the Term Loans and
the Revolving Loan Commitments on the Effective Date), (iv) reduce the
percentage specified in the definition of Required Lenders (it being understood
that, with the consent of the Required Lenders, additional extensions of credit
pursuant to this Agreement may be included in the determination of the Required
Lenders on substantially the same basis as the extensions of Term Loans and
Revolving Loan Commitments are included on the Effective Date) or (v) consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver, discharge
or termination shall (u) increase the Commitments of any Lender over the amount
thereof then in effect without the consent of such Lender (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase of the Commitment of any Lender, and that an increase in
the available portion of any Commitment of any Lender shall not constitute an
increase in the Commitment of such Lender), (v) without the consent of each
Letter of Credit Issuer or BTCo as the case may be,
amend, modify or waive any provision of Section 2 or alter its rights or
obligations with respect to Letters of Credit or Swingline Loans, (w) without
the consent of the Administrative Agent, amend, modify or waive any provision of
Section 12 as same applies to the Administrative Agent or any other provision as
same relates to the rights or obligations of the Administrative Agent, (x)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent, (y)
except in cases where additional extensions of term loans are being afforded
substantially the same treatment afforded to the Term Loans pursuant to this
Agreement as originally in effect, without the consent of the Majority Lenders
of each Tranche which is being allocated a lesser prepayment, repayment or
commitment reduction as a result of the actions described below (or without the
consent of the Majority Lenders of each Tranche in the case of an amendment to
the definition of Majority Lenders), amend the definition of Majority Lenders or
alter the required application of any prepayments or repayments (or commitment
reduction), as between the various Tranches, pursuant to Section 4.01(a) or 4.02
(excluding Sections 4.02(b) and 4.02(c)) (although the Required Lenders may
waive, in whole or in part, any such prepayment, repayment or commitment
reduction, so long as the application, as amongst the various Tranches, of any
such prepayment, repayment or commitment reduction which is still required to be
made is not altered) or (z) without the consent of the Supermajority Lenders of
the respective Tranche, reduce the amount of, or extend the date of, any Tranche
A Scheduled Repayment or Tranche B Scheduled Repayment, as the case may be, or
amend the definition of Supermajority Lenders (it being understood that, with
the consent of the Required Lenders, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Supermajority Lenders
on substantially the same basis as the extensions of Term Loans and Revolving
Loan Commitments are included on the Effective Date).
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Lenders is obtained but the consent of one or more
of such other Lenders whose consent is required is not obtained, then the
Borrower shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described in either clause (A) or
(B) below, to either (A) replace each such non-consenting Lender or Lenders (or,
at the option of the Borrower if the respective Lender's consent is required
with respect to less than all Tranches of Loans (or related Commitments), to
replace only the respective Tranche of Commitments and/or Loans of the
respective non-consenting Lender which gave rise to the need to obtain such
Lender's individual consent) with one or more Replacement Lenders pursuant to
Section 1.13 so long as at the time of such replacement, each such Replacement
Lender consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Lender's Revolving Loan Commitment (if such
Lender's consent is required as a result of its Revolving Loan Commitment)
and/or repay each Tranche of outstanding Loans of such Lender which gave rise to
the need to obtain such Lender's consent and/or cash collateralize its
applicable Percentage of the Letter of Credit of Outstandings, in accordance
with Sections 3.02(b) and/or 4.01(b), provided that, unless the Commitments
which are terminated and Loans which are repaid pursuant to preceding clause (B)
are immediately replaced in full at such time through the addition of new
Lenders or the increase of the Commitments and/or outstanding Loans of existing
Lenders (who in each case must specifically consent thereto), then in the case
of any action pursuant to preceding clause (B) the
Required Lenders (determined after giving effect to the proposed action) shall
specifically consent thereto, provided further, that the Borrower shall not have
the right to replace a Lender, terminate its Commitments or repay its Loans
solely as a result of the exercise of such Lender's rights (and the withholding
of any required consent by such Lender) pursuant to the second proviso to
Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without limitation, in Section 1.10, 1.11, 2.05, 4.04, 12.07 or 13.01, shall survive the execution and delivery of this Agreement and the making and repayment of the Loans.
13.14 Domicile of Loans and Commitments. Each Lender may transfer and carry its Loans and/or Commitments at, to or for the account of any branch office, subsidiary or affiliate of such Lender; provided that the Borrower shall not be responsible for costs arising under Section 1.10, 1.11, 2.05 or 4.04 resulting from any such transfer (other than a transfer pursuant to Section 1.12) to the extent such costs would not otherwise be applicable to such Lender in the absence of such transfer.
13.15 Confidentiality. (a) Each of the Lenders agrees that it will use its reasonable efforts not to disclose without the prior consent of the Borrower (other than to its directors, employees, officers, auditors, counsel or other professional advisors, to affiliates or to another Lender if the Lender or such Lender's holding or parent company in its sole discretion determines that any such party should have access to such information) any information with respect to Holdings or any of its Subsidiaries which is furnished pursuant to this Agreement and which is designated by the Borrower to the Lenders in writing as confidential; provided that any Lender may disclose any such information (a) as has become generally available to the public, (b) as may be required or appropriate (x) in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors or (y) in connection with any request or requirement of any such regulatory body, (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) to comply with any law, order, regulation or ruling applicable to such Lender, (e) to the Administrative Agent or the Collateral Agent and (f) to any prospective transferee in connection with any contemplated transfer of any of the Notes or any interest therein by such Lender; provided that such prospective transferee agrees to be bound by this Section 13.15 to the same extent as such Lender.
(b) Holdings and the Borrower hereby acknowledge and agree that each Lender may share with any of its affiliates any information related to Holdings or any of its Subsidiaries (including, without limitation, any nonpublic customer information regarding the creditworthiness of Holdings and its Subsidiaries), provided that such Persons shall be subject to the provisions of this Section 13.15 to the same extent as such Lender.
13.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.17 Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.17, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Lenders, the Loans made by each of
the Lenders and each repayment in respect of the principal amount of the Loans
of each Lender. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Lender, the transfer of the Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitments shall not be effective until such transfer is
recorded on the Register maintained by the Administrative Agent with respect to
ownership of such Commitment and Loans and prior to such recordation all amounts
owing to the transferor with respect to such Commitment and Loans shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of any Commitment and Loans shall be recorded by the Administrative Agent
on the Register only upon the acceptance by the Administrative Agent of a
properly executed and delivered Assignment and Assumption Agreement pursuant to
Section 13.04(b). Coincident with the delivery of such an Assignment and
Assumption Agreement to the Administrative Agent for acceptance and registration
of assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Lender shall surrender any Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Lender and/or
the new Lender, in each case upon the request of the respective Lenders. The
Borrower agrees to indemnify the Administrative Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Administrative Agent in
performing its duties under this Section 13.17.
SECTION 14. Holdings Guaranty.
14.01 The Guaranty. In order to induce the Lenders to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by Holdings from the proceeds of the Loans and the issuance of the Letters of Credit, Holdings hereby agrees with the Lenders as follows: Holdings hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors. If any or all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors becomes due and payable hereunder, Holdings unconditionally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, together with any and all expenses which may be incurred by the Guaranteed Creditors in collecting any of the Guaranteed Obligations. This Guaranty is a guaranty of payment and not of collection. If claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with
any such claimant (including the Borrower), then and in such event Holdings agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Holdings, notwithstanding any revocation of this Guaranty or any other instrument evidencing any liability of the Borrower, and Holdings shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
14.02 Bankruptcy. Additionally, Holdings unconditionally and irrevocably guarantees the payment of any and all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 10.05, and unconditionally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.
14.03 Nature of Liability. The liability of Holdings hereunder is exclusive and independent of any security for or other guaranty of the Guaranteed Obligations of the Borrower whether executed by Holdings, any other guarantor or by any other party, and the liability of Holdings hereunder is not affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to the Guaranteed Creditors on the Guaranteed Obligations which any such Guaranteed Creditor repays to the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and Holdings waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding or (f) any action or inaction of the type described in Section 14.05.
14.04 Independent Obligation. The obligations of Holdings hereunder are independent of the obligations of any other guarantor, any other party or the Borrower, and a separate action or actions may be brought and prosecuted against Holdings whether or not action is brought against any other guarantor, any other party or the Borrower and whether or not any other guarantor, any other party or the Borrower be joined in any such action or actions. Holdings waives, to the full extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to Holdings.
14.05 Authorization. Holdings authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including any increase or decrease in the rate of interest thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and the
Guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit Party or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Guaranteed Creditors regardless of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document, any Interest Rate Protection Agreement or Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify or supplement this Agreement, any other Credit Document, any Interest Rate Protection Agreement or Other Hedging Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of Holdings from its liabilities under this Guaranty.
14.06 Reliance. It is not necessary for the Guaranteed Creditors to inquire into the capacity or powers of the Borrower or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Guaranteed Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any indebtedness of the Borrower now or hereafter owing to Holdings is hereby subordinated to the Guaranteed Obligations of the Borrower owing to the Guaranteed Creditors; and if the Administrative Agent so requests at a time when an Event of Default exists, all such indebtedness of the Borrower to Holdings shall be collected, enforced and
received by Holdings for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of Holdings under the other provisions of this Guaranty. Prior to the transfer by Holdings of any note or negotiable instrument evidencing any of the indebtedness of the Borrower to Holdings, Holdings shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, Holdings hereby agrees with the Guaranteed Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash.
14.08 Waiver. (a) Holdings waives any right (except as shall be required by applicable statute and cannot be waived) to require any Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditor's power whatsoever. Holdings waives any defense based on or arising out of any defense of the Borrower, any other guarantor or any other party, other than payment in full of the Guaranteed Obligations, based on or arising out of the disability of the Borrower, any other guarantor or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the Guaranteed Obligations. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Guaranteed Creditors may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of Holdings hereunder except to the extent the Guaranteed Obligations have been paid. Holdings waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Holdings against the Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new or additional Guaranteed Obligations. Holdings assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which Holdings assumes and incurs hereunder, and agrees that the Guaranteed Creditors shall have no duty to advise Holdings of information known to them regarding such circumstances or risks.
(c) Holdings hereby acknowledges and affirms that it understands that to the extent the Guaranteed Obligations are secured by Real Property located in California, Holdings
shall be liable for the full amount of the liability hereunder notwithstanding the foreclosure on such Real Property by trustee sale or any other reason impairing Holdings' or any Guaranteed Creditor's right to proceed against the Borrower or any other guarantor of the Guaranteed Obligations. In accordance with Section 2856 of the California Civil Code, Holdings hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Holdings by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code;
(ii) all rights and defenses that Holdings may have because the Guaranteed Obligations are secured by Real Property located in California. This means, among other things: (A) the Guaranteed Creditors may collect from Holdings without first foreclosing on any real or personal property collateral pledged by the Borrower or any other Credit Party; and (B) if the Guaranteed Creditors foreclose on any Real Property collateral pledged by the Borrower or any other Credit Party, (1) the amount of the Guaranteed Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) the Guaranteed Creditors may collect from Holdings even if the Guaranteed Creditors, by foreclosing on the Real Property collateral, have destroyed any right Holdings may have to collect from the Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Holdings may have because the Guaranteed Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580d or 726 of the California Code of Civil Procedure; and
(iii) all rights and defenses arising out of an election of remedies by the Guaranteed Creditors, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Holdings' rights of subrogation and reimbursement against the Borrower by the operation of Section 580d of the Code of Civil Procedure or otherwise.
Holdings warrants and agrees that each of the waivers set forth above is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law of public policy, such waivers shall be effective only to the maximum extent permitted by law.
14.09 Nature of Liability. It is the desire and intent of Holdings and the Guaranteed Creditors that this Guaranty shall be enforced against Holdings to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If, however, and to the extent that, the obligations of Holdings under this Guaranty shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers), then the amount of the Guaranteed Obligations of Holdings shall be deemed to be reduced and
Holdings shall pay the maximum amount of the Guaranteed Obligations which would be permissible under applicable law.
* * *
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written. Address:
TRANSDIGM HOLDING COMPANY
8233 Imperial Drive
Waco, TX 76712
Telephone No.: (254) 741-5420
Facsimile No.: (254) 741-5402 By /s/ Peter B. Radekevich
Attention: Douglas Peacock ------------------------------------
Title: Chief Financial Officer
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TRANSDIGM INC.
8233 Imperial Drive
Waco, TX 76712
Telephone No.: (254) 741-5420
Facsimile No.: (254) 741-5402 By /s/ Peter B. Radekevich
Attention: Douglas Peacock -------------------------------------
Title: Chief Financial Officer
|
BANKERS TRUST COMPANY, Individually and as Administrative Agent and Co-Lead Arranger
/s/ Gregory P. Shefrin ----------------------------------- Title: Vice President |
CREDIT SUISSE FIRST BOSTON,
Individually and as Syndication Agent
and Co-Lead Arranger
/s/ Bill O'Daly ----------------------------------- Title: Vice President /s/ Thomas G. Muoio ----------------------------------- Title: Vice President |
ANNEX I
LIST OF LENDERS AND COMMITMENTS
A Term Loan B Term Loan Revolving Loan
Lender Commitment Commitment Commitment
------ ---------- ---------- ----------
Bankers Trust Company $24,750,000 $24,750,000 $16,500,000
Credit Suisse First Boston $20,250,000 $20,250,000 $13,500,000
----------- ----------- -----------
Total $45,000,000 $45,000,000 $30,000,000
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ANNEX II
LENDER ADDRESSES
Lender Address
------ -------
Bankers Trust Company One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Greg Shefrin
Telephone No.: (212) 250-1724
Facsimile No.: (212) 250-7218
Credit Suisse First Boston 11 Madison Avenue
New York, New York 10010
Attention: Donald Hardie
Telephone No.: (212) 325-4956
Facsimile No.: (212) 325-8018
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ANNEX III
|
PLANS
1. Retirement Plan for Bargaining Unit Employees of Adel Fasteners Division, Transdigm Inc., Huntington, West Virginia Plant.
2. Pension Plan for Hourly Employees of TransDigm Inc., Wiggins Connectors Division.
3. TransDigm Inc. Retirement & 401(k) Plan for Non-Bargaining Employees.
4. Marathon Power Technologies 401(k) Profit Sharing Plan for Salaried Employees.
5. TransDigm Inc. Executive Retirement Savings Plan.
ANNEX IV
SUBSIDIARIES
TransDigm Inc. -------------- JURISDICTION OF INCORPORATION: Delaware FOREIGN QUALIFICATIONS: California, Ohio AUTHORIZED CAPITAL STOCK: 1000 shares of Common Stock, par value $0.01 per share ISSUED AND OUTSTANDING SHARES: 1000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Holding Company - 1000 shares of Common Stock Marathon Power Technologies Company ----------------------------------- JURISDICTION OF INCORPORATION: Delaware FOREIGN QUALIFICATION: Texas AUTHORIZED CAPITAL STOCK: 50,000 shares of Common Stock, par value $0.01 per share ISSUED AND OUTSTANDING SHARES: 32,925 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Inc. - 32,925 shares of Common Stock Marathon Power Technologies Limited ----------------------------------- JURISDICTION OF INCORPORATION: England FOREIGN QUALIFICATIONS: None AUTHORIZED CAPITAL STOCK: 100,000 Ordinary Shares, par value (POUNDS)1.00 per share ISSUED AND OUTSTANDING SHARES: 100,000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: Marathon Power Technologies Company - 100,000 Ordinary Shares TransDigm Export, Inc. ---------------------- JURISDICTION OF INCORPORATION: Virgin Islands FOREIGN QUALIFICATIONS: None AUTHORIZED CAPITAL STOCK: 1000 shares of common stock, without par value ISSUED AND OUTSTANDING SHARES: 1000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Inc. - 1000 shares of common stock |
ANNEX V
REAL PROPERTY
1. 5000 Triggs Street
Los Angeles, CA 90022
(Adel Wiggins Group)
2. 4223 Monticello Blvd.
South Euclid, OH 44121
(AeroControlex Group)
3. 8301 Imperial Drive
Waco, TX 76712
(Marathon Power Technologies Company)
1. 26380 Curtiss Wright Parkway
Richmond Heights, Ohio 44143
2. 948 Wayside
Cleveland, Ohio 44110
3. 8 Airlinks Estate
Spitfire Way, Heston
Middlesex, England TW5 9NR
(oral Agreement)
ANNEX VI
EXISTING INDEBTEDNESS
None
ANNEX VII
INSURANCE
1. First American Title Insurance Company Policy No. 9336938-8, issued to TransDigm Inc. on September 30, 1997, relating to the property located at 5000 Triggs Street, Los Angeles, CA 90022.
2. First American Title Insurance Company Policy No. 0 68597, issued to TransDigm Inc. on September 30, 1997, relating to the property located at 4223 Monticello Blvd., South Euclid, OH 44121.
3. Lawyers Title Insurance Corporation Policy No. 90-00-463985, issued to MPT Acquisition Corp. (now Marathon Power Technologies Company) on May 20, 1994, relating to the property located at 301 Imperial Drive, Waco, TX 76712.
4. Fireman's Fund Insurance Company Package Policy #DXX80685161 (includes property, boiler and machinery and commercial general liability), issued to TransDigm Inc. on September 30, 1997.
5. United Fire & Casualty and Underwriters at Lloyds' Property-Difference in Conditions Primary Layer Policy #UIM464520, issued to TransDigm Inc. on September 30, 1997.
6. Insurance Company of the West Property-Difference in Conditions 1st Excess Layer Policy #XH0141509203, issued to TransDigm Inc. on September 30, 1997
7. Guaranty National Insurance Company/United National Insurance Company Property-Difference in Conditions 2nd Excess Layer Policy #IM29007, issued to TransDigm Inc. on September 30, 1997.
8. Underwriters at Lloyds' Aviation Products and Grounding Liability Policy #V700969, issued to TransDigm Inc. on September 30, 1997.
9. The American Insurance Company (Fireman's Fund) Workers' Compensation Policy (California and Connecticut) #DWC80753989, issued to TransDigm Inc. on September 30, 1997.
10. Wausau Insurance Company Workers' Compensation Policy #141800145944, issued to Marathon Power Technologies Company, a division of TransDigm Holding Company, on September 30, 1997.
11. Lumbermans Mutual Casualty Company (Kemper) International Liability Policy #QD60059802, issued to TransDigm Inc. on September 30, 1997.
12. Federal Insurance Company (Chubb) Executive Protection Policy #81340831 (Executive Liability and Indemnification (D&O), Fiduciary Liability, Crime, Kidnap/Ransom and
Extortion and Outside Directorship Liability), issued to TransDigm Holding Company and its subsidiaries on September 30, 1997.
13. Federal Insurance Company (Chubb) Group Business Auto Policy #BAP (98) 7323-09-80, issued to TransDigm Inc. on September 30, 1997.
14. Federal Insurance Company (Chubb) Commercial Umbrella Policy # (98) 7974-70-67, issued to TransDigm Inc. on September 30, 1997.
15. Reliance National Aircraft Hull & Liability Policy #NAB0139091, issued to TransDigm Inc. and renewed on April 7, 1998.
ANNEX VIII
EXISTING LIENS
None
ANNEX IX
EXISTING INVESTMENTS
TransDigm Inc. -------------- JURISDICTION OF INCORPORATION: Delaware FOREIGN QUALIFICATIONS: California, Ohio AUTHORIZED CAPITAL STOCK: 1000 shares of Common Stock, par value $0.01 per share ISSUED AND OUTSTANDING SHARES: 1000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Holding Company - 1000 shares of Common Stock Marathon Power Technologies Company ----------------------------------- JURISDICTION OF INCORPORATION: Delaware FOREIGN QUALIFICATION: Texas AUTHORIZED CAPITAL STOCK: 50,000 shares of Common Stock, par value $0.01 per share ISSUED AND OUTSTANDING SHARES: 32,925 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Inc. - 32,925 shares of Common Stock Marathon Power Technologies Limited ----------------------------------- JURISDICTION OF INCORPORATION: England FOREIGN QUALIFICATIONS: None AUTHORIZED CAPITAL STOCK: 100,000 Ordinary Shares, par value (POUND)1.00 per share ISSUED AND OUTSTANDING SHARES: 100,000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: Marathon Power Technologies Company - 100,000 Ordinary Shares TransDigm Export, Inc. ---------------------- JURISDICTION OF INCORPORATION: Virgin Islands FOREIGN QUALIFICATIONS: None AUTHORIZED CAPITAL STOCK: 1000 shares of common stock, without par value ISSUED AND OUTSTANDING SHARES: 1000 OUTSTANDING OPTIONS, WARRANTS, CONVERSION OR OTHER RIGHTS OR AGREEMENTS FOR SHARES: None OWNERSHIP: TransDigm Inc. - 1000 shares of common stock |
ANNEX X
INDEBTEDNESS TO BE REFINANCED
1. Amended and Restated Credit Agreement, dated as of August 8, 1997, among TransDigm Inc., the financial institutions from time to time parties thereto, The Chase Manhattan Bank, as (i) administrative agent for the Lenders, (ii) successor collateral agent for the Lenders, and (iii) the issuing bank for letters of credit issued thereunder, and Chase Securities Inc., as arranger.
Exhibit A
FORM OF NOTICE OF BORROWING
[Date]
Bankers Trust Company,
as Administrative Agent for the Lenders party
to the Credit Agreement
referred to below
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: ______________
Ladies and Gentlemen:
The undersigned, TransDigm Inc. (the "Borrower"), refers to the Credit Agreement, dated as of December 3, 1998 (as amended, modified or supplemented from time to time, the "Credit Agreement," the terms defined therein being used herein as therein defined), among TransDigm Holding Company, the Borrower, the lenders from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and you, as Administrative Agent and Co-Lead Arranger for such Lenders, and hereby gives you notice, irrevocably, pursuant to Section 1.03(a) of the Credit Agreement, that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________.(1)
(ii) The aggregate principal amount of the Proposed Borrowing is $______________.
(iii) The Proposed Borrowing shall consist of [A Term Loans] [B Term Loans] [Revolving Loans].
(iv) The Loans to be made pursuant to the Proposed Borrowing shall be initially maintained as [Base Rate Loans] [Eurodollar Loans].
[(v) The initial Interest Period for the Proposed Borrowing is ____ month(s) [seven days](2).]
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit Agreement and in the other Credit Documents are and will be true and correct in all material respects, both before and after giving effect to the Proposed Borrowing and to the application of the proceeds thereof, as though made on such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds thereof.
Very truly yours,
TRANSDIGM INC.
Title:
Exhibit B-1
FORM OF A TERM NOTE
$________ New York, New York
[Date]
FOR VALUE RECEIVED, TRANSDIGM INC. (the "Borrower"), a Delaware
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corporation, hereby promises to pay to ____________ or its registered assigns (the "Lender"), in lawful money of the United States of America in immediately available funds, at the office of Bankers Trust Company (the "Administrative Agent") located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 on the A Term Loan Maturity Date (as defined in the Credit Agreement referred to below) the principal sum of _____________ DOLLARS ($_____) or, if less, the unpaid principal amount of all A Term Loans (as defined in the Credit Agreement) made by the Lender pursuant to the Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at the rates and at the times provided in Section 1.08 of the Credit Agreement.
This Note is one of the A Term Notes referred to in the Credit Agreement, dated as of December 3, 1998, among TransDigm Holding Company, the Borrower, the lenders from time to time party thereto (including the Lender), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and the Administrative Agent (as amended, modified or supplemented from time to time, the "Credit Agreement") and is entitled to the benefits thereof and of the other Credit Documents (as defined in the Credit Agreement). This Note is secured by the Security Documents (as defined in the Credit Agreement) and is entitled to the benefits of the Guaranties (as defined in the Credit Agreement). This Note is subject to voluntary prepayment and mandatory repayment prior to the A Term Loan Maturity Date, in whole or in part, as provided in the Credit Agreement.
In case an Event of Default (as defined in the Credit Agreement) shall occur and be continuing, the principal of and accrued interest on this Note may become or be declared to be due and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
Exhibit B-1
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
TRANSDIGM INC.
Title:
Exhibit B-2
FORM OF B TERM NOTE
$________ New York, New York
[Date]
FOR VALUE RECEIVED, TRANSDIGM INC. (the "Borrower"), a Delaware corporation, hereby promises to pay to or its registered assigns (the "Lender"), in lawful money of the United States of America in immediately available funds, at the office of Bankers Trust Company (the "Administrative Agent") located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 on the B Term Loan Maturity Date (as defined in the Credit Agreement referred to below) the principal sum of DOLLARS ($ ) or, if less, the unpaid principal amount of all B Term Loans (as defined in the Credit Agreement) made by the Lender pursuant to the Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at the rates and at the times provided in Section 1.08 of the Credit Agreement.
This Note is one of the B Term Notes referred to in the Credit Agreement, dated as December 3, 1998, among TransDigm Holding Company, the Borrower, the lenders from time to time party thereto (including the Lender), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and the Administrative Agent (as amended, modified or supplemented from time to time, the "Credit Agreement") and is entitled to the benefits thereof and of the other Credit Documents (as defined in the Credit Agreement). This Note is secured by the Security Documents (as defined in the Credit Agreement) and is entitled to the benefits of the Guaranties (as defined in the Credit Agreement). This Note is subject to voluntary prepayment and mandatory repayment prior to the B Term Loan Maturity Date, in whole or in part, as provided in the Credit Agreement.
In case an Event of Default (as defined in the Credit Agreement) shall occur and be continuing, the principal of and accrued interest on this Note may become or be declared to be due and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
Exhibit B-2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
TRANSDIGM, INC.
Title:
Exhibit B-3
FORM OF REVOLVING NOTE
$__________ New York, New York
[Date]
FOR VALUE RECEIVED, TRANSDIGM INC. (the "Borrower"), a Delaware corporation, hereby promises to pay to ___________ or its registered assigns (the "Lender"), in lawful money of the United States of America in immediately available funds, at the office of Bankers Trust Company (the "Administrative Agent") located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 on the Revolving Loan Maturity Date (as defined in the Credit Agreement referred to below) the principal sum of _____________ DOLLARS ($________) or, if less, the unpaid principal amount of all Revolving Loans (as defined in the Credit Agreement) made by the Lender pursuant to the Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at the rates and at the times provided in Section 1.08 of the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit Agreement, dated as of December 3, 1998, among TransDigm Holding Company, the Borrower, the lenders from time to time party thereto (including the Lender), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and the Administrative Agent (as amended, modified or supplemented from time to time, the "Credit Agreement") and is entitled to the benefits thereof and of the other Credit Documents (as defined in the Credit Agreement). This Note is secured by the Security Documents (as defined in the Credit Agreement) and is entitled to the benefits of the Guaranties (as defined in the Credit Agreement). This Note is subject to voluntary prepayment and mandatory repayment prior to the Revolving Loan Maturity Date, in whole or in part, as provided in the Credit Agreement.
In case an Event of Default (as defined in the Credit Agreement) shall occur and be continuing, the principal of and accrued interest on this Note may become or be declared to be due and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
Exhibit B-3
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
TRANSDIGM INC.
Title:
Exhibit B-4
FORM OF SWINGLINE NOTE
$________________ New York, New York
[Date]
FOR VALUE RECEIVED, TRANSDIGM INC. (the "Borrower"), a Delaware corporation, hereby promises to pay to BANKERS TRUST COMPANY or its registered assigns (the "Lender"), in lawful money of the United States of America in immediately available funds, at the office of Bankers Trust Company (the "Administrative Agent") located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 on the Swingline Expiry Date (as defined in the Credit Agreement referred to below) the principal sum of _____________ DOLLARS ($_________) or, if less, the unpaid principal amount of all Swingline Loans (as defined in the Credit Agreement) made by the Lender pursuant to the Credit Agreement.
The Borrower promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at the rates and at the times provided in Section 1.08 of the Credit Agreement.
This Note is Swingline Note referred to in the Credit Agreement, dated as of December 3, 1998, among TransDigm Holding Company, the Borrower, the lenders from time to time party thereto (including the Lender), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and the Administrative Agent (as amended, modified or supplemented from time to time, the "Credit Agreement") and is entitled to the benefits thereof and of the other Credit Documents (as defined in the Credit Agreement). This Note is secured by the Security Documents (as defined in the Credit Agreement) and is entitled to the benefits of the Guaranties (as defined in the Credit Agreement). This Note is subject to voluntary prepayment and mandatory repayment prior to the Swingline Expiry Date, in whole or in part, as provided in the Credit Agreement.
In case an Event of Default (as defined in the Credit Agreement) shall occur and be continuing, the principal of and accrued interest on this Note may become or be declared to be due and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
TRANSDIGM INC.
Title
Exhibit C
FORM OF LETTER OF CREDIT REQUEST
No. (1) Dated (2)
Bankers Trust Company, as Administrative Agent under
the Credit Agreement (the "Credit
Agreement"), dated as of December 3,
1998, among TransDigm Holding Company,
TransDigm Inc., the lenders from time
to time party thereto, Credit Suisse First Boston,
as Syndication Agent and Co-Lead Arranger,
and Bankers Trust Company,
as Administrative Agent and Co-Lead Arranger
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
[Name and Address of respective Letter of Credit Issuer]
Attention:
Dear Sirs:
We hereby request that _____________________, in its individual capacity, issue a [standby] [trade] Letter of Credit for the account of the undersigned on (3) (the "Date of Issuance") in the aggregate stated amount of (4).
For purposes of this Letter of Credit Request, unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall have the respective meaning provided such terms in the Credit Agreement.
The beneficiary of the requested Letter of Credit will be (5), and such Letter of Credit will be in support of (6) and will have a stated expiration date of (7).
(2) Date of Letter of Credit Request.
(3) Date of Issuance which shall be at least five Business Days from the date hereof (or such shorter period as is acceptable to the respective Letter of Credit Issuer).
(4) Aggregate initial Stated Amount of Letter of Credit.
(5) Insert name and address of beneficiary.
We hereby certify that:
(1) the representations and warranties contained in the Credit Agreement and in the other Credit Documents are and will be true and correct in all material respects, both before and after giving effect to the issuance of the Letter of Credit requested hereby, on the Date of Issuance (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date); and
(2) no Default or Event of Default has occurred and is continuing nor, after giving effect to the issuance of the Letter of Credit requested hereby, would such a Default or an Event of Default occur.
Copies of all documentation with respect to the supported transaction are attached hereto.
TRANSDIGM INC.
Title
(6) Insert description of L/C Supportable Obligations or applicable trade obligations, as the case may be.
(7) Insert the last date upon which drafts may be presented which may not be
later than (A) in the case of standby Letters of Credit, the earlier of
(x) one year after the Date of Issuance and (y) the tenth Business Day
prior to the Revolving Loan Maturity Date and (B) in the case of trade
Letters of Credit, the earlier of (x) 180 days after the Date of Issuance
and (y) 30 days prior to the Revolving Loan Maturity Date.
Exhibit D
FORM OF SECTION 4.04(b)(ii) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as December 3, 1998, among TransDigm Holding Company, TransDigm Inc., the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (as amended from time to time, the "Credit Agreement"). Pursuant to the provisions of Section 4.04(b)(ii) of the Credit Agreement, the undersigned hereby certifies that it is not a "bank" as such term is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended.
[NAME OF BANK]
By
-----------------------------
Name:
Title:
Date: ,
----------------- ------
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Exhibit E
[lettlehead]
|
December 3, 1998
026409-0017
Bankers Trust Company
Credit Suisse First Boston
c/o Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Re: Credit Agreement dated as of December 3, 1998 (the "Credit Agreement"), among TransDigm Holding Company, a Delaware corporation, TransDigm Inc., a Delaware corporation, as borrower, various lending institutions (each, a "Lender" and, collectively, the "Lenders"), Credit Suisse First Boston, as co-lead arranger and syndication agent (in such capacity, the "Syndication Agent"), and Bankers Trust Company, as co-lead arranger and administrative agent (in such capacity, the "Administrative Agent")
Ladies and Gentlemen:
We have acted as special counsel to TransDigm Inc., a Delaware corporation (the "Borrower"), TransDigm Holding Company, a Delaware corporation ("Holdings"), and Marathon Power Technologies Company, a Delaware corporation ("Marathon" and, together with the Borrower and Holdings, the "Credit Parties"), in connection with the referenced Credit Agreement.
This opinion is rendered to you pursuant to Section 5.03 of the Credit Agreement.
As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of rendering the opinions expressed below, except where a statement is qualified as to knowledge or awareness, in which case we have made no or limited inquiry as specified below. We have examined, among other things, the following (the "Specified Loan Documents"):
Exhibit E
December 3, 1998
(a) the Credit Agreement;
(b) the A Term Notes, the B Term Notes, the Revolving Notes and the Swingline Note, each dated December 3, 1998 payable to Bankers Trust Company or Credit Suisse First Boston, as the case may be, in the aggregate principal sum of $69,000,000 and $54,000,000 respectively, made by the Borrower (the "Notes");
(c) the Pledge Agreement dated as of December 3, 1998 among the Borrower, Holdings, Marathon and Bankers Trust Company (the "Pledge Agreement");
(d) the Security Agreement dated as of December 3, 1998 among the Borrower, Holdings, Marathon and Bankers Trust Company (the "Security Agreement" and, with the Pledge Agreement, the "Security Documents"); and
(e) the Subsidiaries Guaranty dated as of December 3, 1998 by Marathon in favor of the Administrative Agent.
We have also examined the financing statements to be filed in the office of the Secretary of State of the State of California, copies of which are attached hereto as Exhibit A (the "California Financing Statements"), in the office of the Secretary of State of the State of Texas, copies of which are attached hereto as Exhibit B (the "Texas Financing Statements") and in the office of the Secretary of State of the State of Ohio and the office of the county recorder for Cuyahoga County, Ohio, copies of which are attached hereto as Exhibit C (the "Ohio Financing Statements").
We have further examined the certificate of incorporation of the Borrower certified by the Secretary of State of Delaware as of a recent date, the by-laws of the Borrower certified by the Secretary of the Borrower as of the date hereof, the certificate of incorporation of Holdings certified by the Secretary of State of Delaware as of a recent date, the by-laws of Holdings certified by the Secretary of Holdings as of the date hereof, the certificate of incorporation of Marathon certified by the Secretary of State of Delaware as of a recent date, and the by-laws of Marathon certified by the Secretary of Marathon as of the date hereof (collectively, the "Governing Documents").
As used in this letter, "UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of New York, except that, in reference to the opinion in paragraph 6 below and, insofar as they relate thereto to the assumptions, exceptions, limitations and qualifications set forth herein, "UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of California.
In our examination, we have assumed the genuineness of all signatures (other than those of officers of the Credit Parties on the Specified Loan Documents), the legal capacity of all natural persons executing documents, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as copies.
We have been furnished with, and with your consent have relied upon, certificates of officers of the Credit Parties with respect to certain factual matters. In addition, we have obtained and relied
Exhibit E
December 3, 1998
upon such certificates and assurances and other records from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transactions only of the federal laws of the United States, the internal laws of the State of New York, the General Corporation Law ("DGCL") of the State of Delaware and, in respect solely of the opinion in paragraph 6 below, the Uniform Commercial Code as in effect on the date hereof in the State of California and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction or, in the case of Delaware or California, any other laws, or as to any matters of municipal law or the laws of any other local agencies within any state or any laws which are applicable to the subject transactions or the parties thereto because of the nature or extent of their business.
Our opinions set forth in paragraph 4 below are based upon our consideration of only those laws, statutes, rules and regulations which, in our experience, are normally applicable to borrowers and guarantors in secured loan transactions. Whenever a statement herein is qualified by "to the best of our knowledge" or a similar phrase, it is intended to indicate that those attorneys in this firm who have rendered legal services in connection with the Credit Agreement do not have current actual knowledge of the inaccuracy of such statement. However, except as otherwise expressly indicated, we have not undertaken any independent investigation to determine the accuracy of any such statement, and no inference that we have any knowledge of any matters pertaining to such statement should be drawn from our representation of the Credit Parties.
The opinions expressed herein are delivered as of the date hereof and pertain solely to matters existing as of the date hereof. We express no opinion as to any matters that arise after the date hereof, including (without limitation) changes of fact or law, whether foreseeable or not foreseeable as of the date hereof, and we do not undertake any obligation to advise you of any such matters or otherwise to update this opinion in any respect after the date hereof.
Subject to the foregoing and the other matters set forth herein, and in reliance thereon, it is our opinion that, as of the date hereof:
1. Each Credit Party has been duly incorporated under the laws of the State of Delaware and is validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to conduct its business as now conducted and to own, or hold under lease, its assets. Each Credit Party has the corporate power and authority to enter into the Specified Loan Documents in which it is identified as a signatory party and to perform its obligations thereunder. Based solely on certificates from public officials, we confirm that the Borrower is qualified to do business in the State of California and the State of Ohio and that Marathon is qualified to do business in the State of Texas.
2. The execution, delivery and performance by each Credit Party of each Specified Loan Document in which it is identified as a signatory party has been duly authorized by all necessary corporate action of such Credit Party. Each Credit Party has duly executed and delivered each Specified Loan Document in which it is identified as a signatory party.
Exhibit E
December 3, 1998
3. Each Specified Loan Document constitutes a legally valid and binding obligation of each Credit Party identified therein as a signatory party thereto, enforceable against such Credit Party in accordance with its terms.
4. The execution and delivery of the Specified Loan Documents by
each of the Credit Parties that are identified therein as a signatory party
thereto, the borrowing of the loans pursuant to the Credit Agreement on the date
hereof by the Borrower, the granting of security interests pursuant to the
Security Documents on the date hereof by each of the Credit Parties that are
identified as a signatory party thereto, and the payment of the indebtedness of
the Borrower for such loans do not (a) violate any federal or New York law,
statute, rule or regulation applicable to the Credit Parties (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System) or the DGCL, (b) violate the provisions of the Governing
Documents, (c) constitute a breach of or default under the indenture dated as of
the date hereof among the Borrower, certain guarantors and State Street Bank and
Trust Company, as trustee, relating to the Borrower's 10-3/8% Senior
Subordinated Notes Due 2008 (the "Senior Subordinated Note Indenture") or the
indenture dated as of the date hereof between Holdings and State Street Bank and
Trust Company, as trustee, relating to Holdings' 12% Pay-in-Kind Notes Due 2009
(the "Seller Subordinated Note Indenture"), or (d) require any consent,
approval, authorization, registration, declaration or filing by any of the
Credit Parties under the Senior Subordinated Note Indenture or the Seller
Subordinated Note Indenture or under any federal or New York law, statute, rule
or regulation applicable to any of the Credit Parties or the DGCL, except (i)
the filing of financing statements under the Uniform Commercial Code, as in
effect in any jurisdiction in which such filing may be required or appropriate
and (ii) compliance with federal and state securities laws in connection with
the issuance or sale of any securities evidencing the loans or constituting
collateral. No opinion is expressed in this paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law or of any state or federal securities laws, antifraud laws, environmental
laws or antitrust or trade regulation laws.
5. The provisions of each of the Security Documents are effective to create valid security interests in favor of Bankers Trust Company as Collateral Agent (in such capacity, the "Collateral Agent") for the benefit of the Lenders in that portion of the collateral described in such Security Document which is subject to Article 9 of the UCC (the "Specified Article 9 Collateral") as security, to the extent set forth in such Security Document, for the payment of the obligations described therein as secured thereby.
6. The California Financing Statements are in appropriate form for filing in the Offices of the Secretary of State of California. Upon the proper filing of the California Financing Statements in such Office, the security interest in favor of the Collateral Agent for the benefit of the Lenders in the Specified Article 9 Collateral described in the California Financing Statements will be perfected to the extent a security interest in such Specified Article 9 Collateral can be perfected by filing a financing statement within the State of California under the provisions of the UCC.
7. Assuming that the Collateral Agent takes possession of, and holds, in the State of New York the certificate representing 100 shares of capital stock of the Borrower and 32,925 shares of capital stock of Marathon described in Annex B to the Pledge Agreement (the "Pledged Shares") delivered to the Collateral Agent pursuant to the Pledge Agreement in the State of New York with undated stock powers duly indorsed in blank, then the Pledge Agreement creates a valid and perfected security interest in favor of the Collateral Agent for the benefit of the Lenders in the rights in the Pledged
Exhibit E
December 3, 1998
Shares which the Borrower has or has actual authority to convey, as security, to the extent set forth in the Pledge Agreement, for the payment of the obligations described therein as secured thereby and, if and to the extent the Collateral Agent is a protected purchaser within the meaning of Section 8-303 of the UCC, free of any adverse claim to the Pledged Shares.
8. None of the Credit Parties is an "investment company" as such term is defined in the Investment Company Act of 1940, as amended.
9. The monetary obligations of the Borrower or any "Guarantor" (as defined in the Senior Subordinated Note Indenture) under the Specified Loan Documents are within the definition of "Senior Debt" set forth in the Senior Subordinated Note Indenture and the monetary obligations of Holdings under the Specified Loan Documents are within the definition of "Senior Debt" set forth in the Seller Subordinated Note Indenture, in each case subject to the limitations and exceptions set forth in the second paragraph in such definition of "Senior Debt."
The opinions expressed in paragraphs 3, 4, 5, 6 and 7 above are subject to the following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors;
(b) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought;
(c) our opinion expressed in paragraph 3 above does not extend to or include the enforceability of any security interest or lien and, except as set forth in paragraphs 5, 6 and 7 above, we express no opinion as to the enforceability, creation, perfection or priority of any security interest or lien;
(d) certain rights, remedies and waivers contained in the Specified Loan Documents may be limited or rendered ineffective by applicable laws or judicial decisions governing such provisions, but such laws or judicial decisions do not affect the validity or enforceability of any Specified Loan Document as a whole;
(e) we express no opinion as to the validity or enforceability of any provision of the Specified Loan Documents that permits an increase in the rate of interest or the collection of a late charge or prepayment premium in the event of a delinquency or default;
(f) the unenforceability under certain circumstances of provisions indemnifying a party against liability for its own wrongful or negligent acts or where such indemnification is contrary to public policy or prohibited by law;
Exhibit E
December 3, 1998
(g) the unenforceability under certain circumstances of contractual provisions respecting self-help or summary remedies without notice or opportunity for hearing or correction;
(h) the unenforceability under certain circumstances of provisions requiring the payment of attorneys' fees, except to the extent that a court determines such fees to be reasonable;
(i) the effect of general principles exonerating a guarantor or surety if the creditor materially alters the original obligation of the principal without the consent of the guarantor or surety, elects remedies for default that impair the subrogation rights of the guarantor or surety against the principal, takes action without notice or consent of the guarantor or surety that materially prejudices the guarantor or surety and the like; while we believe that a court should hold that the explicit language contained in the Specified Loan Documents waiving such rights is enforceable, we express no opinion with respect to the effect of (i) any modification to or amendment of the obligations of any guarantor or surety that materially increases such obligations, (ii) any election of remedies by the Administrative Agent or the holders of obligations arising under the Credit Agreement following the occurrence of an event of default, or (iii) any other action by the Administrative Agent or such holders contemplated by such waivers that materially prejudices the guarantor or surety;
(j) we have not been requested to express and, with your permission, do not render any opinion as to the applicability of Section 548 of the federal Bankruptcy Code or applicable state law relating to fraudulent transfers and obligations to the obligations of any Credit Party under any of the Specified Loan Documents;
(k) we have not been requested to express and, with your permission, do not render any opinion as to any of the instruments, agreements or other documents delivered at the closing under the Credit Agreement or any of the other "Credit Documents" referred to in the Credit Agreement (collectively, the "Loan Documents") other than, to the extent expressly set forth herein, the Specified Loan Documents.
Our opinions in paragraphs 5, 6 and 7 above are also subject to the following assumptions, exceptions, limitations and qualifications:
(i) we express no opinion as to the creation, validity or perfection of any security interest that is not governed by, or that is excluded from coverage by, Article 9 of the UCC;
(ii) we have assumed that each debtor under the Security Documents has "rights" in the collateral and that "value" has been given, as contemplated by Section 9-203 of the UCC;
(iii) we have assumed that none of the collateral consists of consumer goods, crops (growing or to be grown), equipment used in farming operations, farm products, or
Exhibit E
December 3, 1998
accounts or general intangibles arising from or relating to the sale of farm products by a farmer, timber to be cut, minerals or the like (including oil and gas) or accounts resulting from the sale of minerals or the like at the wellhead or the minehead, beneficial interests in a trust or decedent's estate, letters of credit, items which are subject to a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title or which specifies a place of filing different from that specified in the UCC for filing of the security interest, or any other items excluded from the coverage of the UCC by Section 9-104 thereof;
(iv) we call to your attention the fact that the perfection of a security interest in "proceeds" (as defined in the UCC) of collateral is governed and restricted by Section 9-306 of the UCC;
(v) the effect of the provisions of the UCC which require a secured party, in any disposition of personal property collateral, to act in good faith and in a commercially reasonable manner;
(vi) Section 552 of the federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of the case; and
(vii) we call to your attention that (A) under the UCC, with certain limited exceptions, the effectiveness of a properly filed financing statement will lapse five years after the date of filing thereof and a security interest that is otherwise properly perfected by the filing of such financing statement will become unperfected, unless a continuation statement is filed within six months prior to the end of such five-year period, and (B) perfection of security interests under the UCC in any of the collateral will be terminated as to any collateral acquired by a debtor under the Security Documents more than four months after such debtor changes its name, identity or corporate structure to such an extent as to make a properly filed financing statement seriously misleading, unless a new appropriate financing statement indicating the new name, identity or corporate structure of such debtor is properly filed before the expiration of four months after such change.
We have assumed that neither the Administrative Agent nor any holder of obligations arising under the Credit Agreement has expressly or by implication waived, subordinated or agreed to any modification of any of its rights or interests under the Specified Loan Documents or agreed to any adverse claim.
To the extent that the obligations of any Credit Party may be dependent upon such matters, we assume for purposes of this opinion that (i) each party to the Specified Loan Documents, other than the Credit Parties, is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and under the laws of each jurisdiction in which it is required to qualify or be licensed as a foreign corporation or foreign organization; (ii) each party to the Specified Loan Documents, other than the Credit Parties, has the requisite corporate or organizational power and authority to execute, deliver and perform its obligations under all Specified Loan Documents
Exhibit E
December 3, 1998
to which it is a party; (iii) the execution, delivery and performance of the Specified Loan Documents has been duly authorized by all necessary corporate or organizational action of each party thereto other than the Credit Parties; (iv) other than in respect of the matters as to which we express our opinion as set forth in paragraph 4 above, each party to the Specified Loan Documents, including each Credit Party, has duly complied with all federal, state and local law or regulations, has obtained all consents, approvals and authorizations, and made all registrations, declarations or filings, required to be obtained or made by it from or with any governmental authority or agency under any such laws or regulations, and has obtained all consents, approvals and authorizations required to be obtain by it from any person or entity under any applicable indenture, instrument, conveyance or agreement and (v) each Specified Loan Document to which any person or entity, other than a Credit Party, is a party has been duly executed and delivered by such person or entity and constitutes its legally valid and binding obligation, enforceable against it in accordance with the terms thereof. We express no opinion as to compliance by any party to the Specified Loan Documents with any banking laws or any other state or federal laws or regulations applicable to the subject transactions because of the nature of its business, other than Regulations T, U and X of the Board of Governors of the Federal Reserve System.
Without expressing any opinion as to the laws of the State of
Ohio or the State of Texas, we confirm that we have read the provisions of
Section 9-401 and Section 9-402 of the Uniform Commercial Code, as currently
reported by CCH Secured Transactions Guide to be in effect in the State of Ohio
and the State of Texas, and did not find therein any requirements inconsistent
with the conclusion that, subject to the assumptions, exceptions, limitations
and qualifications set forth herein as to our opinion in paragraph 6 above, (i)
the Ohio Financing Statements are in appropriate form for filing in the office
of the Secretary of State of Ohio and the office of the county recorder for
Cuyahoga County, Ohio, (ii) upon the proper filing of the Ohio Financing
Statements in such offices, the security interest in favor of the Collateral
Agent for the benefit of the Lenders in the Specified Article 9 Collateral
described in the Ohio Financing Statements will be perfected to the extent a
security interest in such Specified Article 9 Collateral can be perfected by
filing a financing statement within the State of Ohio under such provisions,
(iii) the Texas Financing Statements are in appropriate form for filing in the
office of the Secretary of State of Texas, and (iv) upon the proper filing of
the Texas Financing Statements in such office, the security interest in favor of
the Collateral Agent for the benefit of the Lenders in the Specified Article 9
Collateral described in the Texas Financing Statements will be perfected to the
extent a security interest in such Specified Article 9 Collateral can be
perfected by filing a financing statement within the State of Texas under such
provisions.
We further confirm to you that (i) the Credit Agreement, the Senior Subordinated Note Indenture and the Seller Subordinated Note Indenture have been identified to us by the Borrower as being all of the agreements to which any Credit Party is a party, or to which any of the businesses or assets of any Credit Party is subject, that are material to the financial condition or results of operations of the Credit Parties taken as a whole and (ii) the Borrower has not identified to us any order, judgment or decree that is material to the financial condition or results of operations of the Credit Parties taken as a whole.
This opinion is rendered only to you and is solely for your benefit in connection with the transactions covered hereby. This opinion may not be relied upon by you for any other purpose, or furnished to, quoted to or relied upon by any other person, firm or corporation for any purpose, without our prior written consent. At your request, we hereby consent to reliance hereon by any future assigns of or participants in your interest under the Credit Agreement as expressly permitted under Section 13.04 of the Credit Agreement, on the understanding that this opinion speaks only as of the date hereof and we
Exhibit E
December 3, 1998
have no responsibility or obligation to update this opinion, to consider its applicability or correctness other than to its addressee, or to take into account, or advise any person of, changes in law, facts or any other development of which we may later become aware. We hereby consent to your furnishing this opinion to your auditors and to regulatory officials having jurisdiction over you.
Attached hereto as Exhibit D is a copy of our letter dated the date hereof addressed to BT Alex. Brown Incorporated and Credit Suisse First Boston Corporation. We hereby consent to reliance thereon by you and the future assigns and participants described in the immediately preceding paragraph in connection with the transactions covered hereby, on the understanding that (i) such letter may not be relied upon by you or them for any other purpose, or furnished to, quoted to or relied upon by any other person, firm or corporation for any purpose, without our prior written consent, except as otherwise provided in the last sentence of the immediately preceding paragraph and (ii) such letter speaks only as of the date hereof and we have no responsibility or obligation to update such letter, to consider its applicability or correctness other than to its addressees, or to take into account, or advise any person of, changes in law, facts or any other development of which we may later become aware.
Very Truly Yours,
Exhibit E
December 3, 1998
EXHIBIT A
[California Financing Statements]
Exhibit E
December 3, 1998
EXHIBIT B
[Texas Financing Statements]
Exhibit E
December 3, 1998
EXHIBIT C
[Ohio Financing Statements]
Exhibit E
December 3, 1998
EXHIBIT D
[Form of Opinion]
Exhibit F
FORM OF OFFICERS' CERTIFICATE
I, the undersigned, [Chairman of the Board/Vice Chairman of the Board/President/Vice President] of [Name of Credit Party] a corporation organized and existing under the laws of the State of ________ (the "Company"), do hereby certify on behalf of the Company that:
1. This Certificate is furnished pursuant to Section 5.04(a) of the Credit Agreement, dated as of December 3, 1998, among TransDigm Holding Company, TransDigm Inc., the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger, (such Credit Agreement, as in effect on the date of this Certificate, being herein called the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
2. The following named individuals are elected officers of the Company, each holds the office of the Company set forth opposite his or her name and has held such office since _________ __, 19__.(1) The signature written opposite the name and title of each such officer is his or her genuine signature.
Name(2) Office Signature
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3. Attached hereto as Exhibit A is a certified copy of the Certificate of Incorporation of the Company, as filed in the Office of the Secretary of State of the State of ________ on ___________, 19__, together with all amendments thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of the By-Laws of the Company which were duly adopted, are in full force and effect on the date hereof, and have been in effect since _____________, 19__.
(2) Include name, office and signature of each officer who will sign any Credit Document, including the officer who will sign the certification at the end of this Certificate or related documentation.
5. Attached hereto as Exhibit C is a true and correct copy of resolutions which were duly adopted on __________, 19__ [by unanimous written consent of the Board of Directors of the Company] [by a meeting of the Board of Directors of the Company at which a quorum was present and acting throughout], and said resolutions have not been rescinded, amended or modified. Except as attached hereto as Exhibit C, no resolutions have been adopted by the Board of Directors of the Company which deal with the execution, delivery or performance of any of the Documents to which the Company is party.
[6. On the date hereof, all of the applicable conditions set forth in Sections 5.05, 5.06, 5.07, 5.08, 5.09, 5.10 and 6.01 of the Credit Agreement have been satisfied.
7. Attached hereto as Exhibit D are true and correct copies of all Recapitalization Documents.
8. Attached hereto as Exhibit E are true and correct copies of all Refinancing Documents.
9. Attached hereto as Exhibit F are true and correct copies of all Equity Financing Documents.
10. Attached hereto as Exhibit G are true and correct copies of all Senior Subordinated Note Documents.
11. Attached hereto as Exhibit H are true and correct copies of all Seller Subordinated Note Documents.
12. Attached hereto as Exhibit I are true and correct copies of all Employee Benefit Plans.
13. Attached hereto as Exhibit J are true and correct copies of all Shareholders' Agreements.
14. Attached hereto as Exhibit K are true and correct copies of all Management Agreements.
15. Attached hereto as Exhibit L are true and correct copies of all Employment Agreements.
16. Attached hereto as Exhibit M are true and correct copies of all Collective Bargaining Agreements.
17. Attached hereto as Exhibit N are true and correct copies of all Existing Indebtedness Agreements.
18. Attached hereto as Exhibit O are true and correct copies of all Tax Allocation Agreements](3)
[6.][19.] On the date hereof, the representations and warranties contained in the Credit Agreement and in the other Credit Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on the date hereof, both before and after giving effect to the incurrence of Loans on the date hereof and the application of the proceeds thereof, unless stated to relate to a specific earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date.
[7.][20.] On the date hereof, no Default or Event of Default has occurred and is continuing or would result from the Borrowing to occur on the date hereof or from the application of the proceeds thereof.
[8.][21.] There is no proceeding for the dissolution or liquidation of the Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of ____, 1998.
[NAME OF CREDIT PARTY]
Title:
I, the undersigned, [Secretary/Assistant Secretary] of the Company, do hereby certify on behalf of the Company that:
1. [Name of Person making above certifications] is the duly elected and qualified [Chairman of the Board/Vice Chairman of the Board/President/Vice President] of the Company and the signature above is his or her genuine signature.
2. The certifications made by [name of Person making above certifications] on behalf of the Company in Items 2, 3, 4, 5, and [8][21] above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of _____, 1998.
[NAME OF CREDIT PARTY]
Title:
EXHIBIT G
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this "Agreement"), dated as of December 3, 1998, made by each of the undersigned pledgors (each a "Pledgor" and, together with any other entity that becomes a pledgor hereunder pursuant to Section 25 hereof, the "Pledgors") to BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, TransDigm Holding Company ("Holdings"), TransDigm Inc. (the "Borrower"), the lenders from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (together with any successor Administrative Agent, the "Administrative Agent"), have entered into a Credit Agreement, dated as of December 3, 1998 (as amended, modified or supplemented from time to time, the "Credit Agreement"), providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (the Lenders, the Administrative Agent, each Letter of Credit Issuer and the Pledgee are herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender's or affiliate's successors and assigns, if any, collectively, the "Other Creditors," and together with the Lender Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, it is a condition to the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement that each Pledgor shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to enter into this Agreement in order to satisfy the condition described in the preceding paragraph;
Exhibit G
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, Fees and interest thereon) of such Pledgor to the Lender Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the other Credit Documents to which such Pledgor is a party (including all such obligations and indebtedness of such Pledgor under any Guaranty to which it is a party) and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained in the Credit Agreement and in such other Credit Documents (all such obligations and liabilities under this clause (i), except to the extent consisting of obligations or indebtedness with respect to Interest Rate Protection Agreements or Other Hedging Agreements, being herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and liabilities owing by such Pledgor to the Other Creditors under, or with respect to (including by reason of the any Guaranty to which it is a party), any Interest Rate Protection Agreement or Other Hedging Agreement, whether such Interest Rate Protection Agreement or Other Hedging Agreement is now in existence or hereafter arising, and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained therein (all such obligations and liabilities described in this clause (ii) being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Pledgor referred to in clauses (i), (ii) and (iii) above, after an Event of Default (which term to mean and include any Event of Default under, and as defined in, the Credit Agreement or any payment default by the Borrower under any Interest Rate Protection Agreement or Other Hedging Agreement and shall, in any event, include, without limitation, any payment default on any of the Obligations (as hereinafter defined) shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under Section 11 of this Agreement;
Exhibit G
all such obligations, liabilities, sums and expenses set forth in clauses
(i) through (v) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations"
shall include extensions of credit of the types described above, whether
outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement.
2. DEFINITIONS. (a) Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall be used herein as therein defined. Reference to singular terms shall include the plural and vice versa.
(b) The following capitalized terms used herein shall have the definitions specified below:
"Administrative Agent" has the meaning set forth in the Recitals hereto.
"Adverse Claim" has the meaning given such term in Section 8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph hereof.
"Certificated Security" has the meaning given such term in Section 8-102(a)(4) of the UCC.
"Clearing Corporation" has the meaning given such term in Section 8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.
"Credit Agreement" has the meaning set forth in the Recitals hereto.
"Credit Document Obligations" has the meaning set forth in Section 1 hereof.
"Domestic Corporation" has the meaning set forth in the definition of "Stock."
"Event of Default" has the meaning set forth in Section 1 hereof.
"Financial Asset" has the meaning given such term in Section 8-102(a)(9) of the UCC.
"Foreign Corporation" has the meaning set forth in the definition of "Stock."
"Indemnitees" has the meaning set forth in Section 11 hereof.
"Instrument" has the meaning given such term in Section 9-105(1)(i) of the UCC.
Exhibit G
"Investment Property" has the meaning given such term in Section 9-115(f) of the UCC.
"Lender Creditors" has the meaning set forth in the Recitals hereto.
"Lenders" has the meaning set forth in the Recitals hereto.
"Limited Liability Company Assets" means all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned or represented by any Limited Liability Company Interest.
"Limited Liability Company Interests" means the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.
"Non-Voting Stock" means all capital stock which is not Voting Stock.
"Notes" means (x) all Intercompany Notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor.
"Obligations" has the meaning set forth in Section 1 hereof.
"Other Creditors" has the meaning set forth in the Recitals hereto.
"Other Obligations" has the meaning set forth in Section 1 hereof.
"Partnership Assets" means all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.
"Pledged Notes" has the meaning set forth in Section 3.5 hereof.
"Pledgee" has the meaning set forth in the first paragraph hereof.
"Pledgor" has the meaning set forth in the first paragraph hereof.
"Proceeds" has the meaning given such term in Section 9-306(l) of the UCC.
"Required Banks" has the meaning given such term in the Credit Agreement.
"Secured Creditors" has the meaning set forth in the Recitals hereto.
"Secured Debt Agreements" has the meaning set forth in Section 5 hereof.
Exhibit G
"Securities Account" has the meaning given such term in Section 8-501(a) of the UCC.
"Securities Act" means the Securities Act of 1933, as amended, as in effect from time to time.
"Security" and "Securities" has the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event include all Stock and
Notes (to the extent same constitute "Securities" under Section 8-102(a)(15)).
"Security Entitlement" has the meaning given such term in Section 8-102(a)(17) of the UCC.
"Stock" means (x) with respect to corporations incorporated under the laws of the United States or any State or territory thereof (each a "Domestic Corporation"), all of the issued and outstanding shares of capital stock of any corporation at any time owned by any Pledgor of any Domestic Corporation and (y) with respect to corporations not Domestic Corporations (each a "Foreign Corporation"), all of the issued and outstanding shares of capital stock at any time owned by any Pledgor of any Foreign Corporation.
"Termination Date" has the meaning set forth in Section 20 hereof.
"UCC" means the Uniform Commercial Code as in effect in the State of New York from time to time; provided that all references herein to specific sections or subsections of the UCC are references to such sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in Section 8-102(a)(18) of the UCC.
"Voting Stock" means all classes of capital stock of any Foreign Corporation entitled to vote.
3. PLEDGE OF SECURITIES, ETC.
3.1 Pledge. To secure the Obligations now or hereafter owed or to be performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to the Pledgee for the benefit of the Secured Creditors, and does hereby create a continuing security interest in favor of the Pledgee for the benefit of the Secured Creditors in, all of the right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the "Collateral"):
(a) each of the Collateral Accounts, including any and all assets of whatever type or kind deposited by such Pledgor in such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, moneys, checks, drafts, Instruments, Securities or interests
Exhibit G
therein of any type or nature deposited or required by the Credit Agreement or any other Secured Debt Agreement to be deposited in such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time representing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(b) all Securities of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such interest relates, whether now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses, Limited Liability Company Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;
(D) all present and future claims, if any, of such Pledgor against any such limited liability company for moneys loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any limited liability company agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
Exhibit G
(F) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to time and all of its right, title and interest in each partnership to which each such interest relates, whether now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses, Partnership Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;
(B) all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;
(D) all present and future claims, if any, of such Pledgor against any such partnership for moneys loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing (with all of the foregoing rights only to be exercisable upon the occurrence and during the continuation of an Event of Default); and
(F) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights
Exhibit G
and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(e) all Security Entitlements of such Pledgor from time to time in any and all of the foregoing;
(f) all Financial Assets and Investment Property of such Pledgor from time to time; and
(g) all Proceeds of any and all of the foregoing.
Notwithstanding anything to the contrary contained in this Section 3.1, (x) except as otherwise provided in Section 8.12 of the Credit Agreement, no Pledgor (to the extent that it is the Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time to pledge hereunder more than 65% of the Voting Stock of any Foreign Corporation and (y) each Pledgor shall be required to pledge hereunder 100% of any Non-Voting Stock at any time and from time to time acquired by such Pledgor of any Foreign Corporation.
3.2 Procedures. (a) To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by the respective Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, such Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 10 days after it obtains such Collateral) for the benefit of the Pledgee and the Secured Creditors:
(i) with respect to a Certificated Security (other than a Certificated Security credited on the books of a Clearing Corporation), the respective Pledgor shall physically deliver such Certificated Security to the Pledgee, indorsed to the Pledgee or indorsed in blank;
(ii) with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation), the respective Pledgor shall cause the issuer of such Uncertificated Security to duly authorize and execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the Secured Creditors substantially in the form of Annex G hereto (appropriately completed to the satisfaction of the Pledgee and with such modifications, if any, as shall be satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security (and any Partnership Interests and Limited Liability Company Interests issued by such issuer) originated by any other Person other than a court of competent jurisdiction;
(iii) with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation (including a Federal Reserve Bank, Participants Trust Company or The
Exhibit G
Depository Trust Company), the respective Pledgor shall promptly notify
the Pledgee thereof and shall promptly take all actions required (i) to
comply with the applicable rules of such Clearing Corporation and (ii) to
perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 9-115 (4)(a) and (b), 9-115
(1)(e) and 8-106 (d) of the UCC). The Pledgor further agrees to take such
actions as the Pledgee deems necessary or desirable to effect the
foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability
Company Interest (other than a Partnership Interest or Limited Liability
Interest credited on the books of a Clearing Corporation), (1) if such
Partnership Interest or Limited Liability Company Interest is represented
by a certificate, the procedure set forth in Section 3.2(a)(i) hereof, and
(2) if such Partnership Interest or Limited Liability Company Interest is
not represented by a certificate, the procedure set forth in Section
3.2(a)(ii) hereof;
(v) with respect to any Note, physical delivery of such Note to the Pledgee, indorsed to the Pledgee or indorsed in blank; and
(vi) with respect to cash, (i) establishment by the Pledgee of a cash account in the name of such Pledgor over which the Pledgee shall have exclusive and absolute control and dominion (and no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee) and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to proceeding Section 3.2(a) hereof, each Pledgor shall take the following additional actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain "control" thereof within the meaning of Section 8-106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), the respective Pledgor shall take all actions as may be requested from time to time by the Pledgee so that "control" of such Collateral is obtained and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate financing statements (on Form UCC-1 or other appropriate form) under the Uniform Commercial Code as in effect in the various relevant States, on form covering all Collateral hereunder (with the form of such financing statements to be satisfactory to the Pledgee), to be filed in the relevant filing offices so that at all times the Pledgee has a security interest in all Investment Property and other Collateral which is perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-115(4)(b) of the UCC).
Exhibit G
3.3 Subsequently Acquired Collateral. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Collateral at any time
or from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1 hereof and,
furthermore, the Pledgor will promptly thereafter take (or cause to be taken)
all action with respect to such Collateral in accordance with the procedures set
forth in Section 3.2 hereof, and will promptly thereafter deliver to the Pledgee
(i) a certificate executed by a principal executive officer of such Pledgor
describing such Collateral and certifying that the same has been duly pledged in
favor of the Pledgee (for the benefit of the Secured Creditors) hereunder and
(ii) supplements to Annexes A through F hereto as are necessary to cause such
annexes to be complete and accurate at such time. Without limiting the
foregoing, each Pledgor shall be required to pledge hereunder any shares of
stock at any time and from time to time after the date hereof acquired by such
Pledgor of any Foreign Corporation, provided that (x) except as provided in
Section 8.12 of the Credit Agreement, no Pledgor (to the extent that it is the
Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time
to pledge hereunder more than 65% of the Voting Stock of any Foreign Corporation
and (y) each Pledgor shall be required to pledge hereunder 100% of any
Non-Voting Stock at any time and from time to time acquired by such Pledgor of
any Foreign Corporation.
3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or
Section 3.3 hereof shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 Definition of Pledged Notes. All Notes at any time pledged or required to be pledged hereunder are hereinafter called the "Pledged Notes".
3.6 Certain Representations and Warranties Regarding the Collateral.
Each Pledgor represents and warrants that on the date hereof (i) each Subsidiary
of such Pledgor, and the direct ownership thereof, is listed in Annex A hereto;
(ii) the Stock held by such Pledgor consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (iii) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex B hereto; (iv) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) the Limited Liability Company
Interests held by such Pledgor consist of the number and type of interests of
the Persons described in Annex D hereto; (vi) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
equity interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest constitutes that percentage or portion of the entire
partnership interest of the Partnership as set forth in Annex E hereto; (ix) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
hereof with respect to each item of Collateral described in Annexes A through E
hereto; and (x) on the date hereof, such Pledgor owns no other Securities,
Limited Liability Company Interests or Partnership Interests.
Exhibit G
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary to enable the Pledgee to perfect its security interest in any of the Collateral or to exercise any of its remedies hereunder, the Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided, that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate or be inconsistent with any of the terms of this Agreement, the Credit Agreement, any other Credit Document or any Interest Rate Protection Agreement or Other Hedging Agreement (collectively, the "Secured Debt Agreements"), or which would have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral. All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has occurred and is continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred and be continuing an Event of Default, (i) all cash dividends, cash distributions, cash Proceeds and other cash amounts payable in respect of the Collateral shall be paid to the respective Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:
(i) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash dividends other than as set forth above) paid or distributed by way of dividend or otherwise in respect of the Collateral;
(ii) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash) which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the Pledgee's right to receive proceeds of the Collateral in any form in accordance with Section 3 of this Agreement. All dividends, distributions or other payments which are received by any Pledgor contrary to the
Exhibit G
provisions of this Section 6 and Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Secured Debt Agreement or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the Uniform Commercial Code as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the following rights, which each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to the respective Pledgor;
(ii) to transfer all or any part of the Collateral into the Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);
(v) at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided that at least 10 days' written notice of the time and place of any such sale shall be given to the respective Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon
Exhibit G
any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and
(vi) to set-off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Secured Debt Agreement, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Agreement or any other Secured Debt Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Agreement may be enforced only by the action of the Administrative Agent or the Pledgee, in each case acting upon the instructions of the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least the majority of the outstanding Other Obligations) and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent or the Pledgee or the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies received by the Pledgee hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral hereunder and the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money
Exhibit G
paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor and their respective successors, assigns, employees, agents and
servants (individually an "Indemnitee," and collectively the "Indemnitees") from
and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case growing out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities or expenses to the extent incurred by reason
of gross negligence or willful misconduct of such Indemnitee). In no event shall
the Pledgee be liable, in the absence of gross negligence or willful misconduct
on its part, for any matter or thing in connection with this Agreement other
than to account for monies actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of any Pledgor under this
Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any other Secured Creditor liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or partnership. The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or Partnership Interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Pledgee, any other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of this
Section 12, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or a partner of any partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
limited liability company or partnership either before or after an Event of
Default shall have occurred. The Pledgee shall have only those powers set forth
herein and the Secured Creditors shall assume none of the duties, obligations or
liabilities of a member of any limited liability company or as a partner of any
partnership or any Pledgor except as provided in the last sentence of paragraph
(a) of this Section 12.
(c) The Pledgee and the other Secured Creditors shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the
Exhibit G
Pledgee or any other Secured Creditor to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that it will join with the Pledgee in executing and, at such Pledgor's own expense, file and refile under the Uniform Commercial Code or other applicable law such financing statements, continuation statements and other documents in such offices as the Pledgee may deem necessary and wherever required by law in order to perfect and preserve the Pledgee's security interest in the Collateral and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral without the signature of such Pledgor where permitted by law, and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem necessary to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, to act from time to time solely after the occurrence and during the continuance of an Event of Default in the Pledgee's reasonable discretion to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed by each Secured Creditor that by accepting the benefits of this Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein (except as may be permitted in accordance with the terms of the Credit Agreement).
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good and marketable title to, all Collateral consisting of one or more Securities and that it has sufficient interest in all Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other
Exhibit G
encumbrance whatsoever, except the liens and security interests created by this Agreement);
(ii) it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of
any other party (including, without limitation, any stockholder or
creditor of such Pledgor or any of its Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by such Pledgor in connection with
(a) the execution, delivery or performance of this Agreement, (b) the
validity or enforceability of this Agreement (except as set forth in
clause (iii) above), (c) the perfection or enforceability of the Pledgee's
security interest in the Collateral or (d) except for compliance with or
as may be required by applicable securities laws, the exercise by the
Pledgee of any of its rights or remedies provided herein;
(v) the execution, delivery and performance of this Agreement will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to such Pledgor, or of the certificate of incorporation, operating agreement, limited liability company agreement, partnership agreement or by-laws of such Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries, or of any mortgage, deed of trust, indenture, lease, loan agreement, credit agreement or other material contract, agreement or instrument or undertaking to which such Pledgor or any of its Subsidiaries is a party or which purports to be binding upon such Pledgor or any of its Subsidiaries or upon any of their respective assets and will not result in the creation or imposition of (or the obligation to create or impose) any lien or encumbrance on any of the assets of such Pledgor or any of its Subsidiaries except as contemplated by this Agreement;
(vi) all of the Collateral (consisting of Securities, Limited Liability Company Interests or Partnership Interests) has been duly and validly issued and acquired, is fully paid and non-assessable and is subject to no options to purchase or similar rights;
(vii) each of the Pledged Notes constitutes, or when executed by the obligor thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Exhibit G
laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law); and
(viii) the pledge, collateral assignment and delivery to the Pledgee of the Collateral consisting of Certificated Securities pursuant to this Agreement creates a valid and perfected first priority security interest in such Certificated Securities, and the proceeds thereof, subject to no prior Lien or encumbrance or to any agreement purporting to grant to any third party a Lien or encumbrance on the property or assets of such Pledgor which would include the Securities and the Pledgee is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfect security interests in respect of such Collateral; and
(ix) "control" (as defined in Section 8-106 of the UCC) has been obtained by the Pledgee over all Collateral consisting of Securities (including Notes which are Securities) with respect to which such "control" may be obtained pursuant to Section 8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the Pledgee's right, title and security interest in and to the Securities and the proceeds thereof against the claims and demands of all persons whomsoever; and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action which would violate any of the terms of any Secured Debt Agreement.
17. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
each Pledgor is located at the address specified in Annex F hereto. Each Pledgor
will not move its chief executive office except to such new location as such
Pledgor may establish in accordance with the last sentence of this Section 17.
The originals of all documents in the possession of such Pledgor evidencing all
Collateral, including but not limited to all Limited Liability Company Interests
and Partnership Interests, and the only original books of account and records of
such Pledgor relating thereto are, and will continue to be, kept at such chief
executive office as specified in Annex F hereto, or at such new locations as
such Pledgor may establish in accordance with the last sentence of this Section
17. All Limited Liability Company Interests and Partnership Interests are, and
will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, such chief executive
office as specified in Annex F hereto, or such new locations as such Pledgor may
establish in accordance with the last sentence of this Section 17. No Pledgor
shall establish a new location for such offices until (i) it shall have given to
the Pledgee not less than 30 days' prior written notice of its intention so to
do, clearly describing such new location and providing such other information in
connection therewith as the Pledgee may reasonably request and (ii) with respect
to such new location, it shall have taken all action, satisfactory to the
Pledgee, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all
Exhibit G
times fully perfected and in full force and effect. Promptly after establishing a new location for such offices in accordance with the immediately preceding sentence, the respective Pledgor shall deliver to the Pledgee a supplement to Annex F hereto so as to cause such Annex F hereto to be complete and accurate.
18. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument including, without limitation, this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Pledgor or any Subsidiary
of any Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
19. REGISTRATION, ETC. (a) If there shall have occurred and be continuing an Event of Default then, and in every such case, upon receipt by any Pledgor from the Pledgee of a written request or requests that such Pledgor cause any registration, qualification or compliance under any Federal or state securities law or laws to be effected with respect to all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests, such Pledgor as soon as practicable and at its expense will cause such registration to be effected (and be kept effective) and will cause such qualification and compliance to be declared effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Collateral, including, without limitation, registration under the Securities Act, as then in effect (or any similar statute then in effect), appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with any other government requirements, provided, that the Pledgee shall furnish to such Pledgor such information regarding the Pledgee as such Pledgor may reasonably request in writing and as shall be required in connection with any such registration, qualification or compliance. Such Pledgor will cause the Pledgee to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will furnish to the Pledgee such number of prospectuses, offering circulars or other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify the Pledgee, each other Secured Creditor and all others participating in the distribution of such Collateral against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in
Exhibit G
any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to such Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to Section
7 hereof, and the Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Collateral, as the case may be, or part thereof by private sale in such manner
and under such circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Collateral or part thereof shall have been filed under such Securities Act,
(ii) may approach and negotiate with a single possible purchaser to effect such
sale, and (iii) may restrict such sale to a purchaser who will represent and
agree that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Collateral or part thereof.
In the event of any such sale, the Pledgee shall incur no responsibility or
liability for selling all or any part of the Collateral at a price which the
Pledgee, in its sole and absolute discretion, in good faith deems reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after
registration as aforesaid.
20. TERMINATION; RELEASE. (a) After the Termination Date, this Agreement and the security interest created hereby shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination), and the Pledgee, at the request and expense of any Pledgor, will execute and deliver to such Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any monies at the time held by the Pledgee or any of its sub-agents hereunder. As used in this Agreement, "Termination Date" shall mean the date upon which the Total Commitment and all Interest Rate Protection Agreements and Other Hedging Agreements have been terminated, no Note under the Credit Agreement is outstanding (and all Loans have been repaid in full), all Letters of Credit have been terminated and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold in connection with a sale permitted by Section 9.02 of the Credit Agreement (other than a sale to any Pledgor or any Subsidiary thereof) or is otherwise released at the direction of the Required Lenders (or all Lenders if required by Section 13.12 of the Credit Agreement) and the proceeds of such sale or sales or from such release are applied in accordance with the provisions of the Credit Agreement, to the extent required to be so applied, the Pledgee, at the request and expense of any Pledgor, will duly assign, transfer and deliver to such Pledgor (without recourse and without any
Exhibit G
representation or warranty) such of the Collateral (and releases therefor) as is then being (or has been) so sold or released and has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign, transfer and deliver Collateral (and releases therefor) as provided in Section 20(a) or (b) hereof, it shall deliver to the Pledgee a certificate signed by a principal executive officer of such Pledgor stating that the release of the respective Collateral is permitted pursuant to such Section 20(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with this Section 20.
21. NOTICES, ETC. All such notices and communications hereunder shall be sent or delivered by mail, telegraph, telex, telecopy, cable or overnight courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be effective when delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier and when mailed shall be effective three Business Days following deposit in the mail with proper postage, except that notices and communications to the Pledgee shall not be effective until received by the Pledgee. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at the address set forth opposite such Pledgor's signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Greg Shefrin
Telephone No.: (212) 250-1725
Telecopier No.: (212) 250-7218;
(c) if to any Lender Creditor, either (x) to the Administrative Agent, at the address of the Administrative Agent specified in the Credit Agreement or (y) at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other Creditor shall have specified in writing to the Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
22. WAIVER; AMENDMENT. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Pledgor directly affected thereby and the Pledgee (with the written
Exhibit G
consent of either (x) the Required Lenders (or all of the Lenders to the extent required by Section 13.12 of the Credit Agreement) at all times prior to the time on which all Credit Document Obligations have been paid in full or (y) the holders of at least a majority of the outstanding Other Obligations at all times after the time on which all Credit Document Obligations have been paid in full); provided, that any change, waiver, modification or variance affecting the rights and benefits of a single Class (as defined below) of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall also require the written consent of the Requisite Creditors (as defined below) of such affected Class. For the purpose of this Agreement, the term "Class" shall mean each class of Secured Creditors, i.e., whether (i) the Lender Creditors as holders of the Credit Document Obligations or (ii) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term "Requisite Creditors" of any Class shall mean each of (i) with respect to the Credit Document Obligations, the Required Lenders and (ii) with respect to the Other Obligations, the holders of at least a majority of all obligations outstanding from time to time under the Interest Rate Protection Agreements and Other Hedging Agreements.
23. MISCELLANEOUS. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns, provided that no Pledgor may assign any of its rights or obligations under this Agreement without the prior consent of the Collateral Agent. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH PLEDGOR IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto.
24. RECOURSE. This Agreement is made with full recourse to the Pledgors and pursuant to and upon all the representations, warranties, covenants and agreements on the part of the Pledgors contained herein and in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the Credit Agreement shall become a Pledgor hereunder by executing a counterpart hereof and delivering the same to the Pledgee.
* * * *
Exhibit G
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
Address:
8233 Imperial Drive TRANSDIGM HOLDING COMPANY,
Waco, TX 76712 as a Pledgor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By
------------------------------
Title:
8233 Imperial Drive TRANSDIGM INC.,
Waco, TX 76712 as a Pledgor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By
------------------------------
Title:
8233 Imperial Drive MARATHON POWER TECHNOLOGIES
Waco, TX 76712 COMPANY,
Attention: Douglas W. Peacock as a Pledgor
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By
------------------------------
Title:
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Pledgee, Collateral Agent
By
--------------------------------
Title:
|
ANNEX A
to
PLEDGE AGREEMENT
|
LIST OF SUBSIDIARIES
I. TransDigm Holding Company
TransDigm Inc.
II. TransDigm Inc.
Marathon Power Technologies Company
III. Marathon Power Technologies Company
None.
ANNEX B
to
PLEDGE AGREEMENT
LIST OF STOCK
I. TransDigm Holding Company
==========================================================================================
Percentage of
Outstanding Shares Relevant Sub-Clause
Name of Issuing Certificate Type of Number of of of Section 3.2(a)
Corporation Number Shares Shares Capital Stock of Pledge Agreement
----------- ------ ------ ------ ------------- -------------------
------------------------------------------------------------------------------------------
TransDigm Inc. Common 100% (i)
==========================================================================================
|
II. TransDigm Inc.
==============================================================================================
Percentage of
Outstanding Shares Relevant Sub-Clause
Name of Issuing Certificate Type of Number of of of Section 3.2(a)
Corporation Number Shares Shares Capital Stock of Pledge Agreement
----------- ------ ------ ------ ------------- -------------------
----------------------------------------------------------------------------------------------
Marathon Power
Technologies Company Company 100% (i)
==============================================================================================
|
III. Marathon Power Technologies Company
=========================================================================================
Percentage of
Outstanding Shares Relevant Sub-Clause
Name of Issuing Certificate Type of Number of of of Section 3.2(a)
Corporation Number Shares Shares Capital Stock of Pledge Agreement
----------- ------ ------ ------ ------------- -------------------
-----------------------------------------------------------------------------------------
None
=========================================================================================
|
ANNEX C
to
PLEDGE AGREEMENT
LIST OF NOTES
I. TransDigm Holding Company
Relevant Sub-clause of
Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
II. TransDigm Inc.
Sub-clause of Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
III. Marathon Power Technologies Company
Sub-clause of Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
ANNEX D
to
PLEDGE AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
I. TransDigm Holding Company
None.
II. TransDigm Inc.
None.
III. Marathon Power Technologies Company
None.
ANNEX E
to
PLEDGE AGREEMENT
LIST OF PARTNERSHIP INTERESTS
I. TransDigm Holding Company
None.
II. TransDigm Inc.
None.
III. Marathon Power Technologies Company
None.
ANNEX F
to
PLEDGE AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
I. TransDigm Holding Company
II. TransDigm Inc.
III. Marathon Power Technologies Company
ANNEX G
to
PLEDGE AGREEMENT
Form of Agreement Regarding Uncertificated Securities, Limited Liability Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to time, this "Agreement"), dated as of _______ __, ____, among each of the undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"), Bankers Trust Company, not in its individual capacity but solely as Collateral Agent (the "Pledgee"), and __________, as the issuer of the Uncertificated Securities, Limited Liability Company Interests and/or Partnership Interests (each as defined below) (the "Issuer").
W I T N E S S E T H :
WHEREAS, each Pledgor and the Pledgee have entered into a Pledge Agreement, dated as of December 3, 1998 (as amended, amended and restated, modified or supplemented from time to time, the "Pledge Agreement"), under which, among other things, in order to secure the payment of the Obligations (as defined in the Pledge Agreement), each Pledgor will pledge to the Pledgee for the benefit of the Secured Creditors (as defined in the Pledge Agreement), and grant a security interest in favor of the Pledgee for the benefit of the Secured Creditors in, all of the right, title and interest of such Pledgor in and to any and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of the Uniform Commercial Code, as adopted in the State of New York) ("Uncertificated Securities"), (2) Partnership Interests (as defined in the Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the Pledge Agreement), in each case issued from time to time by the Issuer, whether now existing or hereafter from time to time acquired by such Pledgor (with all of such Uncertificated Securities, Partnership Interests and Limited Liability Company Interests being herein collectively called the "Issuer Pledged Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this Agreement in order to perfect the security interest of the Pledgee under the Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control of the Issuer Pledge Interests and to provide for the rights of the parties under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the Issuer, and the Issuer hereby agrees, to comply with any and all instructions and orders originated by the
Pledgee (and its successors and assigns) regarding any and all of the Issuer Pledged Interests without the further consent by the registered owner (including the respective Pledgor), and not to comply with any instructions or orders regarding any or all of the Issuer Pledged Interests originated by any person or entity other than the Pledgee (and its successors and assigns) or a court of competent jurisdiction.
2. The Issuer hereby certifies that (i) no notice of any security interest, lien or other encumbrance or claim affecting the Issuer Pledged Interests (other than the security interest of the Pledgee) has been received by it, and (ii) the security interest of the Pledgee in the Issuer Pledged Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by the Pledgors of, and the granting by the Pledgors of a security interest in, the Issuer Pledged Interests to the Pledgee, for the benefit of the Secured Creditors, does not violate the charter, by-laws, partnership agreement, membership agreement or any other agreement governing the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged Interests are fully paid and nonassessable.
4. All notices, statements of accounts, reports, prospectuses, financial statements and other communications to be sent to any Pledgor by the Issuer in respect of the Issuer will also be sent to the Pledgee at the following address:
Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street New York, New York 10006 Attention: Greg Shefrin Tel: (212) 250-1725 Fax: (212) 250-7218
5. Until the Pledgee shall have delivered written notice to the Issuer that all of the Obligations have been paid in full and this Agreement is terminated, the Issuer will send any and all redemptions, distributions, interest or other payments in respect of the Issuer Pledged Interests from the Issuer for the account of the Pledgor only by wire transfers to the following address:
6. Except as expressly provided otherwise in Sections 4 and 5, all notices, instructions, orders and communications hereunder shall be sent or delivered by mail, telex, telecopy or overnight courier service and all such notices and communications shall, when mailed, telexed, telecopied or sent by overnight courier, be effective when deposited in the mails
or delivered to the overnight courier, prepaid and properly addressed for delivery on such or the next Business Day, or sent by telex or telecopier, except that notices and communications to the Pledgee shall not be effective until received by the Pledgee. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at:
(b) if to the Pledgee, at:
Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street New York, New York 10006 Attention: Greg Shefrin Tel: (212) 250-1725 Fax: (212) 250-7218
(c) if to the Issuer, at:
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
7. This Agreement shall be binding upon the successors and assigns of each Pledgor and the Issuer and shall inure to the benefit of and be enforceable by the Pledgee and its successors and assigns. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto. None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever except in writing signed by the Pledgee, the Issuer and any Pledgor which at such time owns any Issuer Pledged Interests.
8. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflict of laws.
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Collateral Agent and Pledgee
Title:
Title:
EXHIBIT H
SECURITY AGREEMENT
among
TRANSDIGM HOLDING COMPANY,
TRANSDIGM INC.,
CERTAIN OTHER SUBSIDIARIES OF TRANSDIGM HOLDING COMPANY
and
BANKERS TRUST COMPANY,
as COLLATERAL AGENT
Dated as of December 3, 1998
TABLE OF CONTENTS
ARTICLE I
SECURITY INTERESTS.............................................................2
1.1. Grant of Security Interests......................................2
1.2. Power of Attorney................................................2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..............................3
2.1. Necessary Filings................................................3
2.2. No Liens.........................................................3
2.3. Other Financing Statements.......................................3
2.4. Chief Executive Office, Record Locations.........................3
2.5. Location of Inventory and Equipment..............................4
2.6. Recourse.........................................................4
2.7. Trade Names; Change of Name......................................4
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER....................................5
3.1. Additional Representations and Warranties........................5
3.2. Maintenance of Records...........................................5
3.3. Direction to Account Debtors; Contracting Parties; etc...........5
3.4. Modification of Terms; etc.......................................6
3.5. Collection.......................................................6
3.6. Instruments......................................................6
3.7. Assignors Remain Liable Under Receivables........................6
3.8. Assignors Remain Liable Under Contracts..........................7
3.9. Further Actions..................................................7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS.......................................7
4.1. Additional Representations and Warranties........................7
4.2. Licenses and Assignments.........................................8
4.3. Infringements....................................................8
4.4. Preservation of Marks............................................8
4.5. Maintenance of Registration......................................8
4.6. Future Registered Marks..........................................8
4.7. Remedies.........................................................8
ARTICLE V
|
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..........................................9
5.1. Additional Representations and Warranties........................9
5.2. Licenses and Assignments.........................................9
5.3. Infringements....................................................9
5.4. Maintenance of Patents or Copyright.............................10
5.5. Prosecution of Patent Applications..............................10
5.6. Other Patents and Copyrights....................................10
5.7. Remedies........................................................10
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL..........................................10
6.1. Protection of Collateral Agent's Security.......................10
6.2. Warehouse Receipts Non-negotiable...............................11
6.3. Further Actions.................................................11
6.4. Financing Statements............................................11
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT..................................11
7.1. Remedies; Obtaining the Collateral Upon Default.................11
7.2. Remedies; Disposition of the Collateral.........................13
7.3. Waiver of Claims................................................13
7.4. Application of Proceeds.........................................14
7.5. Remedies Cumulative.............................................16
7.6. Discontinuance of Proceedings...................................16
ARTICLE VIII
INDEMNITY.....................................................................17
8.1. Indemnity.......................................................17
8.2. Indemnity Obligations Secured by Collateral; Survival...........18
ARTICLE X
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MISCELLANEOUS.................................................................23
10.2. Waiver; Amendment.............................................23
10.3. Obligations Absolute..........................................24
10.4. Successors and Assigns........................................24
10.5. Headings Descriptive..........................................24
10.6. Governing Law.................................................24
10.7. Assignor's Duties.............................................24
10.8. Termination; Release..........................................24
10.9. Counterparts..................................................25
10.10. Severability..................................................25
10.11. The Collateral Agent..........................................25
10.12. Benefit of Agreement..........................................26
10.13. Additional Assignors..........................................26
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Location
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patent
ANNEX F Schedule of Copyrights
ANNEX G Form of Assignment of Security Interest in United States
Trademarks and Patents
ANNEX H Form of Assignment of Security Interest in United States
Copyrights
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EXHIBIT H
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 3, 1998, made by each of the undersigned assignors (each an "Assignor" and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.13 hereof, the "Assignors") in favor of Bankers Trust Company, as Collateral Agent (the "Collateral Agent"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, TransDigm Holding Company ("Holdings"), TransDigm Inc. (the "Borrower"), the lenders party from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (together with any successor administrative agent, the "Administrative Agent"), have entered into a Credit Agreement, dated as of December 3, 1998, providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (as amended, modified or supplemented from time to time, the "Credit Agreement") (the Lenders, the Administrative Agent, the Letter of Credit Issuers and the Collateral Agent are herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender's or affiliate's successors and assigns, if any, collectively, the "Other Creditors", and together with the Lender Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein:
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, it is a condition precedent to the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement that each Assignor shall have executed and delivered to the Collateral Agent this Agreement; and
Exhibit H
WHEREAS, each Assignor will obtain benefits from the incurrence of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement and the entering into by the Borrower of Interest Rate Protection Agreements or Other Hedging Agreements and, accordingly, each Assignor desires to enter into this Agreement in order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest in, all of the right, title and
interest of such Assignor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, Trade Secrets Rights, (viii) all other Goods,
General Intangibles, Investment Property, Permits, Chattel Paper, Documents,
Instruments and other assets (including cash), (ix) the Cash Collateral Account
and all monies, securities, instruments and other investments deposited or
required to be deposited in such Cash Collateral Account, (x) all other bank,
demand, time savings, cash management, passbook, certificates of deposit and
similar accounts maintained by such Assignor and all monies, securities,
instruments and other investments deposited or required to be deposited in any
of the foregoing accounts, and (xi) all Proceeds and products of any and all of
the foregoing (all of the above, collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral of the kind which is the subject of this Agreement which any Assignor may acquire at any time during the term of this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to
Exhibit H
endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been accomplished (or within 10 days after the Initial Borrowing Date will be accomplished) and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by filing a financing statement under the Uniform Commercial Code as enacted in any relevant jurisdiction or in the United States Patent and Trademark Office or in the United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien, security interest, encumbrance or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.
2.4. Chief Executive Office, Record Locations. The chief executive office of such Assignor is located at the address indicated on Annex A hereto for such Assignor. Such Assignor will not move its chief executive office except to such new location as such Assignor may establish in accordance with the last sentence of this Section 2.4. The originals of all documents evidencing all Receivables and Contract Rights of such Assignor and the only
Exhibit H
original books of account and records of such Assignor relating thereto are, and
will continue to be, kept at such chief executive office, at one or more of the
other locations set forth on Annex A hereto or at such new locations as such
Assignor may establish in accordance with the last sentence of this Section 2.4.
All Receivables and Contract Rights of such Assignor are, and will continue to
be, maintained at, and controlled and directed (including, without limitation,
for general accounting purposes) from, the office locations described above or
such new location established in accordance with the last sentence of this
Section 2.4. No Assignor shall establish new locations for such offices until
(i) it shall have given to the Collateral Agent not less than 15 days' prior
written notice of its intention to do so, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, and (ii) with respect to such new location, it
shall have taken all action reasonably satisfactory to the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.5. Location of Inventory and Equipment. All Inventory and Equipment held on the date hereof by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor. Each Assignor agrees that all Inventory and Equipment now held or subsequently acquired by it shall be kept at (or shall be in transport to) any one of the locations shown on Annex B hereto, or such new location as such Assignor may establish in accordance with the last sentence of this Section 2.5. Any Assignor may establish a new location for Inventory and Equipment only if (i) it shall have given to the Collateral Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such new location and providing such other information in connection therewith as the Collateral Agent may request and (ii) with respect to such new location, it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each Assignor (including, without limitation, with full recourse to all assets of such Assignor) and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, any trade names, fictitious names or other names except its legal name and such other trade or fictitious names as are listed on Annex C hereto for such Assignor. No Assignor shall change its legal name or assume or operate in any jurisdiction under any trade, fictitious or other name except those names listed on Annex C hereto for such Assignor and new names established in accordance with the last sentence of this Section 2.7. No Assignor shall assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Collateral Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such new name and the jurisdictions in which such new name shall be used and providing such other information in connection therewith as the Collateral Agent may reasonably request and (ii) with respect to such new name, it shall have taken all action reasonably requested
Exhibit H
by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
ARTICLE III III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
3.1. Additional Representations and Warranties. As of the time when each of its Receivables arises, each Assignor shall be deemed to have represented and warranted that such Receivable, and all records, papers and documents relating thereto (if any) are what they purport to be.
3.2. Maintenance of Records. Each Assignor will keep and maintain at its own cost and expense accurate records of its Receivables and Contracts, including, but not limited to, originals of all documentation (including each Contract) with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignor's premises to the Collateral Agent for inspection, at such Assignor's own cost and expense, at any and all reasonable times upon prior notice to such Assignor. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Receivables and Contract Rights (including, without limitation, all documents evidencing the Receivables and all Contracts) and such books and records to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent, the Receivables and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Receivables and Contracts with an appropriate reference to the fact that such Receivables and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all payments on account of the Receivables and Contracts to be made directly to the Cash Collateral Account, (y) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Receivables and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and (z) that the Collateral Agent may enforce collection of any such Receivables and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Assignor. Without notice to or assent by any Assignor, the Collateral Agent may apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account which application shall be effected in the manner provided in Section 7.4 of this Agreement. The costs and expenses (including reasonable attorneys' fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne by the relevant Assignor. The Collateral Agent
Exhibit H
shall deliver a copy of each notice referred to in the preceding clause (y) to the relevant Assignor, provided, that the failure by the Collateral Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.3.
3.4. Modification of Terms; etc. Except in accordance with such Assignor's ordinary course of business and consistent with reasonable business judgment, no Assignor shall rescind or cancel any indebtedness evidenced by any Receivable or under any Contract, or modify any term thereof or make any adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Receivable or Contract, or interest therein, without the prior written consent of the Collateral Agent. No Assignor will do anything to impair the rights of the Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Receivables or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Receivable or Contract, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Receivable or under such Contract, except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Receivables and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument constituting Collateral (other than checks and other payment instruments received and collected in the ordinary course of business), such Assignor will within 10 Business Days notify the Collateral Agent thereof, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent as further security hereunder.
3.7. Assignors Remain Liable Under Receivables. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Receivables to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Receivables. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment
Exhibit H
relating to such Receivable pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Receivable (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.8. Assignors Remain Liable Under Contracts. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.9. Further Actions. Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to its Receivables, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks listed in Annex D hereto for such Assignor and that said listed Marks include all United States marks and applications for United States marks registered in the United States Patent and Trademark Office that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks that it uses. Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignor's present or contemplated business operations infringes or will infringe any trademark, service mark or trade name other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor represents and warrants that it is the true and lawful owner of or
Exhibit H
otherwise has the right to use all U.S. trademark registrations and applications listed in Annex D hereto and that said registrations are valid, subsisting, have not been cancelled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, or is not aware that there is any reason that any of said registrations is invalid or unenforceable, or is not aware that there is any reason that any of said applications will not pass to registration other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office in order to effect an absolute assignment of all right, title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Mark absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is infringing or diluting or otherwise violating any of such Assignor's rights in and to any Mark, or with respect to any party claiming that such Assignor's use of any Mark violates in any material respect any property right of that party. Each Assignor further agrees to prosecute in accordance with reasonable business practices any Person infringing any Mark in any manner that could reasonably be expected to have a Material Adverse Effect.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are necessary to preserve such Marks as trademarks or service marks under the laws of the United States.
4.5. Maintenance of Registration. Each Assignor shall, at its own expense, diligently process all documents required to maintain trademark registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its significant registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent.
4.6. Future Registered Marks. If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office, within 30 days of receipt of such certificate, such Assignor shall deliver to the Collateral Agent a copy of such certificate, and an assignment for security in such Mark, to the Collateral Agent and at the expense of such Assignor, confirming the assignment for security in such Mark to the Collateral Agent hereunder, the form of such security to be substantially the
Exhibit H
same as the form hereof or in such other form as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks, together with all trademark rights and rights of protection to the same, vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency; (ii) take and use or sell the Marks and the goodwill of such Assignor's business symbolized by the Marks and the right to carry on the business and use the assets of such Assignor in connection with which the Marks have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Marks and registrations and any pending trademark application in the United States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of the Assignor (the "Trade Secret Rights"), (ii) the
Patents listed in Annex E hereto for such Assignor and that said Patents include
all the United States patents and applications for United States patents that
such Assignor owns as of the date hereof and (iii) the Copyrights listed in
Annex F hereto for such Assignor and that said Copyrights constitute all the
United States copyrights registered with the United States Copyright Office and
applications to United States copyrights that such Assignor owns as of the date
hereof. Each Assignor further warrants that it has no knowledge of any third
party claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any patent or such Assignor has
misappropriated any trade secret or proprietary information which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent, and to record the
same.
Exhibit H
5.2. Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright acquired after the date hereof absent prior written approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning thereof, to furnish the Collateral Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party in any manner which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent to the contrary, to diligently prosecute any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right in accordance with such Assignor's reasonable business judgment.
5.4. Maintenance of Patents or Copyright. At its own expense, each Assignor shall make timely payment of all post-issuance fees required pursuant to 35 U.S.C. ss. 41 to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent.
5.5. Prosecution of Patent Applications. At its own expense, each Assignor shall diligently prosecute all significant applications for (i) United States Patents listed in Annex E hereto and (ii) Copyrights listed on Annex F hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies, absent written consent of the Collateral Agent.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy of said Copyright or certificate or registration of, or application therefor, said Patents, as the case may be, with an assignment for security as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the expense of such Assignor, confirming the assignment for security, the form of such assignment for security to be substantially the same as the form hereof or in such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Creditors, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the
Exhibit H
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent may reasonably request further to confirm this and to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times keep its Inventory and Equipment insured in favor of the Collateral Agent, at such Assignor's own expense to the extent and in the manner provided in the Credit Agreement. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Credit Agreement, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as such term is used in Section 7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense and upon the request of the Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which the Collateral Agent deems reasonably appropriate or advisable to perfect, preserve or protect its security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to execute and deliver to the Collateral Agent such financing statements, in form reasonably acceptable to the Collateral Agent, as the Collateral Agent may from time to time reasonably request or as are necessary or desirable in the opinion of the Collateral Agent to establish and maintain a valid, enforceable, first priority perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby all in accordance with the UCC as enacted in any and all relevant jurisdictions or any other relevant law. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby
Exhibit H
authorizes the Collateral Agent to file any such financing statements without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect, in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignor's premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Receivables and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;
(iii) withdraw all monies, securities and instruments in the Cash Collateral Account for application to the Obligations in accordance with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct the relevant Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by directing the relevant Assignor in writing to deliver the same to the Collateral Agent at any place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and
Exhibit H
(z) while the Collateral shall be so stored and kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement, the Secured Creditors agree that this Agreement may be enforced only by the action of the Collateral Agent acting upon the instructions of the Required Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Creditors upon the terms of this Agreement and the Credit Agreement.
7.2. Remedies; Disposition of the Collateral. If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor which the Collateral Agent shall determine to be commercially reasonable. Any such disposition which shall be a private sale or other private proceedings permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time at which such disposition is to be made and the intended sale price or other consideration therefor, and shall be subject, for the 10 days after the giving of such notice, to the right of the relevant Assignor or any nominee of such Assignor to acquire the Collateral involved at a price or for such other consideration at least equal to the intended sale price or other consideration so specified. Any such disposition which shall be a public sale permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time and place of such sale and, in the absence of applicable requirements of law, shall be by public auction (which may, at the Collateral Agent's option, be subject to reserve), after publication of notice of such auction (where required by applicable law) not less than 10 days prior thereto. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser of the Collateral or any item thereof, offered for
Exhibit H
sale in accordance with this Section without accountability to the relevant Assignor. If, under mandatory requirements of applicable law, the Collateral Agent shall be required to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Collateral Agent need give such Assignor only such notice of disposition as shall be reasonably practicable in view of such mandatory requirements of applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such sale or sales of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any damages which are the direct result of the Collateral Agent's gross negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the Collateral Agent (or, to the extent the Pledge Agreement or any Additional Security Document require proceeds of collateral under such Security Document to be applied in accordance with the provisions of this Agreement, the Pledgee or Collateral Agent under such other Security Document) upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder, shall be applied as follows.
Exhibit H
(i) first, to the payment of all amounts owing the Collateral Agent of the type described in clauses (iii) and (iv) of the definition of "Obligations";
(ii) second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Primary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to such outstanding Primary Obligations or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Secondary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Secondary Obligations or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application pursuant to the preceding clauses (i) through (iii), inclusive, and following the termination of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean, when calculating a Secured Creditor's portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Creditor's Primary Obligations or Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Primary Obligations or Secondary Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the Credit Document Obligations, all principal of, and interest on, all Loans, all Unpaid Drawings and all Fees and (ii) in the case of the Other Obligations, all amounts due under such Interest Rate Protection Agreements or Other Hedging Agreements (other than indemnities, fees (including, without limitation, attorneys' fees) and similar obligations and liabilities) and (z) "Secondary Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary
Exhibit H
Obligations or Secondary Obligations, as the case may be, of all Secured Creditors entitled to such distribution.
(d) Each of the Secured Creditors, by their acceptance of the benefits hereof, agrees and acknowledges that if the Lender Creditors are to receive a distribution on account of undrawn amounts with respect to Letters of Credit issued under the Credit Agreement (which shall only occur after all outstanding Loans and Unpaid Drawings with respect to such Letters of Credit have been paid in full), such amounts shall be paid to the Administrative Agent under the Credit Agreement and held by it, for the equal and ratable benefit of the Lender Creditors, as cash security for the repayment of Obligations owing to the Lender Creditors as such. If any amounts are held as cash security pursuant to the immediately preceding sentence, then upon the termination of all outstanding Letters of Credit, and after the application of all such cash security to the repayment of all Obligations owing to the Lender Creditors after giving effect to the termination of all such Letters of Credit, if there remains any excess cash, such excess cash shall be returned by the Administrative Agent to the Collateral Agent for distribution in accordance with Section 7.4(a) hereof.
(e) All payments required to be made hereunder shall be made (x) if to the Lender Creditors, to the Administrative Agent under the Credit Agreement for the account of the Lender Creditors, and (y) if to the Other Creditors, to the trustee, paying agent or other similar representative (each a "Representative") for the Other Creditors or, in the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
the Other Creditors or, in the absence of such a Representative, upon the Other
Creditors for a determination (which the Administrative Agent, each
Representative for any Other Creditors and the Secured Creditors agree (or shall
agree) to provide upon request of the Collateral Agent) of the outstanding
Primary Obligations and Secondary Obligations owed to the Lender Creditors or
the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Lender Creditor or an Other Creditor)
to the contrary, the Administrative Agent and each Representative, in furnishing
information pursuant to the preceding sentence, and the Collateral Agent, in
acting hereunder, shall be entitled to assume that no Secondary Obligations are
outstanding. Unless it has actual knowledge (including by way of written notice
from an Other Creditor) to the contrary, the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Interest Rate Protection
Agreements or Other Hedging Agreements are in existence.
(g) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.
7.5. Remedies Cumulative. Each and every right, power and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given under this Agreement, the other Secured Debt Agreements or now or
Exhibit H
hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence therein. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys' fees, and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement, any other Secured Debt
Agreement or any other document executed in connection herewith or therewith or
in any other way connected with the administration of the transactions
contemplated hereby or thereby or the enforcement of any of the terms of, or the
preservation of any rights under any thereof, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or
Exhibit H
unit, any tort (including, without limitation, claims arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent caused by the gross negligence or wilful misconduct of such Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the relevant Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the relevant Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral Agent for any and all reasonable fees, costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Collateral Agent's Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral, premiums for insurance with respect to the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Collateral Agent's interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b) hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement, any other Secured Debt Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Secured Debt Agreement.
(d) If and to the extent that the obligations of any Assignor under this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Notes issued under the Credit Agreement, the termination of all Interest Rate Protection Agreements or Other Hedging Agreements and all Letters of Credit and the payment of all other Obligations and notwithstanding the discharge thereof but shall not thereafter be secured by any security interest granted hereby.
Exhibit H
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the recitals of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be modified, supplemented or amended from time to time in accordance with its terms.
"Assignor" shall have the meaning provided in the first paragraph of this Agreement.
"Borrower" shall have the meaning provided in the recitals of this Agreement.
"Cash Collateral Account" shall mean a cash collateral account maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this Agreement.
"Collateral Agent" shall have the meaning provided in the first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
"Contracts" shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Interest Rate Protection Agreements or Other Hedging Agreements and any partnership agreements, joint venture agreements and limited liability company agreements), but excluding any contract to the extent that the terms thereof prohibit (after giving effect to any approvals or waivers) the assignment of, or granting a security interest in, such contract (it being understood and agreed, however, that notwithstanding the foregoing, all rights to payment for money due or to become due pursuant to any such excluded contract shall be subject to the security interests created by this Agreement).
Exhibit H
"Copyrights" shall mean any United States copyright owned by any Assignor, including any registrations of any Copyrights, in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor and, in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Other Obligations after the expiration of any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York (and shall include all partnership interests and all limited liability company and membership interests).
"Goods" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production -- from raw materials through work-in-process to finished goods -- and all products and proceeds of whatever
Exhibit H
sort and wherever located and any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's customers, and shall specifically include all "inventory" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor.
"Investment Property" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Lender Creditors" shall have the meaning provided in the recitals of this Agreement.
"Lenders" shall have the meaning provided in the recitals of this Agreement.
"Liens" shall mean any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor's interest in a financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration of any trademarks and service marks in the United States Patent and Trademark Office or in any equivalent foreign office and any trade dress including logos and/or designs used by any Assignor.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, Fees
and interest thereon) of each Assignor to the Lender Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with the
Credit Agreement and the other Credit Documents to which such Assignor is a
party (including, in the case of each Guarantor, all such obligations and
indebtedness of such Guarantor under any Guaranty to which it is a party) and
the due performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the Credit Agreement and in such other
Credit Documents (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and liabilities owing by such Assignor to the Other Creditors
under, or with respect to (including by reason of any Guaranty to which such
Assignor is a party), any Interest Rate Protection Agreement or Other Hedging
Agreement, whether such Interest Rate Protection Agreement or Other Hedging
Agreement is now in existence or hereafter arising, and the due performance and
compliance by such Assignor with all of the terms, conditions and agreements
contained therein (all such obligations and liabilities described in this clause
(ii) being herein collectively called the "Other Obligations"); (iii) any and
all sums advanced by the Assignee in order to preserve the Collateral or
preserve its security interest in the Collateral; (iv) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations,
or liabilities of such Assignor referred to in clauses (i) and (ii) above, after
an Event of Default shall have occurred and be continuing, the
Exhibit H
reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Assignee of its rights hereunder, together with reasonable attorneys' fees and court costs; and (v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 8.1 of this Agreement; it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals of this Agreement.
"Other Obligations" shall have the meaning provided in the definition of "Obligations" in this Article IX.
"Patents" shall mean any patent to which any Assignor now or hereafter has title and any divisions or continuations thereof, as well as any application for a patent now or hereafter made by any Assignor.
"Primary Obligations" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York on the date hereof or under other relevant law and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor and, in any event, shall include, but shall not be limited to, all of such Assignor's rights to payment for goods sold or leased or services performed by such Assignor, whether now in existence or arising from time to time hereafter, including, without limitation, rights evidenced by an account, note, contract, security agreement, chattel paper, or other evidence of indebtedness or security, together with (a) all security pledged, assigned, hypothecated or granted to or held by such Assignor to secure the foregoing, (b) all of any Assignor's right, title and interest in and to any goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all books, records, ledger cards, and invoices relating thereto, (f) all evidences of the filing of financing statements and other
Exhibit H
statements and the registration of other instruments in connection therewith and amendments thereto, notices to other creditors or secured parties, and certificates from filing or other registration officers, (g) all credit information, reports and memoranda relating thereto and (h) all other writings related in any way to the foregoing.
"Representative shall have the meaning provided in Section 7.4(e) of this Agreement.
"Required Secured Creditors" shall mean (i) the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, each of the Lenders) under the Credit Agreement so long as any Credit Document Obligations remain outstanding and (ii) in any situation not covered by the preceding clause (i), the holders of a majority of the outstanding principal amount of the Other Obligations.
"Requisite Creditors" shall have the meaning provided in Section 10.2 of this Agreement.
"Secondary Obligations" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals of this Agreement.
"Secured Debt Agreements" shall mean and include this Agreement, the other Credit Documents and the Interest Rate Protection Agreements and Other Hedging Agreements.
"Termination Date" shall have the meaning provided in Section 10.8 of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1 of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been duly given or made when delivered to the party to which such notice, request, demand or other communication is required or permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Assignor, at the address set forth opposite such Assignor's signature below;
Exhibit H
(b) if to the Collateral Agent, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Greg Shefrin
Tel. No.: (212) 250-1725
Fax. No.: (212) 250-7218;
(c) if to any Lender Creditor, at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly effected thereby and the Collateral Agent (with the written consent of the Required Secured Creditors); provided, however, that any change, waiver, modification or variance affecting the rights and benefits of a single Class of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall require the written consent of the Requisite Creditors of such affected Class. For the purpose of this Agreement, the term "Class" shall mean each class of Secured Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term "Requisite Creditors" of any Class shall mean each of (x) with respect to the Credit Document Obligations, the Required Lenders and (y) with respect to the Other Obligations, the holders of at least a majority of all obligations outstanding from time to time under the respective Interest Rate Protection Agreements or Other Hedging Agreements.
10.3. Obligations Absolute. The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon each Assignor and its successors and assigns (although no Assignor may assign its rights and obligations hereunder except in accordance with the provisions of the Secured Debt Agreements) and shall inure to the benefit of the Collateral Agent and the Secured Creditors and their
Exhibit H
respective successors and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 8.1 hereof shall survive such termination) and the Collateral Agent, at the request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement. As used in this Agreement, "Termination Date" shall mean the date upon which the Total Commitment and all Interest Rate Protection Agreements and Other Hedging Agreements have been terminated, no Note is outstanding (and all Loans have been repaid in full), all Letters of Credit have been terminated and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold in connection with a sale permitted by Section 9.02 of the Credit Agreement (other than a sale to any Assignor or a Subsidiary thereof) or otherwise released at the direction of the Required Secured Creditors and the proceeds of such sale or sales or from such release are applied in accordance with the provisions of the Credit Agreement, to the extent required to be so applied, such Collateral will be sold free and clear of the Liens created by this Agreement and the Collateral Agent, at the request and expense of the relevant Assignor, will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as
Exhibit H
is then being (or has been) so sold or released and as may be in the possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that an Assignor desires that the Collateral Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 10.8(a) or (b), such Assignor shall deliver to the Collateral Agent a certificate signed by a principal executive officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to Section 10.8(a) or (b).
10.9. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with each Assignor and the Collateral Agent.
10.10. Severability. Any provision of this Agreement which 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.
10.11. The Collateral Agent. The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Collateral Agent shall act hereunder and thereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
10.12. Benefit of Agreement. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns.
10.13. Additional Assignors. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the Credit Agreement shall become an Assignor hereunder by executing a counterpart hereof and delivering the same to the Collateral Agent.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
Address:
8233 Imperial Drive TRANSDIGM HOLDING COMPANY,
Waco, TX 76712 as an Assignor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By
-------------------------------
Title:
8233 Imperial Drive TRANSDIGM INC.,
Waco, TX 76712 as an Assignor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By
-------------------------------
Title:
8233 Imperial Drive MARATHON POWER TECHNOLOGIES
Waco, TX 76712 COMPANY,
Attention: Douglas W. Peacock as an Assignor
Telephone: (254) 741-5420
Telecopier: (254) 741-5402
By
-------------------------------
Title
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Assignee, Collateral Agent
By
------------------------------
Title:
|
ANNEX A
to
SECURITY AGREEMENT
|
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location -------- -------- |
ANNEX C
to
|
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
ANNEX D
to
SECURITY AGREEMENT
SCHEDULE OF MARKS
ANNEX E
to
SECURITY AGREEMENT
SCHEDULE OF PATENTS
ANNEX F
to
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS
ANNEX G
to
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of
which are hereby acknowledged, [Name of Assignor], a __________ corporation (the
"Assignor") with principal offices at ____________________________, hereby
assigns and grants to Bankers Trust Company, as Collateral Agent, with principal
offices at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006
(the "Assignee"), a security interest in (i) all of the Assignor's right, title
and interest in and to the United States trademarks, trademark registrations and
trademark applications (the "Marks") set forth on Schedule A attached hereto,
(ii) all of the Assignor's rights, title and interest in and to the United
States patents (the "Patents") set forth on Schedule B attached hereto, in each
case together with (iii) all Proceeds (as such term is defined in the Security
Agreement referred to below) and products of the Marks and Patents, (iv) the
goodwill of the businesses with which the Marks are associated and (v) all
causes of action arising prior to or after the date hereof for infringement of
any of the Marks and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the satisfactory performance and payment of all the Obligations of the Assignor, as such term is defined in the Security Agreement among the Assignor, the other assignors from time to time party thereto and the Assignee, dated as of December 3, 1998 (as amended from time to time, the "Security Agreement"). Upon the occurrence of the Termination Date (as defined in the Security Agreement), the Assignee shall, upon such satisfaction, execute, acknowledge, and deliver to the Assignor an instrument in writing releasing the security interest in the Marks and Patents acquired under this Assignment.
ANNEX G
This Assignment has been granted in conjunction with the security interest granted to the Assignee under the Security Agreement. The rights and remedies of the Assignee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Assignment are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
* * *
ANNEX G
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the ____ day of ____________, ____.
[NAME OF ASSIGNOR], Assignor
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Assignee
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Assignor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came ________ _____________________ who, being by me duly sworn, did state as follows: that [s]he is __________________ of Bankers Trust Company that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
Notary Public
SCHEDULE A
MARK REG. NO. REG. DATE
---- -------- ---------
|
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
|
ANNEX H
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
|
WHEREAS, [Name of Assignor], a _______________ corporation (the "Assignor"), having its chief executive office at ______________, ________________, is the owner of all right, title and interest in and to the United States copyrights and associated United States copyright registrations and applications for registration set forth in Schedule A attached hereto;
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its principal offices at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 (the "Assignee"), desires to acquire a security interest in said copyrights and copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to grant to the Assignee a security interest in and lien upon the copyrights and copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and subject to the terms and conditions of the Security Agreement, dated as of December 3, 1998, made by the Assignor, the other assignors from time to time party thereto and the Assignee (as amended from time to time, the "Security Agreement"), the Assignor hereby assigns to the Assignee as collateral security, and grants to the Assignee a security interest in, the copyrights and copyright registrations and applications therefor set forth in Schedule A attached hereto.
This Assignment has been granted in conjunction with the security interest granted to the Assignee under the Security Agreement. The rights and remedies of the Assignee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Assignment are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
Executed at New York, New York, the ___ day of _________, ____.
[NAME OF ASSIGNOR], as Assignor
Title:
BANKERS TRUST COMPANY, as
Collateral Agent, Assignee
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _________, ____, before me personally came ___________ _______________, who being duly sworn, did depose and say that [s]he is ___________________ of [Name of Assignor], that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came ________ _____________________ who, being by me duly sworn, did state as follows: that [s]he is __________________ of Bankers Trust Company that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
Notary Public
SCHEDULE A
REGISTRATION PUBLICATION NUMBERS DATE COPYRIGHT TITLE ------------ ----------- --------------- |
EXHIBIT I
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY, dated as of December 3, 1998 (as amended, modified or supplemented from time to time, this "Guaranty"), made by each of the undersigned guarantors (each a "Guarantor," and together with any other entity that becomes a guarantor hereunder pursuant to Section 26 hereof, the "Guarantors"). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, TransDigm Holding Company, TransDigm Inc. (the "Borrower"), the lenders from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (together with any successor administrative agent, the "Administrative Agent"), have entered into a Credit Agreement, dated as of December 3, 1998 (as amended, modified, or supplemented from time to time, the "Credit Agreement"), providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (the Lenders, the Collateral Agent, the Letter of Credit Issuers, and the Administrative Agent are herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender's or affiliate's successors and assigns, if any, collectively, the "Other Creditors," and together with the Lender Creditors, the "Secured Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement that each Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement and the entering into by the Borrower of Interest Rate Protection Agreements or Other Hedging Agreements and, accordingly, desires to execute this Guaranty in order to satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby makes the following representations and warranties to the Secured Creditors and hereby covenants and agrees with each Secured Creditor as follows:
Exhibit I
1. Each Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees: (i) to the Lender Creditors the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of and interest on the Notes issued by, and the Loans made to, the Borrower under the Credit Agreement, and all reimbursement obligations and Unpaid Drawings with respect to Letters of Credit issued under the Credit Agreement and (y) all other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to the Lender Creditors under the Credit Agreement or any other Credit Document to which the Borrower is a party (including, without limitation, indemnities, Fees and interest thereon), whether now existing or hereafter incurred under, arising out of or in connection with the Credit Agreement or any such other Credit Document and the due performance and compliance by the Borrower with all of the terms, conditions and agreements contained in the Credit Documents (all such principal, interest, liabilities, indebtedness and obligations being herein collectively called the "Credit Document Obligations"); and (ii) to each Other Creditor the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower under any Interest Rate Protection Agreement or Other Hedging Agreement, whether now in existence or hereafter arising, and the due performance and compliance by the Borrower with all of the terms, conditions and agreements contained in the Interest Rate Protection Agreements and Other Hedging Agreements (all such obligations, liabilities and indebtedness being herein collectively called the "Other Obligations," and together with the Credit Document Obligations, the "Guaranteed Obligations"). Each Guarantor understands, agrees and confirms that the Secured Creditors may enforce this Guaranty up to the full amount of the Guaranteed Obligations against such Guarantor without proceeding against any other Guarantor, the Borrower, against any security for the Guaranteed Obligations, or under any other guaranty covering all or a portion of the Guaranteed Obligations.
2. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 10.05 of the Credit Agreement, and unconditionally and irrevocably,
jointly and severally, promises to pay such Guaranteed Obligations to the
Secured Creditors, or order, on demand, in legal tender of the United States.
This Guaranty shall constitute a guaranty of payment, and not of collection.
3. The liability of each Guarantor hereunder is primary, absolute
and unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of the Borrower whether executed by such Guarantor,
any other Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever, including, without limitation: (a) any
direction as to application of payment by the Borrower or by any other party,
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the Guaranteed Obligations, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in
Exhibit I
personnel by the Borrower, (e) any payment made to any Secured Creditor on the indebtedness which any Secured Creditor repays the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (f) any action or inaction by the Secured Creditors as contemplated in Section 6 hereof or (g) any invalidity, irregularity or unenforceability of all or any part of the Guaranteed Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, any other guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, any other guarantor or the Borrower and whether or not any other Guarantor, any other guarantor or the Borrower be joined in any such action or actions. Each Guarantor waives, to the fullest extent permitted by law, the benefits of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by the Administrative Agent or any other Secured Creditor against, and any other notice to, any party liable thereon (including such Guarantor, any other Guarantor, any other guarantor or the Borrower).
6. Any Secured Creditor may at any time and from time to time without the consent of, or notice to, any Guarantor, without incurring responsibility to such Guarantor, without impairing or releasing the obligations of such Guarantor hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew or alter, any of the Guaranteed Obligations (including any increase or decrease in the rate of interest thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, surrender, impair, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit Party, any Subsidiary thereof or otherwise act or refrain from acting;
Exhibit I
(d) release or substitute any one or more endorsers, Guarantors, other guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Secured Creditors regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, any of the Interest Rate Protection Agreements or Other Hedging Agreements, the Credit Documents or any of the instruments or agreements referred to therein, or otherwise amend, modify or supplement any of the Interest Rate Protection Agreements or Other Hedging Agreements, the Credit Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Guaranty which may deprive such Guarantor of its right to subrogation against the Borrower to recover full indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of such Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Secured Creditor in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Secured Creditor would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Secured Creditor to any other or further action in any circumstances without notice or demand. It is not necessary for any Secured Creditor to inquire into the capacity or powers of the Borrower or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
8. Any indebtedness of the Borrower now or hereafter held by any Guarantor is hereby subordinated to the indebtedness of the Borrower to the Secured Creditors, and such indebtedness of the Borrower to any Guarantor, if the Administrative Agent or the Collateral Agent, after the occurrence and during the continuance of an Event of Default, so requests, shall
Exhibit I
be collected, enforced and received by such Guarantor as trustee for the Secured Creditors and be paid over to the Secured Creditors on account of the indebtedness of the Borrower to the Secured Creditors, but without affecting or impairing in any manner the liability of such Guarantor under the other provisions of this Guaranty. Without limiting the generality of the foregoing, each Guarantor hereby agrees with the Secured Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash.
9. (a) Each Guarantor waives any right (except as shall be required by applicable law and cannot be waived) to require the Secured Creditors to: (i) proceed against the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; (ii) proceed against or exhaust any security held from the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other remedy in the Secured Creditors' power whatsoever. Each Guarantor waives any defense based on or arising out of any defense of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party other than payment in full of the Guaranteed Obligations, including, without limitation, any defense based on or arising out of the disability of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment in full of the Guaranteed Obligations. The Secured Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or the other Secured Creditors by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, or exercise any other right or remedy the Secured Creditors may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations have been paid in full in cash. Each Guarantor waives any defense arising out of any such election by the Secured Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance, protests and notices, including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new or additional indebtedness. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and agrees that the Secured Creditors shall have no duty to advise any Guarantor of information known to them regarding such circumstances or risks.
10. The Secured Creditors agree that this Guaranty may be enforced only by the action of the Administrative Agent or the Collateral Agent, in each case acting upon the instructions of the Required Lenders (or, after the date on which all Credit Document Obligations
Exhibit I
have been paid in full, the holders of at least the majority of the outstanding Other Obligations) and that no other Secured Creditors shall have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the security to be granted by the Security Documents, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent or the Collateral Agent or, after all the Credit Document Obligations have been paid in full, by the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Guaranty and the Security Documents. The Secured Creditors further agree that this Guaranty may not be enforced against any director, officer, employee, partner or stockholder of any Guarantor (except to the extent such partner or stockholder is also a Guarantor hereunder).
11. In order to induce the Lenders to make Loans to, and issue Letters of Credit for the account of, the Borrower pursuant to the Credit Agreement, and in order to induce the Other Creditors to execute, deliver and perform the Interest Rate Protection Agreements or Other Hedging Agreements, each Guarantor represents, warrants and covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing corporation, partnership or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate, partnership or limited liability company, power and authority, as the case may be, to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business requires such qualification except for failures to be so qualified which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate, partnership or limited liability company, power and authority, as the case may be, to execute, deliver and perform the terms and provisions of this Guaranty and each other Document to which it is a party and has taken all necessary corporate, partnership or limited liability company, action, as the case may be, to authorize the execution, delivery and performance by it of this Guaranty and each such other Document. Such Guarantor has duly executed and delivered this Guaranty and each other Document to which it is a party, and this Guaranty and each such other Document constitutes the legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms, except to the extent that the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Document to which it is a party, nor compliance by
it with the terms and provisions hereof and thereof, will (i) contravene any
provision of any applicable law, statute, rule or regulation or any applicable
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the property or assets
of such Guarantor or any of its Subsidiaries pursuant to the
Exhibit I
terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement, or any other material agreement, contract or instrument to which such Guarantor or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or to which it may be subject or (iii) violate any provision of the certificate of incorporation or by-laws (or equivalent organizational documents) of such Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required for, (i) the execution, delivery and performance of this Guaranty by such Guarantor or any other Document to which such Guarantor is a party or (ii) the legality, validity, binding effect or enforceability of this Guaranty or any other Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or threatened
(i) with respect to this Guaranty or any other Document to which such Guarantor
is a party or (ii) with respect to such Guarantor that, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
12. Each Guarantor covenants and agrees that on and after the Effective Date and until the termination of the Total Commitment and all Interest Rate Protection Agreements and Other Hedging Agreements and when no Note or Letter of Credit remains outstanding and all Guaranteed Obligations have been paid in full, such Guarantor will comply, and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in Sections 8 and 9 of the Credit Agreement, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in Section 8 or 9 of the Credit Agreement, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all reasonable out-of-pocket costs and expenses of each Secured Creditor in connection with the enforcement of this Guaranty and of the Administrative Agent in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by each Secured Creditor).
14. This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Secured Creditors and their successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of either (x) the Required Lenders (or to the extent required by Section 13.12 of the Credit Agreement, with the written consent of each Lender) at all times prior to the time on which all Credit Document Obligations have been paid in full or (y) the holders of at least a majority of the outstanding Other Obligations at all times after the time on which all Credit Document Obligations have been paid in full; provided, that any change, waiver,
Exhibit I
modification or variance affecting the rights and benefits of a single Class (as
defined below) of Secured Creditors (and not all Secured Creditors in a like or
similar manner) shall also require the written consent of the Requisite
Creditors (as defined below) of such Class of Secured Creditors (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released). For the purpose of this
Guaranty, the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the Lender Creditors as holders of the Credit Document Obligations
or (y) the Other Creditors as the holders of the Other Obligations. For the
purpose of this Guaranty, the term "Requisite Creditors" of any Class shall mean
(x) with respect to the Credit Document Obligations, the Required Lender (or to
the extent required by Section 13.12 of the Credit Agreement, each Lender) and
(y) with respect to the Other Obligations, the holders of at least a majority of
all obligations outstanding from time to time under the Interest Rate Protection
or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy of each of the Credit Documents and Interest Rate Protection Agreements or Other Hedging Agreements has been made available to its principal executive officers and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Secured Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default (such term to mean and include any "Event of Default" as defined in the Credit Agreement or any payment default under any Interest Rate Protection Agreement or Other Hedging Agreement continuing after any applicable grace period), each Secured Creditor is hereby authorized, at any time or from time to time, without notice to any Guarantor or to any other Person, any such notice being expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Secured Creditor to or for the credit or the account of such Guarantor, against and on account of the obligations and liabilities of such Guarantor to such Secured Creditor under this Guaranty, irrespective of whether or not such Secured Creditor shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or unmatured. Notwithstanding anything to the contrary contained in this Section 17, no Secured Creditor shall exercise any such right of set-off without the prior consent of the Administrative Agent or the Required Lenders if, and so long as, the Guaranteed Obligations shall be secured by any Real Property located in the State of California, it being understood and agreed, however, that this sentence is for the sole benefit of the Secured Creditors and may be amended, modified or waived in any respect by the Required Lenders without the requirement of prior notice to or consent by any Credit Party and does not constitute a waiver of any rights against any Credit Party or against any Collateral.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Lender Creditor, as provided in the
Exhibit I
Credit Agreement, (ii) in the case of any Guarantor, at the address set forth opposite such Guarantor's signature below and (iii) in the case of any Other Creditor, at such address as such Other Creditor shall have specified in writing to the Guarantors; or in any case at such other address as any of the Persons listed above may hereafter notify the others in writing.
19. If claim is ever made upon any Secured Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including the Borrower) then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Guarantor, notwithstanding any revocation hereof or other instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Guaranty or any other Credit Document to which any Guarantor is a party may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby further irrevocably waives any claim that any such court lacks personal jurisdiction over such Guarantor, and agrees not to plead or claim in any legal action or proceeding with respect to this Guaranty or any other Credit Document to which such Guarantor is a party brought in any of the aforesaid courts that any such court lacks personal jurisdiction over such Guarantor. Each Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Guarantor at its address set forth opposite its signature below, such service to become effective 30 days after such mailing. Each Guarantor hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other Credit Document to which such Guarantor is a party that such service of process was in any way invalid or ineffective. Nothing herein shall affect the right of any of the Secured Creditors to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty or any other Credit Document to which such Guarantor is a party brought in the courts referred to in
Exhibit I
clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
21. In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of Section 9.02 of the Credit Agreement (or such sale or other disposition has been approved in writing by the Required Lenders (or all Lenders if required by Section 13.12 of the Credit Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent applicable, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Borrower or another Subsidiary thereof) be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes of this Section 21).
22. At any time a payment in respect of the Guaranteed Obligations is made under this Guaranty, the right of contribution of each Guarantor against each other Guarantor shall be determined as provided in the immediately following sentence, with the right of contribution of each Guarantor to be revised and restated as of each date on which a payment (a "Relevant Payment") is made on the Guaranteed Obligations under this Guaranty. At any time that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Guarantor's Contribution Percentage (as defined below) of the aggregate payments made by all Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the "Aggregate Excess Amount"), each such Guarantor shall have a right of contribution against each other Guarantor who has made payments in respect of the Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Guarantor's Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A Guarantor's right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment to the preceding sentences shall arise at the time of each computation, subject to adjustment to the proceeding sentences; provided, that no
Exhibit I
Guarantor may take any action to enforce such right until the Guaranteed Obligations have been irrevocably paid in full in cash, it being expressly recognized and agreed by all parties hereto that any Guarantor's right of contribution arising pursuant to this Section 22 against any other Guarantor shall be expressly junior and subordinate to such other Guarantor's obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Guaranty. As used in this Section 22: (i) each Guarantor's "Contribution Percentage" shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the "Adjusted Net Worth" of each Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero; and (iii) the "Net Worth" of each Guarantor shall mean the amount by which the fair salable value of such Guarantor's assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Guaranty or under any guaranty of the Subordinated Notes) on such date. All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 22, each Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Guarantor in respect of such payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Guarantor has the right to waive its contribution right against any Guarantor to the extent that after giving effect to such waiver such Guarantor would remain solvent, in the determination of the Required Lenders.
23. Each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act of any similar Federal or state law. To effectuate the foregoing intention, each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
24. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Guarantors and the Administrative Agent.
25. All payments made by any Guarantor hereunder will be made without setoff, counterclaim or other defense and on the same basis as payments are made by the Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
Exhibit I
26. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Guaranty after the date hereof pursuant to the Credit Agreement shall become a Guarantor hereunder by executing a counterpart hereof and delivering the same to the Administrative Agent.
* * *
Exhibit I
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.
Address:
8233 Imperial Drive MARATHON POWER TECHNOLOGIES
Waco, TX 76712 COMPANY,
Attention: Douglas W. Peacock as a Guarantor
Telephone: (254) 741-5420
Telecopier: (254) 741-5402
By
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Title:
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Collateral Agent
By
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Title:
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Exhibit J
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FORM OF SOLVENCY CERTIFICATE
I, the undersigned, the Chief Financial Officer of Transdigm Holding Company (the "Company") do hereby certify in such capacity and on behalf of the Company that:
1. This Certificate is furnished to the Administrative Agent and each of the Lenders pursuant to Section 5.14 of the Credit Agreement, dated as of December 3, 1998, among the Company, the Borrower, the Lenders party thereto from time to time, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (such Credit Agreement, as in effect on the date of this Certificate, being herein called the "Credit Agreement") and the Board of Directors of the Company. Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of each of the Borrower on a stand-alone basis and of the Company and its Subsidiaries taken as a whole would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.
(b) "Present Fair Salable Value":
The amount that could be obtained by an independent willing seller from an independent willing buyer if the assets of each of the Borrower on a stand-alone basis and of the Company and its Subsidiaries taken as a whole are sold with reasonable promptness under normal selling conditions in a current market.
(c) "New Financing"
The Indebtedness incurred or to be incurred by the Company and its Subsidiaries under the Transaction Documents and all other financing contemplated by the Transaction Documents (including without limitation, the Credit Documents, the Senior Subordinated Note Documents and the Seller Subordinated Note Documents) in each case after giving effect to the Transaction and the incurrence of all financing contemplated therewith.
(d) "Stated Liabilities"
The recorded liabilities (including contingent liabilities) that would be recorded in accordance with generally accepted accounting principles ("GAAP") of each of the Borrower on a stand-alone basis and of the Company and its Subsidiaries taken as a whole at September 30, 1998 after giving effect to the Transaction, determined in
Exhibit J
accordance with GAAP consistently applied, together with (i) the net change in long-term debt (including current maturities) between September 30, 1998 and the date hereof and (ii) without duplication, the amount of all New Financing.
(e) "Identified Contingent Liabilities"
The maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of each of the Borrower on a stand-alone basis and of the Company and its Subsidiaries taken as a whole after giving effect to the Transaction (exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as identified and explained in terms of their nature and estimated magnitude by responsible officers of the Company or any of its Subsidiaries or that have been identified as such by an officer of the Company or any of its Subsidiaries.
(f) "Will be able to pay its Stated Liabilities and Identified Contingent Liabilities, as they mature"
For the period from the date hereof through the stated maturity of all the New Financing, each of the Borrower on a stand-alone basis and the Company and its Subsidiaries taken as a whole will have sufficient assets and cash flow to pay their respective Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or otherwise become payable.
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated maturity of all the New Financing, each of the Borrower on a stand-alone basis and the Company and its Subsidiaries taken as a whole, after consummation of the Transaction and all Indebtedness (including the Loans, the Senior Subordinated Notes and the Seller Subordinated Notes) being incurred or assumed and Liens created by the Company and its Subsidiaries in connection therewith, is a going concern and has sufficient capital to ensure that it will continue to be a going concern for such period and to remain a going concern.
3. For purposes of this Certificate, I or other officers of the Company and its Subsidiaries under my direction and supervision, have performed the following procedures as of and for the periods set forth below:
(a) I have reviewed the financial statements (including the PRO FORMA financial statements) referred to in Section 7.10(b) of the Credit Agreement.
(b) I have made inquiries of certain officials of the Company and its Subsidiaries, who have responsibility for financial and accounting matters regarding (i) the existence and amount of Identified Contingent Liabilities associated with the business of the Company and its Subsidiaries and (ii) whether the unaudited PRO FORMA consolidated financial statements referred to in paragraph (a) above are in conformity with GAAP
Exhibit J
applied on a basis substantially consistent with that of the audited financial statements as at September 30, 1998.
(c) I have knowledge of and have reviewed to my satisfaction the Credit Documents and the other Transaction Documents, and the respective Schedules and Exhibits thereto
(d) With respect to Identified Contingent Liabilities, I:
1. inquired of certain officials of the Company and its Subsidiaries who have responsibility for legal, financial and accounting matters as to the existence and estimated liability with respect to all contingent liabilities known to them;
2. confirmed with officers of the Company and its Subsidiaries, that, to the best of such officers' knowledge, (i) all appropriate items were included in Stated Liabilities or the listing of Identified Contingent Liabilities and that (ii) the amounts relating thereto were the maximum estimated amount of liabilities reasonably likely to result therefrom as of the date hereof; and
(e) I have examined the Projections which have been delivered to the Lenders and considered the effect thereon of any changes since the date of the preparation thereof on the results projected therein. After such review, I hereby certify that in my opinion the Projections are reasonable and the Projections support the conclusions contained in paragraph 4 below.
(f) I have made inquiries of certain officers of the Company and its Subsidiaries who have responsibility for financial reporting and accounting matters regarding whether they were aware of any events or conditions that, as of the date hereof, would cause the Borrower on a stand-alone basis or the Company and its Subsidiaries taken as a whole after giving effect to the Transaction and the related financing transactions (including the incurrence of the New Financing), to (i) have assets with a Fair Value or Present Fair Salable Value that are less than the sum of Stated Liabilities and Identified Contingent Liabilities; (ii) have Unreasonably Small Capital; or (iii) not be able to pay its Stated Liabilities and Identified Contingent Liabilities as they mature or otherwise become payable.
4. Based on and subject to the foregoing, I hereby certify on behalf of the Company that, after giving effect to the Transaction and the related financing transactions (including the incurrence of the New Financing), it is my informed opinion that (i) the Fair Value and Present Fair Salable Value of the assets of each of the Borrower on a stand-alone basis and of the Company and its Subsidiaries taken as a whole exceed its Stated Liabilities and Identified Contingent Liabilities; (ii) each of the Borrower on a stand-alone basis and the Company and its Subsidiaries taken as a whole does not have Unreasonably Small Capital; and (iii) each of the Borrower on a stand-alone basis and the Company and its Subsidiaries taken as a whole will be able to pay its Stated Liabilities and Identified Contingent Liabilities, as they mature or otherwise become payable.
Exhibit J
IN WITNESS WHEREOF, I have hereto set my hand this 3rd day of December, 1998.
TRANSDIGM HOLDING COMPANY
Title: Chief Financial Officer
Exhibit K
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
DATE: ________ __, ____
Reference is made to the Credit Agreement described in Item 2 of Annex I annexed hereto (as such Credit Agreement may hereafter be amended, modified or supplemented from time to time, the "Credit Agreement"). Unless defined in Annex I attached hereto, terms defined in the Credit Agreement are used herein as therein defined. _____________ (the "Assignor") and ______________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse and without representation or warranty (other than as expressly provided herein), and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the date hereof which represents the percentage interest specified in Item 4 of Annex I (the "Assigned Share") of all of the outstanding rights and obligations under the Credit Agreement relating to the facilities listed in Item 4 of Annex I, including, without limitation, (w) in the case of any assignment of outstanding A Term Loans, all rights and obligations with respect to the Assigned Share of such A Term Loans, (x) in the case of any assignment of all or any portion of the Assignor's outstanding B Term Loans, all rights and obligations with respect to the Assigned Share of such outstanding B Term Loans and (y) in the case of any assignment of all or any portion of the Assignor's Revolving Loan Commitment, all rights and obligations with respect to the Assigned Share of the Total Revolving Loan Commitment and all outstanding Revolving Loans, Swingline Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claims; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the other Credit Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or the other Credit Documents or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Holdings or any of its Subsidiaries or the performance or observance by Holdings or any of its Subsidiaries of any of their respective obligations under the Credit Agreement or the other Credit Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit Agreement and the other Credit 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 Assignment and Assumption Agreement; (ii) agrees that it will, independently and without reliance upon 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 Credit
Agreement; (iii) appoints and authorizes the Administrative Agent and the
Collateral Agent to take such action as agent on its behalf and to exercise such
powers under the Credit Agreement and the other Credit Documents as are
delegated to the Administrative Agent and the Collateral Agent 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 which by the terms of the Credit Agreement are required to be
performed by it as a Lender [; and (v) attaches the Forms and/or Certificate
described in Section 13.04(b) of the Credit Agreement.](1)
4. Following the execution of this Assignment and Assumption Agreement by the Assignor and the Assignee, an executed original hereof (together with all attachments) will be delivered to the Administrative Agent. The effective date of this Assignment and Assumption Agreement shall be the date of execution hereof by the Assignor and the Assignee, the receipt of the consent of the Administrative Agent, the Borrower and each Letter of Credit Issuer to the extent required by the Credit Agreement, receipt by the Administrative Agent of the assignment fee referred to in Section 13.04(b) of the Credit Agreement, and the recordation by the Administrative Agent of the assignment effected hereby in the Register, unless otherwise specified in Item 5 of Annex I (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Assumption Agreement, have the rights and obligations of a Lender thereunder and under the other Credit Documents and (ii) the Assignor shall, to the extent provided in this Assignment and Assumption Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Credit Documents.
6. It is agreed that upon the effectiveness hereof, the Assignee shall be entitled to (w) all interest on the Assigned Share of the Loans at the rates specified in Item 6 of Annex I hereto, (x) all Commitment Fees (if applicable) on the Assigned Share of the Total Revolving Loan Commitment at the rate specified in Item 7 of Annex I hereto and (y) all Letter of Credit Fees (if applicable) on the Assignee's participation in all Letters of Credit at the rate specified in Item 8 of Annex I hereto, which, in each case, accrue on and after the Settlement Date, such interest and, if applicable, Commitment Fees and Letter of Credit Fees, to be paid by the Administrative Agent directly to the Assignee. It is further agreed that all payments of principal made on the Assigned Share of the Loans which occur on and after the Settlement Date will be paid directly by the Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor an amount specified by the Assignor in writing which represents the Assigned Share of the principal amount of the respective Loans made by the Assignor pursuant to the Credit Agreement which are outstanding on the Settlement Date, net of any closing costs, and which are being assigned hereunder. The Assignor and the Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Settlement Date directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution also being made on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
Title:
[NAME OF ASSIGNEE],
as Assignee
Title:
[Acknowledged and Agreed:
BANKERS TRUST COMPANY, as Administrative Agent
[[LETTER OF CREDIT ISSUER]
[TRANSDIGM INC.]
(3) Insert only if assignment of any portion of the Total Revolving Loan Commitment is being made pursuant to Section 13.04(b)(y) of the Credit Agreement.
(4) Insert only if assignment is being made pursuant to Section 13.04(b)(y) of the Credit Agreement after the Syndication Date and so long as no Default or Event of Default exists.
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: Transdigm Inc. (the "Borrower").
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of December 3, 1998, among Transdigm Holding Company, the Borrower, the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Outstanding Outstanding
Principal Principal Revolving
of A Term of B Term Loan
Loans Loans Commitment
a. Aggregate
Amount for $________ $________ $_________
all Lenders
b. Assigned
Share ________% ________% ________%
c. Amount of
Assigned $________ $________ $_________
Share
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5. Settlement Date:
6. Rate of Interest
to the Assignee: As set forth in Section 1.08 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee).(5)
7. Commitment
Fee to
the Assignee: As set forth in Section 3.01(a) of the Credit
Agreement (unless otherwise agreed to by the Assignor
and the Assignee).(6)
----------
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(5) The Borrower and the Administrative Agent shall, following recordation of such assignment by the Administrative Agent on the Register, direct the entire amount of interest to the Assignee at the rate set forth in Section 1.08 of the Credit Agreement, with the Assignor and Assignee effecting any agreed upon sharing of interest through payments by the Assignee to the Assignor.
(6) Insert "Not Applicable" in lieu of text if no portion of the Total Revolving Loan Commitment is being assigned. Otherwise the Borrower and the Administrative Agent shall, following recordation of such assignment by the Administrative Agent on the Register, direct the entire amount of the Commitment Fee to the Assignee at the rate set forth in Section 3.01(a) of the
8. Letter of Credit Fee to the Assignee: As set forth in Section 3.01(b) of the Credit
Agreement (unless otherwise agreed to by the Assignor
and the Assignee).(7)
9. Notice: ASSIGNEE:
___________________________________
___________________________________
___________________________________
___________________________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions: ASSIGNEE:
___________________________________
___________________________________
___________________________________
___________________________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By By
------------------------------- -------------------------------
Name: Name:
Title: Title:
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Credit Agreement, with the Assignor and the Assignee effecting any agreed upon sharing of the Commitment Fee through payment by the Assignee to the Assignor.
(7) Insert "Not Applicable" in lieu of text if no portion of the Total Revolving Loan Commitment is being assigned. Otherwise the Borrower and the Administrative Agent shall, following recordation of such assignment by the Administrative Agent on the Register, direct the entire amount of the Letter of Credit Fee to the Assignee at the rate set forth in Section 3.01(b) of the Credit Agreement, with the Assignor and the Assignee effecting any agreed upon sharing of the Letter of Credit Fee through payment by the Assignee to the Assignor.
Exhibit L
FORM OF INTERCOMPANY NOTE
[Date]
FOR VALUE RECEIVED, [NAME OF PAYOR] (the "Payor"), hereby promises to pay on demand to the order of _____________ or its assigns (the "Payee"), in lawful money of the United States of America in immediately available funds, at such location in the United States of America as the Payee shall from time to time designate, the unpaid principal amount of all loans and advances made by the Payee to the Payor.
The Payor promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at such rate per annum as shall be agreed upon from time to time by the Payor and Payee.
Upon the commencement of any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar proceeding of any jurisdiction relating to the Payor, the unpaid principal amount hereof shall become immediately due and payable without presentment, demand, protest or notice of any kind in connection with this Note.
This Note evidences certain permitted intercompany Indebtedness referred to in the Credit Agreement, dated as of December 3, 1998 (as amended, modified or supplemented from time to time, the "Credit Agreement"), among TransDigm Holding Company, TransDigm Inc., the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger, and is subject to the terms thereof, and shall be pledged by the Payee pursuant to the Pledge Agreement (as defined in the Credit Agreement). The Payor hereby acknowledges and agrees that the Collateral Agent pursuant to and as defined in the Pledge Agreement, as in effect from time to time, may exercise all rights provided therein with respect to this Note.
The Payee is hereby authorized to record all loans and advances made by it to the Payor (all of which shall be evidenced by this Note), and all repayments or prepayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein.
All payments under this Note shall be made without offset, counterclaim or deduction of any kind.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
Title:
Pay to the order of
Exhibit M
SHAREHOLDER SUBORDINATED NOTE
$_________________ New York, New York
[Date]
FOR VALUE RECEIVED, TRANSDIGM HOLDING COMPANY, a Delaware corporation (the "Company"), hereby promises to pay to _____________ or [his] [her] [its] assigns (the "Payee"), in lawful money of the United States in immediately available funds, at ________________________, the principal sum of ___________ DOLLARS, which amount shall be payable on _________________. (1)
[The Company promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at a rate
per annum equal to __________________, such interest to be paid [semi-annually]
[annually] on ___________________ [and __________________] of each year and
at maturity hereof.]
This Note is subject to voluntary prepayment, in whole or in part, at the option of the Company, without premium or penalty.
This Note is one of the Shareholder Subordinated Notes referred to in the Credit Agreement, dated as of December 3, 1998 (as amended, modified, supplemented, extended, restated, refinanced, replaced or refunded from time to time, the "Credit Agreement"), among the Company, Transdigm Inc., the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger, and shall be subject to the provisions thereof. Unless otherwise defined herein, all capitalized terms used herein or in Annex A attached hereto and defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.
Notwithstanding anything to the contrary contained in this Note, the Payee understands and agrees that the Company shall not be required to make, and shall not make, any payment of principal, interest or other amounts on this Note to the extent that such payment is prohibited by the terms of any Senior Indebtedness (as defined in Annex A attached hereto), including, but not limited to, Sections 9.06 and 9.12 of the Credit Agreement.
This Note, and the Company's obligations hereunder, shall be subordinate and junior to all indebtedness of the Company constituting Senior Indebtedness on the terms and
Exhibit M
conditions set forth in Annex A attached hereto, which Annex A is herein incorporated by reference and made a part hereof as if set forth herein in its entirety.
The Company hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
TRANSDIGM HOLDING COMPANY
By: ___________________________
Title:
ANNEX A
TO EXHIBIT M
Section 1.01. SUBORDINATION OF LIABILITIES. TransDigm Holding Company (the "Company"), for itself, its successors and assigns, covenants and agrees, and each holder of the Note to which this Annex A is attached (the "Note") by its acceptance thereof likewise covenants and agrees, that the payment of the principal of, interest on, and all other amounts owing in respect of, the Note (the "Subordinated Indebtedness") is hereby expressly subordinated, to the extent and in the manner set forth below, to the prior payment in full in cash of all Senior Indebtedness (as defined in Section 1.07 of this Annex A). The provisions of this Annex A shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such holders are made obligees hereunder the same as if their names were written herein as such, and they and/or each of them may proceed to enforce such provisions.
Section 1.02. COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO SUBORDINATED INDEBTEDNESS IN CERTAIN CIRCUMSTANCES. (a) Upon the maturity of any Senior Indebtedness (including interest thereon or fees or any other amounts owing in respect thereof), whether at stated maturity, by acceleration or otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in respect thereof shall first be paid in full in cash, before any payment, whether in cash, property, securities or otherwise, is made on account of the Subordinated Indebtedness.
(b) Until all Senior Indebtedness has been paid in full in cash and all commitments in respect of such Senior Indebtedness have been terminated, the sum of all payments in respect of the Note (including principal and interest), together with the sum of (i) all payments made under all other Shareholder Subordinated Notes and (ii) all payments made by the Company and its Subsidiaries to repurchase stock or options to purchase stock of the Company held by directors, officers and employees of the Company and its Subsidiaries (or former directors, officers or employees) shall not exceed at any time that amount permitted by the terms of the respective issue of Senior Indebtedness.
(c) The Company may not, directly or indirectly, make any payment of any Subordinated Indebtedness and may not acquire any Subordinated Indebtedness for cash or property until all Senior Indebtedness has been paid in full in cash if any default or event of default under the Credit Agreement (as defined in Section 1.07 of this Annex A) or any other issue of Senior Indebtedness is then in existence or would result therefrom. Each holder of the Note hereby agrees that, so long as any such default or event of default in respect of any issue of Senior Indebtedness exists, it will not sue for, or otherwise take any action to enforce the company's obligations to pay, amounts owing in respect of the Note. Each holder of the Note understands and agrees that to the extent that clause (b) of this Section 1.02 reduces the payment of interest and/or principal which would otherwise be payable under the Note but for the limitations set forth in such clause (b), such unpaid amount shall not constitute a payment default under the Note and the holder of the Note may not sue for, or otherwise take action to enforce the Company's obligation to pay such amount, provided that such unpaid principal or interest shall remain an obligation of the Company to the holder of the Note pursuant to the terms of the Note.
ANNEX A
TO EXHIBIT M
(d) In the event that notwithstanding the provisions of the preceding subsections (a), (b) and (c) of this Section 1.02, the Company (or any Person on behalf of the Company) shall make any payment on account of the Subordinated Indebtedness at a time when payment is not permitted by said subsection (a), (b) or (c), such payment shall be held by the holder of the Note, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness or their representative or the trustee under the indenture or other agreement pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, for application pro rata to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. Without in any way modifying the provisions of this Annex A or affecting the subordination effected hereby, the Company shall give the holder of the Note prompt written notice of any event which would prevent payments under Section 1.02(a), (b) or (c) hereof.
Section 1.03. SUBORDINATION TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF COMPANY. Upon any distribution of assets of the Company upon dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to receive payment in full in cash of all Senior Indebtedness (including, without limitation, post-petition interest at the rate provided in the documentation with respect to the Senior Indebtedness, whether or not such post-petition interest is an allowed claim against the debtor in any bankruptcy or similar proceeding) before the holder of the Note is entitled to receive any payment of any kind or character on account of the Subordinated Indebtedness;
(b) any payment or distributions of assets of the Company of any kind or character, whether in cash, property or securities to which the holder of the Note would be entitled except for the provisions of this Annex A shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, to the extent necessary to make payment in full in cash of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that notwithstanding the foregoing provisions of this Section 1.03, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the holder of the Note on account of Subordinated Indebtedness before all Senior Indebtedness is paid in full in cash, such payment or distribution shall be received and held in trust for and shall be paid over
ANNEX A
TO EXHIBIT M
to the holders of the Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full in cash, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or affecting the subordination effected hereby, the Company shall give prompt written notice to the holder of the Note of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon assignment for the benefit of creditors or otherwise).
Section 1.04. SUBROGATION. Subject to the prior payment in full in cash of all Senior Indebtedness, the holder of the Note shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Note shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Company or by or on behalf of the holder of the Note by virtue of this Annex A which otherwise would have been made to the holder of the Note shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holder of the Note, be deemed to be payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Annex A are and are intended solely for the purpose of defining the relative rights of the holder of the Note, on the one hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. OBLIGATION OF THE COMPANY UNCONDITIONAL. Nothing contained in this Annex A or in the Note is intended to or shall impair, as between the Company and the holder of the Note, the obligation of the Company, which is absolute and unconditional, to pay to the holder of the Note the principal of and interest on the Note as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holder of the Note and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the holder of the Note from exercising all remedies, otherwise permitted by applicable law upon an event of default under the Note, subject to the provisions of this Annex A and the rights, if any, under this Annex A of the holders of Senior Indebtedness in respect of cash, property, or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Annex A, the holder of the Note shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any, distribution to the holder of the Note, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount of amounts paid or distributed thereon and all other facts pertinent thereto or to this Annex A.
ANNEX A
TO EXHIBIT M
Section 1.06. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future holders of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act in good faith by any such holder, or by any noncompliance by the Company with the terms and provisions of the Note, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of the Senior Indebtedness may, without in any way affecting the obligations of the holder of the Note with respect hereto, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment of, change or extend the time of payment of, or renew, increase or otherwise alter, any Senior Indebtedness or amend, modify or supplement any agreement or instrument governing or evidencing such Senior Indebtedness or any other document referred to therein, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness including, without limitation, the waiver of default thereunder and the release of any collateral securing such Senior Indebtedness, all without notice to or assent from the holder of the Note.
Section 107. SENIOR INDEBTEDNESS. The term "Senior Indebtedness" shall mean all Obligations (as defined below) (i) of the Company under, or in respect of, the Credit Agreement (as amended, modified, supplemented, extended, restated, refinanced, replaced or refunded from time to time, the "Credit Agreement"), dated as of December 3, 1998, by and among the Company, TransDigm Inc., the lenders from time to time party thereto, Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger, and any renewal, extension, restatement, refinancing or refunding thereof, (ii) of the Company under, or in respect of, any Interest Rate Protection Agreements or Other Hedging Agreements (each as defined in the Credit Agreement), (iii) of the Company under, or in respect of, the Senior Subordinated Note Documents (as defined in the Credit Agreement), (iv) of the Company under, or in respect of, the Seller Subordinated Note Documents (as defined in the Credit Agreement) and (v) of the Company (including guarantees) under, or in respect of, all other Indebtedness except Indebtedness that is, by its express terms, pari passu with the Shareholder Subordinated Note to which this Annex A is attached (including other Shareholder Subordinated Notes) or subordinated to the Shareholder Subordinated Notes. As used herein, the term "Obligation" shall mean any principal, interest, premium, penalties, fees, expenses, indemnities and other liabilities and obligations (including guaranties of the foregoing obligations) payable under the documentation governing any Senior Indebtedness (including post-petition interest at the rate provided in the documentation with respect to Such Indebtedness, whether or not such interest is an allowed claim against the debtor in any bankruptcy or similar proceeding).
EXHIBIT 4.13
SECURITY AGREEMENT
among
TRANSDIGM HOLDING COMPANY,
TRANSDIGM INC.,
CERTAIN OTHER SUBSIDIARIES OF TRANSDIGM HOLDING COMPANY
and
BANKERS TRUST COMPANY,
as COLLATERAL AGENT
Dated as of December 3, 1998
TABLE OF CONTENTS
ARTICLE I
SECURITY INTERESTS.............................................................2
1.1. Grant of Security Interests......................................2
1.2. Power of Attorney................................................2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..............................3
2.1. Necessary Filings................................................3
2.2. No Liens.........................................................3
2.3. Other Financing Statements.......................................3
2.4. Chief Executive Office, Record Locations.........................3
2.5. Location of Inventory and Equipment..............................4
2.6. Recourse.........................................................4
2.7. Trade Names; Change of Name......................................4
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER....................................5
3.1. Additional Representations and Warranties........................5
3.2. Maintenance of Records...........................................5
3.3. Direction to Account Debtors; Contracting Parties; etc...........5
3.4. Modification of Terms; etc.......................................6
3.5. Collection.......................................................6
3.6. Instruments......................................................6
3.7. Assignors Remain Liable Under Receivables........................6
3.8. Assignors Remain Liable Under Contracts..........................7
3.9. Further Actions..................................................7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS.......................................7
4.1. Additional Representations and Warranties........................7
4.2. Licenses and Assignments.........................................8
4.3. Infringements....................................................8
4.4. Preservation of Marks............................................8
4.5. Maintenance of Registration......................................8
4.6. Future Registered Marks..........................................8
4.7. Remedies.........................................................8
ARTICLE V
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SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..........................................9
5.1. Additional Representations and Warranties........................9
5.2. Licenses and Assignments.........................................9
5.3. Infringements....................................................9
5.4. Maintenance of Patents or Copyright.............................10
5.5. Prosecution of Patent Applications..............................10
5.6. Other Patents and Copyrights....................................10
5.7. Remedies........................................................10
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL..........................................10
6.1. Protection of Collateral Agent's Security.......................10
6.2. Warehouse Receipts Non-negotiable...............................11
6.3. Further Actions.................................................11
6.4. Financing Statements............................................11
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT..................................11
7.1. Remedies; Obtaining the Collateral Upon Default.................11
7.2. Remedies; Disposition of the Collateral.........................13
7.3. Waiver of Claims................................................13
7.4. Application of Proceeds.........................................14
7.5. Remedies Cumulative.............................................16
7.6. Discontinuance of Proceedings...................................16
ARTICLE VIII
INDEMNITY.....................................................................17
8.1. Indemnity.......................................................17
8.2. Indemnity Obligations Secured by Collateral; Survival...........18
ARTICLE X
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MISCELLANEOUS.................................................................23
10.2. Waiver; Amendment.............................................23
10.3. Obligations Absolute..........................................24
10.4. Successors and Assigns........................................24
10.5. Headings Descriptive..........................................24
10.6. Governing Law.................................................24
10.7. Assignor's Duties.............................................24
10.8. Termination; Release..........................................24
10.9. Counterparts..................................................25
10.10. Severability..................................................25
10.11. The Collateral Agent..........................................25
10.12. Benefit of Agreement..........................................26
10.13. Additional Assignors..........................................26
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Location
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patent
ANNEX F Schedule of Copyrights
ANNEX G Form of Assignment of Security Interest in United States
Trademarks and Patents
ANNEX H Form of Assignment of Security Interest in United States
Copyrights
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 3, 1998, made by each of the undersigned assignors (each an "Assignor" and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.13 hereof, the "Assignors") in favor of Bankers Trust Company, as Collateral Agent (the "Collateral Agent"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, TransDigm Holding Company ("Holdings"), TransDigm Inc. (the "Borrower"), the lenders party from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (together with any successor administrative agent, the "Administrative Agent"), have entered into a Credit Agreement, dated as of December 3, 1998, providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (as amended, modified or supplemented from time to time, the "Credit Agreement") (the Lenders, the Administrative Agent, the Letter of Credit Issuers and the Collateral Agent are herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender's or affiliate's successors and assigns, if any, collectively, the "Other Creditors", and together with the Lender Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein:
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, it is a condition precedent to the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement that each Assignor shall have executed and delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement and the entering into by the Borrower of Interest Rate Protection Agreements or Other Hedging Agreements and, accordingly, each Assignor desires to enter into this Agreement in order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest in, all of the right, title and
interest of such Assignor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, Trade Secrets Rights, (viii) all other Goods,
General Intangibles, Investment Property, Permits, Chattel Paper, Documents,
Instruments and other assets (including cash), (ix) the Cash Collateral Account
and all monies, securities, instruments and other investments deposited or
required to be deposited in such Cash Collateral Account, (x) all other bank,
demand, time savings, cash management, passbook, certificates of deposit and
similar accounts maintained by such Assignor and all monies, securities,
instruments and other investments deposited or required to be deposited in any
of the foregoing accounts, and (xi) all Proceeds and products of any and all of
the foregoing (all of the above, collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral of the kind which is the subject of this Agreement which any Assignor may acquire at any time during the term of this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been accomplished (or within 10 days after the Initial Borrowing Date will be accomplished) and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by filing a financing statement under the Uniform Commercial Code as enacted in any relevant jurisdiction or in the United States Patent and Trademark Office or in the United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien, security interest, encumbrance or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.
2.4. Chief Executive Office, Record Locations. The chief executive office of such Assignor is located at the address indicated on Annex A hereto for such Assignor. Such Assignor will not move its chief executive office except to such new location as such Assignor may establish in accordance with the last sentence of this Section 2.4. The originals of all
documents evidencing all Receivables and Contract Rights of such Assignor and
the only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office, at one or
more of the other locations set forth on Annex A hereto or at such new locations
as such Assignor may establish in accordance with the last sentence of this
Section 2.4. All Receivables and Contract Rights of such Assignor are, and will
continue to be, maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, the office locations
described above or such new location established in accordance with the last
sentence of this Section 2.4. No Assignor shall establish new locations for such
offices until (i) it shall have given to the Collateral Agent not less than 15
days' prior written notice of its intention to do so, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and Equipment held on the date hereof by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor. Each Assignor agrees that all Inventory and Equipment now held or subsequently acquired by it shall be kept at (or shall be in transport to) any one of the locations shown on Annex B hereto, or such new location as such Assignor may establish in accordance with the last sentence of this Section 2.5. Any Assignor may establish a new location for Inventory and Equipment only if (i) it shall have given to the Collateral Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such new location and providing such other information in connection therewith as the Collateral Agent may request and (ii) with respect to such new location, it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each Assignor (including, without limitation, with full recourse to all assets of such Assignor) and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, any trade names, fictitious names or other names except its legal name and such other trade or fictitious names as are listed on Annex C hereto for such Assignor. No Assignor shall change its legal name or assume or operate in any jurisdiction under any trade, fictitious or other name except those names listed on Annex C hereto for such Assignor and new names established in accordance with the last sentence of this Section 2.7. No Assignor shall assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Collateral Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such new name and the jurisdictions in which such new name shall be used and providing such other information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new name, it shall have taken all action reasonably requested by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
3.1. Additional Representations and Warranties. As of the time when each of its Receivables arises, each Assignor shall be deemed to have represented and warranted that such Receivable, and all records, papers and documents relating thereto (if any) are what they purport to be.
3.2. Maintenance of Records. Each Assignor will keep and maintain at its own cost and expense accurate records of its Receivables and Contracts, including, but not limited to, originals of all documentation (including each Contract) with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignor's premises to the Collateral Agent for inspection, at such Assignor's own cost and expense, at any and all reasonable times upon prior notice to such Assignor. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Receivables and Contract Rights (including, without limitation, all documents evidencing the Receivables and all Contracts) and such books and records to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent, the Receivables and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Receivables and Contracts with an appropriate reference to the fact that such Receivables and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all payments on account of the Receivables and Contracts to be made directly to the Cash Collateral Account, (y) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Receivables and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and (z) that the Collateral Agent may enforce collection of any such Receivables and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Assignor. Without notice to or assent by any Assignor, the Collateral Agent may apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account which application shall be effected in the manner provided in Section 7.4 of this Agreement. The costs and expenses (including reasonable attorneys' fees) of collection, whether incurred by an
Assignor or the Collateral Agent, shall be borne by the relevant Assignor. The
Collateral Agent shall deliver a copy of each notice referred to in the
preceding clause (y) to the relevant Assignor, provided, that the failure by the
Collateral Agent to so notify such Assignor shall not affect the effectiveness
of such notice or the other rights of the Collateral Agent created by this
Section 3.3.
3.4. Modification of Terms; etc. Except in accordance with such Assignor's ordinary course of business and consistent with reasonable business judgment, no Assignor shall rescind or cancel any indebtedness evidenced by any Receivable or under any Contract, or modify any term thereof or make any adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Receivable or Contract, or interest therein, without the prior written consent of the Collateral Agent. No Assignor will do anything to impair the rights of the Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Receivables or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Receivable or Contract, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Receivable or under such Contract, except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Receivables and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument constituting Collateral (other than checks and other payment instruments received and collected in the ordinary course of business), such Assignor will within 10 Business Days notify the Collateral Agent thereof, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent as further security hereunder.
3.7. Assignors Remain Liable Under Receivables. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Receivables to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Receivables. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Receivable pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Receivable (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.8. Assignors Remain Liable Under Contracts. Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.9. Further Actions. Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to its Receivables, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks listed in Annex D hereto for such Assignor and that said listed Marks include all United States marks and applications for United States marks registered in the United States Patent and Trademark Office that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks that it uses. Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignor's present or contemplated business operations infringes or will infringe any trademark, service mark or trade name other than as could not, either individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use all U.S. trademark registrations and applications listed in Annex D hereto and that said registrations are valid, subsisting, have not been cancelled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, or is not aware that there is any reason that any of said registrations is invalid or unenforceable, or is not aware that there is any reason that any of said applications will not pass to registration other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office in order to effect an absolute assignment of all right, title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Mark absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is infringing or diluting or otherwise violating any of such Assignor's rights in and to any Mark, or with respect to any party claiming that such Assignor's use of any Mark violates in any material respect any property right of that party. Each Assignor further agrees to prosecute in accordance with reasonable business practices any Person infringing any Mark in any manner that could reasonably be expected to have a Material Adverse Effect.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are necessary to preserve such Marks as trademarks or service marks under the laws of the United States.
4.5. Maintenance of Registration. Each Assignor shall, at its own expense, diligently process all documents required to maintain trademark registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its significant registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent.
4.6. Future Registered Marks. If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office, within 30 days of receipt of such certificate, such Assignor shall deliver to the Collateral Agent a copy of such certificate, and an assignment for security in such Mark, to the Collateral Agent and at the expense of such Assignor, confirming the assignment for security in such Mark to the Collateral Agent hereunder, the form of such security to be substantially the
same as the form hereof or in such other form as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks, together with all trademark rights and rights of protection to the same, vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency; (ii) take and use or sell the Marks and the goodwill of such Assignor's business symbolized by the Marks and the right to carry on the business and use the assets of such Assignor in connection with which the Marks have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Marks and registrations and any pending trademark application in the United States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of the Assignor (the "Trade Secret Rights"), (ii) the
Patents listed in Annex E hereto for such Assignor and that said Patents include
all the United States patents and applications for United States patents that
such Assignor owns as of the date hereof and (iii) the Copyrights listed in
Annex F hereto for such Assignor and that said Copyrights constitute all the
United States copyrights registered with the United States Copyright Office and
applications to United States copyrights that such Assignor owns as of the date
hereof. Each Assignor further warrants that it has no knowledge of any third
party claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any patent or such Assignor has
misappropriated any trade secret or proprietary information which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent, and to record the
same.
5.2. Licenses and Assignments. Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright acquired after the date hereof absent prior written approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning thereof, to furnish the Collateral Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party in any manner which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent to the contrary, to diligently prosecute any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right in accordance with such Assignor's reasonable business judgment.
5.4. Maintenance of Patents or Copyright. At its own expense, each Assignor shall make timely payment of all post-issuance fees required pursuant to 35 U.S.C. ss. 41 to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent.
5.5. Prosecution of Patent Applications. At its own expense, each Assignor shall diligently prosecute all significant applications for (i) United States Patents listed in Annex E hereto and (ii) Copyrights listed on Annex F hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies, absent written consent of the Collateral Agent.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy of said Copyright or certificate or registration of, or application therefor, said Patents, as the case may be, with an assignment for security as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the expense of such Assignor, confirming the assignment for security, the form of such assignment for security to be substantially the same as the form hereof or in such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Creditors, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent may reasonably request further to confirm this and to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times keep its Inventory and Equipment insured in favor of the Collateral Agent, at such Assignor's own expense to the extent and in the manner provided in the Credit Agreement. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Credit Agreement, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as such term is used in Section 7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense and upon the request of the Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which the Collateral Agent deems reasonably appropriate or advisable to perfect, preserve or protect its security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to execute and deliver to the Collateral Agent such financing statements, in form reasonably acceptable to the Collateral Agent, as the Collateral Agent may from time to time reasonably request or as are necessary or desirable in the opinion of the Collateral Agent to establish and maintain a valid, enforceable, first priority perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby all in accordance with the UCC as enacted in any and all relevant jurisdictions or any other relevant law. Each Assignor will pay any applicable filing
fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Collateral Agent to file any such financing statements without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect, in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignor's premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Receivables and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;
(iii) withdraw all monies, securities and instruments in the Cash Collateral Account for application to the Obligations in accordance with Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct the relevant Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by directing the relevant Assignor in writing to deliver the same to the Collateral Agent at any place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement, the Secured Creditors agree that this Agreement may be enforced only by the action of the Collateral Agent acting upon the instructions of the Required Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Creditors upon the terms of this Agreement and the Credit Agreement.
7.2. Remedies; Disposition of the Collateral. If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor which the Collateral Agent shall determine to be commercially reasonable. Any such disposition which shall be a private sale or other private proceedings permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time at which such disposition is to be made and the intended sale price or other consideration therefor, and shall be subject, for the 10 days after the giving of such notice, to the right of the relevant Assignor or any nominee of such Assignor to acquire the Collateral involved at a price or for such other consideration at least equal to the intended sale price or other consideration so specified. Any such disposition which shall be a public sale permitted by such requirements shall be made upon not less than 10 days' prior written notice to the relevant Assignor specifying the time and place of such sale and, in the absence of applicable requirements of law, shall be by public auction (which may, at the Collateral Agent's option, be subject to reserve), after publication of notice of such auction (where required by applicable law) not less than 10 days prior thereto. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser of the Collateral or any item thereof, offered for
sale in accordance with this Section without accountability to the relevant Assignor. If, under mandatory requirements of applicable law, the Collateral Agent shall be required to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Collateral Agent need give such Assignor only such notice of disposition as shall be reasonably practicable in view of such mandatory requirements of applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such sale or sales of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any damages which are the direct result of the Collateral Agent's gross negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the Collateral Agent (or, to the extent the Pledge Agreement or any Additional Security Document require proceeds of collateral under such Security Document to be applied in accordance with the provisions of this Agreement, the Pledgee or Collateral Agent under such other Security Document) upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder, shall be applied as follows.
(i) first, to the payment of all amounts owing the Collateral Agent of the type described in clauses (iii) and (iv) of the definition of "Obligations";
(ii) second, to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Primary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to such outstanding Primary Obligations or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Secondary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Secondary Obligations or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application pursuant to the preceding clauses (i) through (iii), inclusive, and following the termination of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean, when calculating a Secured Creditor's portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Creditor's Primary Obligations or Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Primary Obligations or Secondary Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the Credit Document Obligations, all principal of, and interest on, all Loans, all Unpaid Drawings and all Fees and (ii) in the case of the Other Obligations, all amounts due under such Interest Rate Protection Agreements or Other Hedging Agreements (other than indemnities, fees (including, without limitation, attorneys' fees) and similar obligations and liabilities) and (z) "Secondary Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary
Obligations or Secondary Obligations, as the case may be, of all Secured Creditors entitled to such distribution.
(d) Each of the Secured Creditors, by their acceptance of the benefits hereof, agrees and acknowledges that if the Lender Creditors are to receive a distribution on account of undrawn amounts with respect to Letters of Credit issued under the Credit Agreement (which shall only occur after all outstanding Loans and Unpaid Drawings with respect to such Letters of Credit have been paid in full), such amounts shall be paid to the Administrative Agent under the Credit Agreement and held by it, for the equal and ratable benefit of the Lender Creditors, as cash security for the repayment of Obligations owing to the Lender Creditors as such. If any amounts are held as cash security pursuant to the immediately preceding sentence, then upon the termination of all outstanding Letters of Credit, and after the application of all such cash security to the repayment of all Obligations owing to the Lender Creditors after giving effect to the termination of all such Letters of Credit, if there remains any excess cash, such excess cash shall be returned by the Administrative Agent to the Collateral Agent for distribution in accordance with Section 7.4(a) hereof.
(e) All payments required to be made hereunder shall be made (x) if to the Lender Creditors, to the Administrative Agent under the Credit Agreement for the account of the Lender Creditors, and (y) if to the Other Creditors, to the trustee, paying agent or other similar representative (each a "Representative") for the Other Creditors or, in the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
the Other Creditors or, in the absence of such a Representative, upon the Other
Creditors for a determination (which the Administrative Agent, each
Representative for any Other Creditors and the Secured Creditors agree (or shall
agree) to provide upon request of the Collateral Agent) of the outstanding
Primary Obligations and Secondary Obligations owed to the Lender Creditors or
the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Lender Creditor or an Other Creditor)
to the contrary, the Administrative Agent and each Representative, in furnishing
information pursuant to the preceding sentence, and the Collateral Agent, in
acting hereunder, shall be entitled to assume that no Secondary Obligations are
outstanding. Unless it has actual knowledge (including by way of written notice
from an Other Creditor) to the contrary, the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Interest Rate Protection
Agreements or Other Hedging Agreements are in existence.
(g) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.
7.5. Remedies Cumulative. Each and every right, power and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given under this Agreement, the other Secured Debt Agreements or now or
hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence therein. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys' fees, and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement, any other Secured Debt
Agreement or any other document executed in connection herewith or therewith or
in any other way connected with the administration of the transactions
contemplated hereby or thereby or the enforcement of any of the terms of, or the
preservation of any rights under any thereof, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or
unit, any tort (including, without limitation, claims arising or imposed under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent caused by the gross negligence or wilful misconduct of such Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the relevant Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the relevant Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral Agent for any and all reasonable fees, costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Collateral Agent's Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral, premiums for insurance with respect to the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Collateral Agent's interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b) hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement, any other Secured Debt Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Secured Debt Agreement.
(d) If and to the extent that the obligations of any Assignor under this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Notes issued under the Credit Agreement, the termination of all Interest Rate Protection Agreements or Other Hedging Agreements and all Letters of Credit and the payment of all other Obligations and notwithstanding the discharge thereof but shall not thereafter be secured by any security interest granted hereby.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the recitals of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be modified, supplemented or amended from time to time in accordance with its terms.
"Assignor" shall have the meaning provided in the first paragraph of this Agreement.
"Borrower" shall have the meaning provided in the recitals of this Agreement.
"Cash Collateral Account" shall mean a cash collateral account maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this Agreement.
"Collateral Agent" shall have the meaning provided in the first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
"Contracts" shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Interest Rate Protection Agreements or Other Hedging Agreements and any partnership agreements, joint venture agreements and limited liability company agreements), but excluding any contract to the extent that the terms thereof prohibit (after giving effect to any approvals or waivers) the assignment of, or granting a security interest in, such contract (it being understood and agreed, however, that notwithstanding the foregoing, all rights to payment for money due or to become due pursuant to any such excluded contract shall be subject to the security interests created by this Agreement).
"Copyrights" shall mean any United States copyright owned by any Assignor, including any registrations of any Copyrights, in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals of this Agreement.
"Credit Document Obligations" shall have the meaning provided in the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor and, in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Other Obligations after the expiration of any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York (and shall include all partnership interests and all limited liability company and membership interests).
"Goods" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production -- from raw materials through work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's customers, and shall specifically include all "inventory" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor.
"Investment Property" shall have the meaning provided in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
"Lender Creditors" shall have the meaning provided in the recitals of this Agreement.
"Lenders" shall have the meaning provided in the recitals of this Agreement.
"Liens" shall mean any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor's interest in a financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration of any trademarks and service marks in the United States Patent and Trademark Office or in any equivalent foreign office and any trade dress including logos and/or designs used by any Assignor.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, Fees
and interest thereon) of each Assignor to the Lender Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with the
Credit Agreement and the other Credit Documents to which such Assignor is a
party (including, in the case of each Guarantor, all such obligations and
indebtedness of such Guarantor under any Guaranty to which it is a party) and
the due performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the Credit Agreement and in such other
Credit Documents (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and liabilities owing by such Assignor to the Other Creditors
under, or with respect to (including by reason of any Guaranty to which such
Assignor is a party), any Interest Rate Protection Agreement or Other Hedging
Agreement, whether such Interest Rate Protection Agreement or Other Hedging
Agreement is now in existence or hereafter arising, and the due performance and
compliance by such Assignor with all of the terms, conditions and agreements
contained therein (all such obligations and liabilities described in this clause
(ii) being herein collectively called the "Other Obligations"); (iii) any and
all sums advanced by the Assignee in order to preserve the Collateral or
preserve its security interest in the Collateral; (iv) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations,
or liabilities of such Assignor referred to in
clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Assignee of its rights hereunder, together with reasonable attorneys' fees and court costs; and (v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 8.1 of this Agreement; it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals of this Agreement.
"Other Obligations" shall have the meaning provided in the definition of "Obligations" in this Article IX.
"Patents" shall mean any patent to which any Assignor now or hereafter has title and any divisions or continuations thereof, as well as any application for a patent now or hereafter made by any Assignor.
"Primary Obligations" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York on the date hereof or under other relevant law and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor and, in any event, shall include, but shall not be limited to, all of such Assignor's rights to payment for goods sold or leased or services performed by such Assignor, whether now in existence or arising from time to time hereafter, including, without limitation, rights evidenced by an account, note, contract, security agreement, chattel paper, or other evidence of indebtedness or security, together with (a) all security pledged, assigned, hypothecated or granted to or held by such Assignor to secure the foregoing, (b) all of any Assignor's right, title and interest in and to any goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Representative shall have the meaning provided in Section 7.4(e) of this Agreement.
"Required Secured Creditors" shall mean (i) the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, each of the Lenders) under the Credit Agreement so long as any Credit Document Obligations remain outstanding and (ii) in any situation not covered by the preceding clause (i), the holders of a majority of the outstanding principal amount of the Other Obligations.
"Requisite Creditors" shall have the meaning provided in Section 10.2 of this Agreement.
"Secondary Obligations" shall have the meaning provided in Section 7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals of this Agreement.
"Secured Debt Agreements" shall mean and include this Agreement, the other Credit Documents and the Interest Rate Protection Agreements and Other Hedging Agreements.
"Termination Date" shall have the meaning provided in Section 10.8 of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1 of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been duly given or made when delivered to the party to which such notice, request, demand or other communication is required or permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Assignor, at the address set forth opposite such Assignor's signature below;
(b) if to the Collateral Agent, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Greg Shefrin
Tel. No.: (212) 250-1725
Fax. No.: (212) 250-7218;
(c) if to any Lender Creditor, at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly effected thereby and the Collateral Agent (with the written consent of the Required Secured Creditors); provided, however, that any change, waiver, modification or variance affecting the rights and benefits of a single Class of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall require the written consent of the Requisite Creditors of such affected Class. For the purpose of this Agreement, the term "Class" shall mean each class of Secured Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term "Requisite Creditors" of any Class shall mean each of (x) with respect to the Credit Document Obligations, the Required Lenders and (y) with respect to the Other Obligations, the holders of at least a majority of all obligations outstanding from time to time under the respective Interest Rate Protection Agreements or Other Hedging Agreements.
10.3. Obligations Absolute. The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon each Assignor and its successors and assigns (although no Assignor may assign its rights and obligations hereunder except in accordance with the provisions of the Secured Debt Agreements) and shall inure to the benefit of the Collateral Agent and the Secured Creditors and their respective successors and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 8.1 hereof shall survive such termination) and the Collateral Agent, at the request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement. As used in this Agreement, "Termination Date" shall mean the date upon which the Total Commitment and all Interest Rate Protection Agreements and Other Hedging Agreements have been terminated, no Note is outstanding (and all Loans have been repaid in full), all Letters of Credit have been terminated and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold in connection with a sale permitted by Section 9.02 of the Credit Agreement (other than a sale to any Assignor or a Subsidiary thereof) or otherwise released at the direction of the Required Secured Creditors and the proceeds of such sale or sales or from such release are applied in accordance with the
provisions of the Credit Agreement, to the extent required to be so applied, such Collateral will be sold free and clear of the Liens created by this Agreement and the Collateral Agent, at the request and expense of the relevant Assignor, will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or released and as may be in the possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that an Assignor desires that the Collateral Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 10.8(a) or (b), such Assignor shall deliver to the Collateral Agent a certificate signed by a principal executive officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to Section 10.8(a) or (b).
10.9. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with each Assignor and the Collateral Agent.
10.10. Severability. Any provision of this Agreement which 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.
10.11. The Collateral Agent. The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Collateral Agent shall act hereunder and thereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
10.12. Benefit of Agreement. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns.
10.13. Additional Assignors. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the Credit Agreement shall become an Assignor hereunder by executing a counterpart hereof and delivering the same to the Collateral Agent.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
Address:
8233 Imperial Drive TRANSDIGM HOLDING COMPANY,
Waco, TX 76712 as an Assignor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By /s/ Peter Radekevich
-----------------------------------
Title: Chief Financial Officer
8233 Imperial Drive TRANSDIGM INC.,
Waco, TX 76712 as an Assignor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By /s/ Peter Radekevich
-----------------------------------
Title: Chief Financial Officer
8233 Imperial Drive MARATHON POWER TECHNOLOGIES
Waco, TX 76712 COMPANY,
Attention: Douglas W. Peacock as an Assignor
Telephone: (254) 741-5420
Telecopier: (254) 741-5402
By /s/ Peter Radekevich
-----------------------------------
Title: Chief Financial Officer
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Assignee, Collateral Agent
By /s/ Gregory P. Shefrin
-----------------------------------
Title: Vice President
|
ANNEX A
to
SECURITY AGREEMENT
|
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
I. TRANSDIGM HOLDING COMPANY
c/o Marathon Power Technologies Company
8233 Imperial Drive
Waco, TX 76712
II. TRANSDIGM INC.
Marathon Power Technologies Company
8233 Imperial Drive
Waco, TX 76712
AdelWiggins Group
5000 Triggs Street
Los Angeles, CA 90022
AeroControlex Group
26380 Curtiss Wright Parkway
Richmond Heights, OH 44143
III. MARATHON POWER TECHNOLOGIES COMPANY
8233 Imperial Drive
Waco, TX 76712
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
-------- --------
TransDigm Holding Company c/o Marathon Power Technologies Company
8233 Imperial Drive
Waco, TX 76712
TransDigm Inc. Marathon Power Technologies Company
8233 Imperial Drive
Waco, TX 76712
AdelWiggins Group
5000 Triggs Street
Los Angeles, CA 90022
AeroControlex Group
26380 Curtiss Wright Parkway
Richmond Heights, OH 44143
Marathon Power Technologies Company 8233 Imperial Drive
Waco, TX 76712
|
ANNEX C
to
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
TRADE NAMES (name in square brackets indicates division using the trade name) ADEL [AdelWiggins] WIGGINS [AdelWiggins] CONTROLEX [AeroControlex] DSP SKY SOAP (BLOCK LETTERS) [AeroControlex] TRANSDIGM [AdelWiggins] WIG-O-FLEX [AdelWiggins] ADELWIGGINS [AdelWiggins] AEROCONTROLEX [AeroControlex] ADEL FASTENERS [AdelWiggins] WIGGINS CONNECTORS [AdelWiggins] WIGGINS SERVICE SYSTEMS [AdelWiggins] CONNECT-O-MATIC [AdelWiggins] M3 [Marathon] INST-O-MATIC MARATHON (and Design) [Marathon] SUPERPOWER [Marathon] M (and Design) [Marathon] FLITE-TRONICS [Marathon] MARATHON POWER TECHNOLOGIES [Marathon] MARATHON BATTERIES LIMITED [Marathon] |
FICTITIOUS NAMES
None
ANNEX D
to
SECURITY AGREEMENT
SCHEDULE OF MARKS
I. REGISTERED TRADEMARKS--TRANSDIGM INC.
Mark Country Registration No. ---- ------- ---------------- ADEL U.S. 1,189,110 WIGGINS U.S. 1,236,043 CONTROLEX U.S. 1,988,196 DSP U.S. 1,108,030 SKY SOAP (BLOCK LETTERS) France 1,556,830 SKY SOAP (BLOCK LETTERS) Germany 1,183,101 |
II. REGISTERED TRADEMARKS--MARATHON POWER TECHNOLOGIES COMPANY
Mark Country Registration No. ---- ------- ---------------- MARATHON (and Design) U.S. 1,001,746 MARATHON U.S. 1,330,727 SUPERPOWER U.S. 1,347,534 MARATHON U.K. B1,241,295 |
III. UNREGISTERED TRADEMARKS--TRANSDIGM INC.
TRANSDIGM
WIG-O-FLEX
ADELWIGGINS
AEROCONTROLEX
ADEL FASTENERS
WIGGINS CONNECTORS
WIGGINS SERVICE SYSTEMS
CONNECT-O-MATIC
INST-O-MATIC
II. UNREGISTERED TRADEMARKS--MARATHON POWER TECHNOLOGIES COMPANY
M (and Design)
FLITE-TRONICS
MARATHON POWER TECHNOLOGIES
MARATHON BATTERIES LIMITED
ANNEX E
to
SECURITY AGREEMENT
SCHEDULE OF PATENTS
I. U.S. PATENTS--TRANSDIGM INC.
Invention Patent No.
--------- ----------
Tube Clamp 4,393,998
Check-Valve Construction 4,351,358
In-Line, Bidirectional Check Valve 08/938,307
II. FOREIGN PATENTS--TRANSDIGM INC.
(Certain foreign patents may have expired or lapsed)
Invention Country Patent No.
--------- ------- ----------
Check-Valve Construction Canada 1,130,696
Check-Valve Construction Canada 1,132,430
Insert Check Valve or the Like Canada 1,138,743
Insert Check Valve or the Like Japan 1,325,78/89
Bi-Petal L Check-Valve Construction France 8,911,886
Bi-Petal L Check-Valve Construction Japan 2,718,83/89
Bi-Petal L Check-Valve Construction Germany P,392,7694.5
|
III. OTHER
License Agreement, dated as of October 31, 1997, by and between Bell Helicopter Textron Inc. (as Licensor), and AdelWiggins Group, a division of TransDigm Inc. (as Licensee), concerning a self-restraining loop style clamp (U.S. Patent 5,377,940, issued January 3, 1995).
ANNEX F
to
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS
None
ANNEX G
to
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of
which are hereby acknowledged, [Name of Assignor], a __________ corporation (the
"Assignor") with principal offices at ____________________________, hereby
assigns and grants to Bankers Trust Company, as Collateral Agent, with principal
offices at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006
(the "Assignee"), a security interest in (i) all of the Assignor's right, title
and interest in and to the United States trademarks, trademark registrations and
trademark applications (the "Marks") set forth on Schedule A attached hereto,
(ii) all of the Assignor's rights, title and interest in and to the United
States patents (the "Patents") set forth on Schedule B attached hereto, in each
case together with (iii) all Proceeds (as such term is defined in the Security
Agreement referred to below) and products of the Marks and Patents, (iv) the
goodwill of the businesses with which the Marks are associated and (v) all
causes of action arising prior to or after the date hereof for infringement of
any of the Marks and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the satisfactory performance and payment of all the Obligations of the Assignor, as such term is defined in the Security Agreement among the Assignor, the other assignors from time to time party thereto and the Assignee, dated as of December 3, 1998 (as amended from time to time, the "Security Agreement"). Upon the occurrence of the Termination Date (as defined in the Security Agreement), the Assignee shall,
ANNEX G
upon such satisfaction, execute, acknowledge, and deliver to the Assignor an instrument in writing releasing the security interest in the Marks and Patents acquired under this Assignment.
This Assignment has been granted in conjunction with the security interest granted to the Assignee under the Security Agreement. The rights and remedies of the Assignee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Assignment are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
* * *
ANNEX G
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the ____ day of _____________, ____.
[NAME OF ASSIGNOR], Assignor
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Assignee
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Assignor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came ________ _____________________ who, being by me duly sworn, did state as follows: that [s]he is __________________ of Bankers Trust Company that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
Notary Public
SCHEDULE A
MARK REG. NO. REG. DATE
---- -------- ---------
|
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
|
ANNEX H
TO
SECURITY AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
|
WHEREAS, [Name of Assignor], a _______________ corporation (the "Assignor"), having its chief executive office at ___________________, ________________, is the owner of all right, title and interest in and to the United States copyrights and associated United States copyright registrations and applications for registration set forth in Schedule A attached hereto;
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its principal offices at One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 (the "Assignee"), desires to acquire a security interest in said copyrights and copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to grant to the Assignee a security interest in and lien upon the copyrights and copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and subject to the terms and conditions of the Security Agreement, dated as of December 3, 1998, made by the Assignor, the other assignors from time to time party thereto and the Assignee (as amended from time to time, the "Security Agreement"), the Assignor hereby assigns to the Assignee as collateral security, and grants to the Assignee a security interest in, the copyrights and copyright registrations and applications therefor set forth in Schedule A attached hereto.
This Assignment has been granted in conjunction with the security interest granted to the Assignee under the Security Agreement. The rights and remedies of the Assignee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Assignment are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
Executed at New York, New York, the __ day of _________, ____.
[NAME OF ASSIGNOR], as Assignor
Title:
BANKERS TRUST COMPANY, as
Collateral Agent, Assignee
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of _________, ____, before me personally came ___________ _______________, who being duly sworn, did depose and say that [s]he is ___________________ of [Name of Assignor], that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came ________ _____________________ who, being by me duly sworn, did state as follows: that [s]he is __________________ of Bankers Trust Company that [s]he is authorized to execute the foregoing Assignment on behalf of said corporation and that [s]he did so by authority of the Board of Directors of said corporation.
Notary Public
SCHEDULE A
U.S. COPYRIGHTS
REGISTRATION PUBLICATION NUMBERS DATE COPYRIGHT TITLE ------------ ----------- --------------- |
Exhibit 4.14
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified or supplemented from time to time, this "Agreement"), dated as of December 3, 1998, made by each of the undersigned pledgors (each a "Pledgor" and, together with any other entity that becomes a pledgor hereunder pursuant to Section 25 hereof, the "Pledgors") to BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, TransDigm Holding Company ("Holdings"), TransDigm Inc. (the "Borrower"), the lenders from time to time party thereto (the "Lenders"), Credit Suisse First Boston, as Syndication Agent and Co-Lead Arranger, and Bankers Trust Company, as Administrative Agent and Co-Lead Arranger (together with any successor Administrative Agent, the "Administrative Agent"), have entered into a Credit Agreement, dated as of December 3, 1998 (as amended, modified or supplemented from time to time, the "Credit Agreement"), providing for the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower as contemplated therein (the Lenders, the Administrative Agent, each Letter of Credit Issuer and the Pledgee are herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender's or affiliate's successors and assigns, if any, collectively, the "Other Creditors," and together with the Lender Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described therein;
WHEREAS, it is a condition to the making of Loans to, and the issuance of Letters of Credit for the account of, the Borrower under the Credit Agreement that each Pledgor shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to enter into this Agreement in order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations and indebtedness (including, without limitation, indemnities, Fees and interest thereon) of such Pledgor to the Lender Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with the Credit Agreement and the other Credit Documents to which such Pledgor is a party (including all such obligations and indebtedness of such Pledgor under any Guaranty to which it is a party) and the due per-formance and compliance by such Pledgor with all of the terms, conditions and agreements contained in the Credit Agreement and in such other Credit Documents (all such obligations and liabilities under this clause (i), except to the extent consisting of obligations or indebtedness with respect to Interest Rate Protection Agreements or Other Hedging Agreements, being herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities
owing by such Pledgor to the Other Creditors under, or with respect to
(including by reason of the any Guaranty to which it is a party), any
Interest Rate Protection Agreement or Other Hedging Agreement, whether
such Interest Rate Protection Agreement or Other Hedging Agreement is now
in existence or hereafter arising, and the due performance and compliance
by such Pledgor with all of the terms, conditions and agreements contained
therein (all such obligations and liabilities described in this clause
(ii) being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Pledgor referred to in clauses (i), (ii) and (iii) above, after an Event of Default (which term to mean and include any Event of Default under, and as defined in, the Credit Agreement or any payment default by the Borrower under any Interest Rate Protection Agreement or Other Hedging Agreement and shall, in any event, include, without limitation, any payment default on any of the Obligations (as hereinafter defined) shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such Secured Creditor has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i) through (v) of this Section 1 being herein collectively called the "Obligations," it being acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
2. DEFINITIONS. (a) Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall be used herein as therein defined. Reference to singular terms shall include the plural and vice versa.
(b) The following capitalized terms used herein shall have the definitions specified below:
"Administrative Agent" has the meaning set forth in the Recitals hereto.
"Adverse Claim" has the meaning given such term in Section 8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph hereof.
"Certificated Security" has the meaning given such term in Section 8-102(a)(4) of the UCC.
"Clearing Corporation" has the meaning given such term in Section 8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.
"Credit Agreement" has the meaning set forth in the Recitals hereto.
"Credit Document Obligations" has the meaning set forth in Section 1 hereof.
"Domestic Corporation" has the meaning set forth in the definition of "Stock."
"Event of Default" has the meaning set forth in Section 1 hereof.
"Financial Asset" has the meaning given such term in Section 8-102(a)(9) of the UCC.
"Foreign Corporation" has the meaning set forth in the definition of "Stock."
"Indemnitees" has the meaning set forth in Section 11 hereof.
"Instrument" has the meaning given such term in Section 9-105(1)(i) of the UCC.
"Investment Property" has the meaning given such term in Section 9-115(f) of the UCC.
"Lender Creditors" has the meaning set forth in the Recitals hereto.
"Lenders" has the meaning set forth in the Recitals hereto.
"Limited Liability Company Assets" means all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned or represented by any Limited Liability Company Interest.
"Limited Liability Company Interests" means the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.
"Non-Voting Stock" means all capital stock which is not Voting Stock.
"Notes" means (x) all Intercompany Notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor.
"Obligations" has the meaning set forth in Section 1 hereof.
"Other Creditors" has the meaning set forth in the Recitals hereto.
"Other Obligations" has the meaning set forth in Section 1 hereof.
"Partnership Assets" means all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.
"Pledged Notes" has the meaning set forth in Section 3.5 hereof.
"Pledgee" has the meaning set forth in the first paragraph hereof.
"Pledgor" has the meaning set forth in the first paragraph hereof.
"Proceeds" has the meaning given such term in Section 9-306(l) of the UCC.
"Required Banks" has the meaning given such term in the Credit Agreement.
"Secured Creditors" has the meaning set forth in the Recitals hereto.
"Secured Debt Agreements" has the meaning set forth in Section 5 hereof.
"Securities Account" has the meaning given such term in Section 8-501(a) of the UCC.
"Securities Act" means the Securities Act of 1933, as amended, as in effect from time to time.
"Security" and "Securities" has the meaning given such term in
Section 8-102(a)(15) of the UCC and shall in any event include all Stock and
Notes (to the extent same constitute "Securities" under Section 8-102(a)(15)).
"Security Entitlement" has the meaning given such term in Section 8-102(a)(17) of the UCC.
"Stock" means (x) with respect to corporations incorporated under the laws of the United States or any State or territory thereof (each a "Domestic Corporation"), all of the issued and outstanding shares of capital stock of any corporation at any time owned by any Pledgor of any Domestic Corporation and (y) with respect to corporations not Domestic Corporations (each a "Foreign Corporation"), all of the issued and outstanding shares of capital stock at any time owned by any Pledgor of any Foreign Corporation.
"Termination Date" has the meaning set forth in Section 20 hereof.
"UCC" means the Uniform Commercial Code as in effect in the State of New York from time to time; provided that all references herein to specific sections or subsections of the UCC are references to such sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in Section 8-102(a)(18) of the UCC.
"Voting Stock" means all classes of capital stock of any Foreign Corporation entitled to vote.
3. PLEDGE OF SECURITIES, ETC.
3.1 Pledge. To secure the Obligations now or hereafter owed or to be performed by such Pledgor, each Pledgor does hereby grant, pledge and assign to the Pledgee for the benefit of the Secured Creditors, and does hereby create a continuing security interest in favor of the Pledgee for the benefit of the Secured Creditors in, all of the right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the "Collateral"):
(a) each of the Collateral Accounts, including any and all assets of whatever type or kind deposited by such Pledgor in such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, moneys, checks, drafts, Instruments, Securities or interests
therein of any type or nature deposited or required by the Credit Agreement or any other Secured Debt Agreement to be deposited in such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time represent-ing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(b) all Securities of such Pledgor from time to time;
(c) all Limited Liability Company Interests of such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such interest relates, whether now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses, Limited Liability Company Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;
(D) all present and future claims, if any, of such Pledgor against any such limited liability company for moneys loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any limited liability company agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
(F) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to time and all of its right, title and interest in each partnership to which each such interest relates, whether now existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses, Partnership Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;
(B) all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;
(D) all present and future claims, if any, of such Pledgor against any such partnership for moneys loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of any of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing (with all of the foregoing rights only to be exercisable upon the occurrence and during the continuation of an Event of Default); and
(F) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights
and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(e) all Security Entitlements of such Pledgor from time to time in any and all of the foregoing;
(f) all Financial Assets and Investment Property of such Pledgor from time to time; and
(g) all Proceeds of any and all of the foregoing.
Notwithstanding anything to the contrary contained in this Section 3.1, (x) except as otherwise provided in Section 8.12 of the Credit Agreement, no Pledgor (to the extent that it is the Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time to pledge hereunder more than 65% of the Voting Stock of any Foreign Corporation and (y) each Pledgor shall be required to pledge hereunder 100% of any Non-Voting Stock at any time and from time to time acquired by such Pledgor of any Foreign Corporation.
3.2 Procedures. (a) To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by the respective Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, such Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 10 days after it obtains such Collateral) for the benefit of the Pledgee and the Secured Creditors:
(i) with respect to a Certificated Security (other than a Certificated Security credited on the books of a Clearing Corporation), the respective Pledgor shall physically deliver such Certificated Security to the Pledgee, indorsed to the Pledgee or indorsed in blank;
(ii) with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation), the respective Pledgor shall cause the issuer of such Uncertificated Security to duly authorize and execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the Secured Creditors substantially in the form of Annex G hereto (appropriately completed to the satisfaction of the Pledgee and with such modifications, if any, as shall be satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security (and any Partnership Interests and Limited Liability Company Interests issued by such issuer) originated by any other Person other than a court of competent jurisdiction;
(iii) with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation (including a Federal Reserve Bank, Participants Trust Company or The
Depository Trust Company), the respective Pledgor shall promptly notify
the Pledgee thereof and shall promptly take all actions required (i) to
comply with the applicable rules of such Clearing Corporation and (ii) to
perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 9-115 (4)(a) and (b), 9-115
(1)(e) and 8-106 (d) of the UCC). The Pledgor further agrees to take such
actions as the Pledgee deems necessary or desirable to effect the
foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability
Company Interest (other than a Partnership Interest or Limited Liability
Interest credited on the books of a Clearing Corporation), (1) if such
Partnership Interest or Limited Liability Company Interest is represented
by a certificate, the procedure set forth in Section 3.2(a)(i) hereof, and
(2) if such Partnership Interest or Limited Liability Company Interest is
not represented by a certificate, the procedure set forth in Section
3.2(a)(ii) hereof;
(v) with respect to any Note, physical delivery of such Note to the Pledgee, indorsed to the Pledgee or indorsed in blank; and
(vi) with respect to cash, (i) establishment by the Pledgee of a cash account in the name of such Pledgor over which the Pledgee shall have exclusive and absolute control and dominion (and no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee) and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to proceeding Section 3.2(a) hereof, each Pledgor shall take the following additional actions with respect to the Securities and Collateral (as defined below):
(i) with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain "control" thereof within the meaning of Section 8-106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), the respective Pledgor shall take all actions as may be requested from time to time by the Pledgee so that "control" of such Collateral is obtained and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate financing statements (on Form UCC-1 or other appropriate form) under the Uniform Commercial Code as in effect in the various relevant States, on form covering all Collateral hereunder (with the form of such financing statements to be satisfactory to the Pledgee), to be filed in the relevant filing offices so that at all times the Pledgee has a security interest in all Investment Property and other Collateral which is perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-115(4)(b) of the UCC).
3.3 Subsequently Acquired Collateral. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Collateral at any time
or from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant to Section 3.1 hereof and,
furthermore, the Pledgor will promptly thereafter take (or cause to be taken)
all action with respect to such Collateral in accordance with the procedures set
forth in Section 3.2 hereof, and will promptly thereafter deliver to the Pledgee
(i) a certificate executed by a principal executive officer of such Pledgor
describing such Collateral and certifying that the same has been duly pledged in
favor of the Pledgee (for the benefit of the Secured Creditors) hereunder and
(ii) supplements to Annexes A through F hereto as are necessary to cause such
annexes to be complete and accurate at such time. Without limiting the
foregoing, each Pledgor shall be required to pledge hereunder any shares of
stock at any time and from time to time after the date hereof acquired by such
Pledgor of any Foreign Corporation, provided that (x) except as provided in
Section 8.12 of the Credit Agreement, no Pledgor (to the extent that it is the
Borrower or a Domestic Subsidiary of the Borrower) shall be required at any time
to pledge hereunder more than 65% of the Voting Stock of any Foreign Corporation
and (y) each Pledgor shall be required to pledge hereunder 100% of any
Non-Voting Stock at any time and from time to time acquired by such Pledgor of
any Foreign Corporation.
3.4 Transfer Taxes. Each pledge of Collateral under Section 3.1 or
Section 3.3 hereof shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5 Definition of Pledged Notes. All Notes at any time pledged or required to be pledged hereunder are hereinafter called the "Pledged Notes".
3.6 Certain Representations and Warranties Regarding the Collateral.
Each Pledgor represents and warrants that on the date hereof (i) each Subsidiary
of such Pledgor, and the direct ownership thereof, is listed in Annex A hereto;
(ii) the Stock held by such Pledgor consists of the number and type of shares of
the stock of the corporations as described in Annex B hereto; (iii) such Stock
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Annex B hereto; (iv) the Notes held by
such Pledgor consist of the promissory notes described in Annex C hereto where
such Pledgor is listed as the lender; (v) the Limited Liability Company
Interests held by such Pledgor consist of the number and type of interests of
the Persons described in Annex D hereto; (vi) each such Limited Liability
Company Interest constitutes that percentage of the issued and outstanding
equity interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest constitutes that percentage or portion of the entire
partnership interest of the Partnership as set forth in Annex E hereto; (ix) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
hereof with respect to each item of Collateral described in Annexes A through E
hereto; and (x) on the date hereof, such Pledgor owns no other Securities,
Limited Liability Company Interests or Partnership Interests.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary to enable the Pledgee to perfect its security interest in any of the Collateral or to exercise any of its remedies hereunder, the Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided, that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate or be inconsistent with any of the terms of this Agreement, the Credit Agreement, any other Credit Document or any Interest Rate Protection Agreement or Other Hedging Agreement (collectively, the "Secured Debt Agreements"), or which would have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral. All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has occurred and is continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred and be continuing an Event of Default, (i) all cash dividends, cash distributions, cash Proceeds and other cash amounts payable in respect of the Collateral shall be paid to the respective Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:
(i) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash dividends other than as set forth above) paid or distributed by way of dividend or otherwise in respect of the Collateral;
(ii) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and
(iii) all other or additional stock, notes, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash) which may be paid in respect of the Colla-teral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the Pledgee's right to receive proceeds of the Collateral in any form in accordance with Section 3 of this Agreement. All dividends, distributions or other payments which are received by any Pledgor contrary to the
provisions of this Section 6 and Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Secured Debt Agreement or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the Uniform Commercial Code as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the fol-lowing rights, which each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to the respective Pledgor;
(ii) to transfer all or any part of the Collateral into the Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);
(v) at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided that at least 10 days' written notice of the time and place of any such sale shall be given to the respective Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon
any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and
(vi) to set-off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Secured Debt Agreement, or now or hereafter existing at law or in equity or by statute shall be cumula-tive and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Agreement or any other Secured Debt Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Agreement may be enforced only by the action of the Administrative Agent or the Pledgee, in each case acting upon the instructions of the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least the majority of the outstanding Other Obligations) and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent or the Pledgee or the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies received by the Pledgee hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral hereunder and the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor and their respective successors, assigns, employees, agents and
servants (individually an "Indemnitee," and collectively the "Indemnitees") from
and against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and (ii) to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, in each case growing out of or resulting from this Agreement or
the exercise by any Indemnitee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement (but excluding any claims, demands,
losses, judgments and liabilities or expenses to the extent incurred by reason
of gross negligence or willful misconduct of such Indemnitee). In no event shall
the Pledgee be liable, in the absence of gross negligence or willful misconduct
on its part, for any matter or thing in connection with this Agreement other
than to account for monies actually received by it in accordance with the terms
hereof. If and to the extent that the obligations of any Pledgor under this
Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make
the max-imum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any other Secured Creditor liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or partnership. The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or Partnership Interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Pledgee, any other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of this
Section 12, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or a partner of any partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
limited liability company or partnership either before or after an Event of
Default shall have occurred. The Pledgee shall have only those powers set forth
herein and the Secured Creditors shall assume none of the duties, obligations or
liabilities of a member of any limited liability company or as a partner of any
partnership or any Pledgor except as provided in the last sentence of paragraph
(a) of this Section 12.
(c) The Pledgee and the other Secured Creditors shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the
Pledgee or any other Secured Creditor to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that it will join with the Pledgee in executing and, at such Pledgor's own expense, file and refile under the Uniform Commercial Code or other applicable law such financing statements, continuation statements and other documents in such offices as the Pledgee may deem necessary and wherever required by law in order to perfect and preserve the Pledgee's security interest in the Collateral and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral without the signature of such Pledgor where permitted by law, and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional convey-ances, assignments, agreements and instruments as the Pledgee may reasonably require or deem necessary to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, to act from time to time solely after the occurrence and during the continuance of an Event of Default in the Pledgee's reasonable discretion to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed by each Secured Creditor that by accepting the benefits of this Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein (except as may be permitted in accordance with the terms of the Credit Agreement).
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has good and marketable title to, all Collateral consisting of one or more Securities and that it has sufficient interest in all Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other
encumbrance whatsoever, except the liens and security interests created by this Agreement);
(ii) it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bank-ruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of
any other party (including, without limitation, any stockholder or
creditor of such Pledgor or any of its Subsidiaries) and no consent,
license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by such Pledgor in connection with
(a) the execution, delivery or performance of this Agreement, (b) the
validity or enforceability of this Agreement (except as set forth in
clause (iii) above), (c) the perfection or enforceability of the Pledgee's
security interest in the Collateral or (d) except for compliance with or
as may be required by applicable securities laws, the exercise by the
Pledgee of any of its rights or remedies provided herein;
(v) the execution, delivery and performance of this Agreement will not violate any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental author-ity, domestic or foreign, applicable to such Pledgor, or of the certificate of incorporation, operating agreement, limited liability company agreement, partnership agreement or by-laws of such Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries, or of any mortgage, deed of trust, indenture, lease, loan agreement, credit agreement or other material contract, agreement or instrument or undertaking to which such Pledgor or any of its Subsidiaries is a party or which purports to be binding upon such Pledgor or any of its Subsidiaries or upon any of their respective assets and will not result in the creation or imposition of (or the obligation to create or impose) any lien or encumbrance on any of the assets of such Pledgor or any of its Subsidiaries except as contemplated by this Agreement;
(vi) all of the Collateral (consisting of Securities, Limited Liability Company Interests or Partnership Interests) has been duly and validly issued and acquired, is fully paid and non-assessable and is subject to no options to purchase or similar rights;
(vii) each of the Pledged Notes constitutes, or when executed by the obligor thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law); and
(viii) the pledge, collateral assignment and delivery to the Pledgee of the Collateral consisting of Certificated Securities pursuant to this Agreement creates a valid and perfected first priority security interest in such Certificated Securities, and the proceeds thereof, subject to no prior Lien or encumbrance or to any agreement purporting to grant to any third party a Lien or encumbrance on the property or assets of such Pledgor which would include the Securities and the Pledgee is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfect security interests in respect of such Collateral; and
(ix) "control" (as defined in Section 8-106 of the UCC) has been obtained by the Pledgee over all Collateral consisting of Securities (including Notes which are Securities) with respect to which such "control" may be obtained pursuant to Section 8-106 of the UCC.
(b) Each Pledgor covenants and agrees that it will defend the Pledgee's right, title and security interest in and to the Securities and the proceeds thereof against the claims and demands of all persons whomsoever; and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action which would violate any of the terms of any Secured Debt Agreement.
17. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
each Pledgor is located at the address specified in Annex F hereto. Each Pledgor
will not move its chief executive office except to such new location as such
Pledgor may establish in accordance with the last sentence of this Section 17.
The originals of all documents in the possession of such Pledgor evidencing all
Collateral, including but not limited to all Limited Liability Company Interests
and Partnership Interests, and the only original books of account and records of
such Pledgor relating thereto are, and will continue to be, kept at such chief
executive office as specified in Annex F hereto, or at such new locations as
such Pledgor may establish in accordance with the last sentence of this Section
17. All Limited Liability Company Interests and Partnership Interests are, and
will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, such chief executive
office as specified in Annex F hereto, or such new locations as such Pledgor may
establish in accordance with the last sentence of this Section 17. No Pledgor
shall establish a new location for such offices until (i) it shall have given to
the Pledgee not less than 30 days' prior written notice of its intention so to
do, clearly describing such new location and providing such other information in
connection therewith as the Pledgee may reasonably request and (ii) with respect
to such new location, it shall have taken all action, satisfactory to the
Pledgee, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all
times fully perfected and in full force and effect. Promptly after establishing a new location for such offices in accordance with the immediately preceding sentence, the respective Pledgor shall deliver to the Pledgee a supplement to Annex F hereto so as to cause such Annex F hereto to be complete and accurate.
18. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument including, without limitation, this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Pledgor or any Subsidiary
of any Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
19. REGISTRATION, ETC. (a) If there shall have occurred and be con-tinuing an Event of Default then, and in every such case, upon receipt by any Pledgor from the Pledgee of a written request or requests that such Pledgor cause any registration, quali-fication or compliance under any Federal or state securities law or laws to be effected with respect to all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests, such Pledgor as soon as practicable and at its expense will cause such registration to be effected (and be kept effective) and will cause such qualification and compliance to be declared effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Collateral, including, without limitation, registration under the Securities Act, as then in effect (or any similar statute then in effect), appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with any other government requirements, provided, that the Pledgee shall furnish to such Pledgor such information regarding the Pledgee as such Pledgor may reasonably request in writing and as shall be required in connection with any such registration, qualification or compliance. Such Pledgor will cause the Pledgee to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will furnish to the Pledgee such number of prospectuses, offering circulars or other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify the Pledgee, each other Secured Creditor and all others participating in the distribution of such Collateral against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in
any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to such Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to Section
7 hereof, and the Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Collateral, as the case may be, or part thereof by private sale in such manner
and under such circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Collateral or part thereof shall have been filed under such Securities Act,
(ii) may approach and negotiate with a single possible purchaser to effect such
sale, and (iii) may restrict such sale to a purchaser who will represent and
agree that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Collateral or part thereof.
In the event of any such sale, the Pledgee shall incur no responsibility or
liability for selling all or any part of the Collateral at a price which the
Pledgee, in its sole and absolute discretion, in good faith deems reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after
registration as aforesaid.
20. TERMINATION; RELEASE. (a) After the Termination Date, this Agreement and the security interest created hereby shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination), and the Pledgee, at the request and expense of any Pledgor, will execute and deliver to such Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any monies at the time held by the Pledgee or any of its sub-agents hereunder. As used in this Agreement, "Termination Date" shall mean the date upon which the Total Commitment and all Interest Rate Protec-tion Agreements and Other Hedging Agreements have been terminated, no Note under the Credit Agreement is outstanding (and all Loans have been repaid in full), all Letters of Credit have been terminated and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold in connection with a sale permitted by Section 9.02 of the Credit Agreement (other than a sale to any Pledgor or any Subsidiary thereof) or is otherwise released at the direction of the Required Lenders (or all Lenders if required by Section 13.12 of the Credit Agreement) and the proceeds of such sale or sales or from such release are applied in accordance with the provisions of the Credit Agreement, to the extent required to be so applied, the Pledgee, at the request and expense of any Pledgor, will duly assign, transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as is then being (or has been) so sold or released and has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign, transfer and deliver Collateral (and releases therefor) as provided in Section 20(a) or (b) hereof, it shall deliver to the Pledgee a certificate signed by a principal executive officer of such Pledgor stating that the release of the respective Collateral is permitted pursuant to such Section 20(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with this Section 20.
21. NOTICES, ETC. All such notices and communications hereunder shall be sent or delivered by mail, telegraph, telex, telecopy, cable or overnight courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be effective when delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier and when mailed shall be effective three Business Days following deposit in the mail with proper postage, except that notices and communications to the Pledgee shall not be effective until received by the Pledgee. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at the address set forth opposite such Pledgor's signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Greg Shefrin
Telephone No.: (212) 250-1725
Telecopier No.: (212) 250-7218;
(c) if to any Lender Creditor, either (x) to the Administrative Agent, at the address of the Administrative Agent specified in the Credit Agreement or (y) at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other Creditor shall have specified in writing to the Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
22. WAIVER; AMENDMENT. None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Pledgor directly affected thereby and the Pledgee (with the written
consent of either (x) the Required Lenders (or all of the Lenders to the extent required by Section 13.12 of the Credit Agreement) at all times prior to the time on which all Credit Document Obligations have been paid in full or (y) the holders of at least a majority of the outstanding Other Obligations at all times after the time on which all Credit Document Obligations have been paid in full); provided, that any change, waiver, modification or variance affecting the rights and benefits of a single Class (as defined below) of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall also require the written consent of the Requisite Creditors (as defined below) of such affected Class. For the purpose of this Agreement, the term "Class" shall mean each class of Secured Creditors, i.e., whether (i) the Lender Creditors as holders of the Credit Document Obligations or (ii) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term "Requisite Creditors" of any Class shall mean each of (i) with respect to the Credit Document Obligations, the Required Lenders and (ii) with respect to the Other Obligations, the holders of at least a majority of all obligations outstanding from time to time under the Interest Rate Protection Agreements and Other Hedging Agreements.
23. MISCELLANEOUS. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of and be enforceable by each of the parties hereto and its successors and assigns, provided that no Pledgor may assign any of its rights or obligations under this Agreement without the prior consent of the Collateral Agent. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH PLEDGOR IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. The headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an orig-inal, but all of which shall constitute one instrument. In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto.
24. RECOURSE. This Agreement is made with full recourse to the Pledgors and pursuant to and upon all the representations, warranties, covenants and agreements on the part of the Pledgors contained herein and in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
25. ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the Credit Agreement shall become a Pledgor hereunder by executing a counterpart hereof and delivering the same to the Pledgee.
* * * *
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
Address:
8233 Imperial Drive TRANSDIGM HOLDING COMPANY,
Waco, TX 76712 as a Pledgor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By /s/ Peter Radekevich
------------------------------------
Title: Chief Financial Officer
8233 Imperial Drive TRANSDIGM INC.,
Waco, TX 76712 as a Pledgor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By /s/ Peter Radekevich
------------------------------------
Title: Chief Financial Officer
8233 Imperial Drive MARATHON POWER TECHNOLOGIES COMPANY,
Waco, TX 76712 as a Pledgor
Attention: Douglas W. Peacock
Telephone: (254) 741-5420
Telecopier: (254) 741-5402 By /s/ Peter Radekevich
------------------------------------
Title: Chief Financial Officer
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Pledgee, Collateral Agent
By /s/ Gregory P. Shefrin
---------------------------
Title: Vice President
|
ANNEX A
to
|
PLEDGE AGREEMENT
LIST OF SUBSIDIARIES
I. TransDigm Holding Company
TransDigm Inc.
II. TransDigm Inc.
Marathon Power Technologies Company
III. Marathon Power Technologies Company
None.
ANNEX B
to
PLEDGE AGREEMENT
LIST OF STOCK
I. TransDigm Holding Company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Relevant Sub-
Percentage of Clause of
Number Outstanding Section 3.2(a) of
Name of Issuing Certificate Type of of Shares of Pledge
Corporation Number Shares Shares Capital Stock Agreement
--------------------------------------------------------------------------------
TransDigm Inc. Common 100% (i)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|
II. TransDigm Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Relevant Sub-
Percentage of Clause of
Number Outstanding Section 3.2(a) of
Name of Issuing Certificate Type of of Shares of Pledge
Corporation Number Shares Shares Capital Stock Agreement
--------------------------------------------------------------------------------
Marathon Power
Technologies
Company Company 100% (i)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|
III. Marathon Power Technologies Company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Relevant Sub-
Percentage of Clause of
Number Outstanding Section 3.2(a) of
Name of Issuing Certificate Type of of Shares of Pledge
Corporation Number Shares Shares Capital Stock Agreement
--------------------------------------------------------------------------------
None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|
ANNEX C
to
PLEDGE AGREEMENT
LIST OF NOTES
I. TransDigm Holding Company
Relevant Sub-clause of
Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
II. TransDigm Inc.
Sub-clause of
Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
III. Marathon Power Technologies Company
Sub-clause of
Section 3.2(a)
Amount Maturity Date Obligor of Pledge Agreement
------ ------------- ------- -------------------
|
ANNEX D
to
PLEDGE AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
I. TransDigm Holding Company
None.
II. TransDigm Inc.
None.
III. Marathon Power Technologies Company
None.
ANNEX E
to
PLEDGE AGREEMENT
LIST OF PARTNERSHIP INTERESTS
I. TransDigm Holding Company
None.
II. TransDigm Inc.
None.
III. Marathon Power Technologies Company
None.
ANNEX F
to
PLEDGE AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
I. TransDigm Holding Company
II. TransDigm Inc.
III Marathon Power Technologies Company
ANNEX G
to
PLEDGE AGREEMENT
Form of Agreement Regarding Uncertificated Securities, Limited Liability Company Interests and Partnership Interests
AGREEMENT (as amended, modified or supplemented from time to time, this "Agreement"), dated as of _______ __, ____, among each of the undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"), Bankers Trust Company, not in its individual capacity but solely as Collateral Agent (the "Pledgee"), and __________, as the issuer of the Uncertificated Securities, Limited Liability Company Interests and/or Partnership Interests (each as defined below) (the "Issuer").
W I T N E S S E T H :
WHEREAS, each Pledgor and the Pledgee have entered into a Pledge Agreement, dated as of December 3, 1998 (a s amended, amended and restated, modified or supplemented from time to time, the "Pledge Agreement"), under which, among other things, in order to secure the payment of the Obligations (as defined in the Pledge Agreement), each Pledgor will pledge to the Pledgee for the benefit of the Secured Creditors (as defined in the Pledge Agreement), and grant a security interest in favor of the Pledgee for the benefit of the Secured Creditors in, all of the right, title and interest of such Pledgor in and to any and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of the Uniform Commercial Code, as adopted in the State of New York) ("Uncertificated Securities"), (2) Partnership Interests (as defined in the Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the Pledge Agreement), in each case issued from time to time by the Issuer, whether now existing or hereafter from time to time acquired by such Pledgor (with all of such Uncertificated Securities, Partnership Interests and Limited Liability Company Interests being herein collectively called the "Issuer Pledged Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this Agreement in order to perfect the security interest of the Pledgee under the Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control of the Issuer Pledge Interests and to provide for the rights of the parties under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the Issuer, and the Issuer hereby agrees, to comply with any and all instructions and orders originated by the
Pledgee (and its successors and assigns) regarding any and all of the Issuer Pledged Interests without the further consent by the registered owner (including the respective Pledgor), and not to comply with any instructions or orders regarding any or all of the Issuer Pledged Interests originated by any person or entity other than the Pledgee (and its successors and assigns) or a court of competent jurisdiction.
2. The Issuer hereby certifies that (i) no notice of any security interest, lien or other encumbrance or claim affecting the Issuer Pledged Interests (other than the security interest of the Pledgee) has been received by it, and (ii) the security interest of the Pledgee in the Issuer Pledged Interests has been registered in the books and records of the Issuer.
3. The Issuer hereby represents and warrants that (i) the pledge by the Pledgors of, and the granting by the Pledgors of a security interest in, the Issuer Pledged Interests to the Pledgee, for the benefit of the Secured Creditors, does not violate the charter, by-laws, partnership agreement, membership agreement or any other agreement governing the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged Interests are fully paid and nonassessable.
4. All notices, statements of accounts, reports, prospectuses, financial statements and other communications to be sent to any Pledgor by the Issuer in respect of the Issuer will also be sent to the Pledgee at the following address:
Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street New York, New York 10006 Attention: Greg Shefrin Tel: (212) 250-1725 Fax: (212) 250-7218
5. Until the Pledgee shall have delivered written notice to the Issuer that all of the Obligations have been paid in full and this Agreement is terminated, the Issuer will send any and all redemptions, distributions, interest or other payments in respect of the Issuer Pledged Interests from the Issuer for the account of the Pledgor only by wire transfers to the following address:
6. Except as expressly provided otherwise in Sections 4 and 5, all notices, instructions, orders and communications hereunder shall be sent or delivered by mail, telex, telecopy or overnight courier service and all such notices and communications shall, when mailed, telexed, telecopied or sent by overnight courier, be effective when deposited in the mails
or delivered to the overnight courier, prepaid and properly addressed for delivery on such or the next Business Day, or sent by telex or telecopier, except that notices and communications to the Pledgee shall not be effective until received by the Pledgee. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at:
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Greg Shefrin
Tel: (212) 250-1725
Fax: (212) 250-7218
(c) if to the Issuer, at:
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
7. This Agreement shall be binding upon the successors and assigns of each Pledgor and the Issuer and shall inure to the benefit of and be enforceable by the Pledgee and its successors and assigns. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto. None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever except in writing signed by the Pledgee, the Issuer and any Pledgor which at such time owns any Issuer Pledged Interests.
8. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflict of laws.
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but solely
as Collateral Agent and Pledgee
Title:
Title:
Exhibit 10.2
Execution Copy
MANAGEMENT STOCKHOLDERS' AGREEMENT
Dated as of December 3, 1998
TABLE OF CONTENTS
SECTION PAGE
----
1. Restrictions on Transfer of Common Stock...............................2
1.1. General Restriction on Transfer................................2
1.2. Permitted Transferees..........................................3
2. Sales of Common Stock to Holdings; Cancellation of
Options.............................................................4
2.1. The Management Stockholders' Rights............................4
2.2. Notice.........................................................5
2.3. Payment........................................................5
3. Holdings' Rights to Purchase from Management Stockholders Shares of
Common Stock and to Cancel Options...................................6
3.1. Holdings' Rights...............................................6
3.2. Notice.........................................................6
3.3. Payment........................................................7
4. Tag-Along and Drag-Along Rights........................................9
4.1. Tag-Along Rights...............................................9
4.2. Drag-Along Rights..............................................9
5. Tax Liability Loans; Additional Offerings.............................10
5.1. Tax Liability Loans...........................................10
5.2. Additional Offerings..........................................11
6. Purchase Price........................................................11
6.1. Appraisal.....................................................11
6.2. Fair Market Value.............................................12
6.3. Notice to Stockholders........................................13
6.4. Carrying Value................................................13
7. Prohibited Purchases..................................................13
8. Sales to Third Parties................................................16
8.1. General.......................................................16
8.2. Right of First Refusal........................................17
8.3. Involuntary Transfers.........................................18
9. Election of Directors.................................................19
9.1. Board Make-up.................................................19
9.2. Irrevocable Proxy.............................................19
10. Termination of Rights and Obligations Under Certain Sections.........19
|
SECTION PAGE
----
11. Stock Certificate Legend.............................................19
12. Covenants; Representation and Warranties.............................21
12.1. New Management Stockholders..................................21
12.2. No Other Arrangements or Agreements..........................21
13. Amendment and Modification...........................................22
14. Parties..............................................................22
14.1. Assignment by Holdings.......................................22
14.2. Assignment Generally.........................................23
14.3. Termination..................................................23
14.4. Agreements to Be Bound.......................................23
15. Recapitalizations, Exchanges, etc. Affecting the Common Stock........24
16. Transfer of Common Stock.............................................24
17. Further Assurances...................................................25
18. Governing Law........................................................25
19. Invalidity of Provision..............................................25
20. Notices..............................................................26
21. Headings; Execution in Counterpart...................................27
22. Effectiveness of Voting Agreements...................................27
23. Entire Agreement.....................................................28
24. Injunctive Relief....................................................28
25. Defined Terms........................................................29
25.1. Affiliate....................................................29
25.2. Carrying Value...............................................29
25.3. Cause........................................................29
25.4. Change in Control............................................30
25.5. Closing Date.................................................30
25.6. Disability...................................................30
25.7. Exchange Act.................................................31
25.8. Exercisable Options..........................................31
25.9. Fair Market Value............................................31
25.10. Good Reason.................................................31
25.11. Involuntary Transfer........................................31
|
SECTION PAGE
----
25.12. Majority Management Stockholders............................31
25.13. Merger; Merger Agreement....................................32
25.14. Permitted Assignee..........................................32
25.15. Person......................................................32
25.16. Principal Stockholder.......................................33
25.17. Roll-Over Options...........................................33
25.18. Roll-Over Shares............................................33
25.19. Transfer....................................................33
|
MANAGEMENT STOCKHOLDERS' AGREEMENT
This MANAGEMENT STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of December 3, 1998, by and among TransDigm Holding Company, a Delaware corporation ("Holdings"), Odyssey Investment Partners Fund, LP ("Odyssey"), and those employees of TransDigm Inc. ("TransDigm") listed on Schedule A attached hereto (such employees, together with any persons who become parties to this Agreement pursuant to Section 12.1 of this Agreement and each of their respective Permitted Transferees, are referred to herein, collectively, as the "Management Stockholders"). Schedule A shall be updated from time to time to include each Management Stockholder who becomes a party to this Agreement after the date hereof. Odyssey and the Management Stockholders are hereinafter referred to collectively as the "Stockholders."
RECITALS
In connection with that certain Agreement and Plan of Merger, dated as of August 3, 1998, between Phase II Acquisition Corp. and Holdings, as amended (the "Merger Agreement"), as of the date of consummation of the Merger (as defined in the Merger Agreement, the "Closing Date"), each Management Stockholder listed on Schedule B attached hereto holds certain options to purchase shares of common stock of Holdings, $0.01 par value per share (the "Common Stock"), as set forth on Schedule B attached hereto, which options were held by such Management Stockholder immediately prior to the Merger and which options shall be exercisable in full and remain outstanding immediately following the Merger (the "Roll-Over Options"). Each Management Stockholder's Roll-Over Options will remain subject to the terms of the TransDigm Holding Company 1994 Stock Incentive Plan, as the same may be amended
from time to time (the "1994 Plan"), and shall be augmented by the provisions of the applicable Option Roll-Over/Cancellation Agreement executed by such Management Stockholder and the provisions of this Agreement. In addition, effective as of the Closing Date, Holdings is granting to certain employees, options to purchase Common Stock pursuant to the terms of the 1998 Stock Option Plan of TransDigm Holding Company, as amended from time to time (the "1998 Plan") and an Incentive Stock Option Agreement between Holdings and such Management Stockholder, and Holdings may in the future grant additional options to purchase Common Stock to certain employees.
As used in this Agreement, "Options" shall mean all options to purchase Common Stock granted to or held by a Management Stockholder at any time when this Agreement is in effect (including, where applicable, Roll-Over Options). Capitalized terms used herein without definition elsewhere in this Agreement are defined in Section 25.
NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, and to implement the foregoing, the parties hereto agree as follows:
AGREEMENT
1. Restrictions on Transfer of Common Stock.
1.1. General Restriction on Transfer. No shares of Common Stock now or hereafter owned by any Management Stockholder nor any interest therein nor any rights relating thereto may be Transferred, except for (a) Transfers to a Permitted Transferee pursuant to Section 1.2, (b) sales of shares of Common Stock to Holdings pursuant to Section 2 or 3 or (c) Transfers to a third party, Holdings or any Permitted Assignee of shares of Common Stock pursuant to, or otherwise permitted under, Section 8.
1.2. Permitted Transferees.
(a) Trust, Corporation, Partnership, etc. Subject to Section 14.4, a Management Stockholder may Transfer any shares of Common Stock or any interest therein (i) for estate-planning purposes of such Management Stockholder and with the prior written consent of the Compensation Committee of the Board of Directors of Holdings (the "Committee"), which consent shall not be unreasonably withheld, to (x) a trust under which the distribution of the shares of Common Stock may be made only to beneficiaries who are such Management Stockholder, his or her spouse, his or her parents, members of his or her immediate family or his or her lineal descendants ("Permitted Family Members"), (y) a corporation the stockholders of which are only Permitted Family Members or (z) a partnership the partners of which are only Permitted Family Members or (ii) in case of his or her death, by will or by the laws of intestate succession, to his or her executors, administrators, testamentary trustees, legatees or beneficiaries (each such person and entity a "Permitted Transferee" and collectively, the "Permitted Transferees"); provided, however, that in each such case, the shares of Common Stock so Transferred shall be subject to all provisions of this Agreement as though the transferring Management Stockholder were still the holder of such shares.
(b) Security Agreements. Subject to Section 14.4, a Management Stockholder may pledge any or all shares of Common Stock now or hereafter owned by him or her or grant a security interest therein to secure indebtedness of such Stockholder owing to a bank or other financial institution approved by Holdings so long as such indebtedness was incurred for the purpose of paying all or part of the purchase price of such shares of Common Stock or for the purpose of refinancing indebtedness incurred for such purpose, provided, however, that any transferee pursuant to this Section 1.2(b) shall acquire only a security interest in such shares of
Common Stock entitling such transferee to the proceeds from any sale of such shares of Common Stock made in compliance with the terms of this Agreement and any proceeds of any distribution to stockholders on account of the stock in any liquidation as a result of any bankruptcy proceeding or the winding up of affairs of Holdings, but not title to such shares of Common Stock or any other rights incident thereto. The pledge agreements or other related financing agreements of any Management Stockholder shall be subject to, and acknowledge, the rights of Holdings and the other Stockholders set forth herein.
2. Sales of Common Stock to Holdings; Cancellation of Options.
2.1. The Management Stockholders' Rights.
(a) Subject to all subsections of this Section 2 and Section 7, each of the Management Stockholders shall have the right to sell to Holdings, and Holdings shall have the obligation to purchase from such Management Stockholder, all, but not less than all, of such Management Stockholder's shares of Common Stock (including Roll-Over Shares, where applicable) held by such Management Stockholder for at least six months as of the date of such Management Stockholder's notice described in Section 2.2 at their Fair Market Value, if the employment of such Management Stockholder with Holdings or any of its subsidiaries is terminated as a result of (i) termination by Holdings or any such subsidiary without Cause, (ii) the death or Disability of such Management Stockholder or (iii) the resignation of such Management Stockholder for Good Reason.
(b) Subject to all subsections of this Section 2 and Section 7, each of the Management Stockholders shall have the right to sell to Holdings, and Holdings shall have the obligation to purchase from such Management Stockholder, all or any portion of such Management Stockholder's shares of Common Stock (including Roll-Over Shares, where
applicable), held by such Management Stockholder for at least six months as of the date of such Management Stockholder's notice described in Section 2.2 at their Fair Market Value, if the employment of such Management Stockholder with Holdings or any of its subsidiaries is terminated as a result of the retirement of such Management Stockholder upon or after reaching the age of 65 or as otherwise defined in a written agreement between Holdings and such Management Stockholder ("Retirement").
2.2. Notice. If any Management Stockholder desires to sell shares of Common Stock pursuant to Section 2.1, he or she (or his or her estate, trust, corporation or partnership, as the case may be) shall notify Holdings not more than 15 months after the effective date of such Management Stockholder's termination of employment (or such later date as mutually agreed to by such Management Stockholder and Holdings) and shall specify the number of shares of Common Stock such Management Stockholder owns, and the number of shares of Common Stock to be repurchased hereunder.
2.3. Payment.
Subject to Section 7, payment for shares of Common Stock sold by a Management Stockholder pursuant to Section 2.1(a) or (b) shall be made on or prior to the date 30 days (or the first business day thereafter if the 30th day is not a business day) following the date of the receipt by Holdings of such Management Stockholder's notice described in Section 2.2; provided, however, that if such payment is being made pursuant to Section 6.2(c), then such payment shall be made on or prior to the date that is 30 days (or the first business day thereafter if the 30th day is not a business day) following the date of the determination of Fair Market Value.
Any payments required to be made by Holdings under this Section 2.3 (other
than payments made under the terms of a note issued by Holdings pursuant to
Section 7) shall accrue
simple interest at a rate per annum of 6% from the effective date of termination of employment of the relevant Management Stockholder to the date Holdings has paid in full for all of the shares of Common Stock. All payments of interest accrued hereunder (other than interest on any note issued by Holdings pursuant to Section 7) shall be paid only at the date of payment by Holdings for the shares of Common Stock being purchased.
3. Holdings' Rights to Purchase from Management Stockholders Shares of Common Stock and to Cancel Options.
3.1. Holdings' Rights.
Subject to all subsections of this Section 3 and Section 7, Holdings shall have the right to purchase from a Management Stockholder, and such Management Stockholder shall have the obligation to sell to Holdings, all, but not less than all, of such Management Stockholder's shares of Common Stock:
(a) at the Fair Market Value of the shares of Common Stock to be purchased if such Management Stockholder's employment with Holdings or any of its subsidiaries is terminated either (i) as a result of (A) the termination by Holdings or any such subsidiary of such employment without Cause, (B) the death or Disability of such Management Stockholder or (C) the resignation of such Management Stockholder for Good Reason or without Good Reason; or (ii) with regard to Roll-Over Shares, for any reason; or
(b) at the lesser of the Fair Market Value and the Carrying Value of the shares of Common Stock to be purchased if such Management Stockholder's employment with Holdings or any of its subsidiaries is terminated by Holdings or any such subsidiary for Cause.
3.2. Notice. If Holdings desires to purchase shares of Common Stock from a Management Stockholder and/or to cancel Options pursuant to Section 3.1, it shall notify such Management Stockholder (or his or her estate, trust, corporation or partnership, as the case may be hereinafter, collectively with such Management Stockholder, the "Management Stockholder Parties") not more than 15 months after the effective date of the termination of such Management
Stockholder's employment (or such later date as mutually agreed to by such Management Stockholder and Holdings).
3.3. Payment. Subject to Section 7, payment for shares of Common Stock purchased by Holdings (including Roll-Over Shares) by reason of an event described in Section 3.1(a) shall be made on or prior to the date 30 days (or the first business day thereafter if the 30th day is not a business day) following the date of the receipt by such Management Stockholder Parties of Holdings' notice pursuant to Section 3.2; provided, however, that if such payment is being made pursuant to Section 6.2(c), then such payment shall be made on or prior to the date that is 30 days (or the first business day thereafter if the 30th day is not a business day) following the date of determination of Fair Market Value.
Subject to Section 7, and in the sole discretion of the Committee, payment for shares of Common Stock purchased by Holdings (other than Roll-Over Shares) by reason of an event described in Section 3.1(b) shall be made as follows (or on a more accelerated schedule if the Committee so elects):
(a) if the date of termination occurs prior to the third anniversary of the Closing Date, then one-third of the aggregate purchase price of the purchased shares shall be paid within 30 days following each of the third, fourth and fifth anniversaries of the Closing Date;
(b) if the date of termination occurs on or after the third
anniversary of the Closing Date and prior to the fourth anniversary of the
Closing Date, then (x) two-thirds of the purchase price of the purchased
shares shall be paid within 30 days following such fourth anniversary and
(y) one-third of the purchase price of the purchased shares shall be paid
within 30 days following the fifth anniversary of the Closing Date;
(c) if the date of termination occurs on or after the fourth anniversary of the Closing Date and prior to the fifth anniversary of the Closing Date, then the purchase price of the purchased shares shall be paid within 30 days following such fifth anniversary; and
(d) if the date of termination occurs on or after the fifth anniversary of the Closing Date, then the purchase price of the purchased shares shall be paid contemporaneously with the surrender of the certificates representing the purchased shares and evidence of cancellation of such Options.
Any payments based on Fair Market Value required to be made by Holdings under this Section 3.3 (other than payments made under the terms of a note issued by Holdings pursuant to Section 7) shall accrue simple interest at a rate per annum of 6% on the amounts not paid from the date of termination of employment to the date Holdings makes such payments. All payments of interest accrued hereunder (other than interest on any note issued by Holdings pursuant to Section 7) shall be paid only at the date or dates of payment by Holdings for the shares of Common Stock being purchased.
4. Tag-Along and Drag-Along Rights.
4.1. Tag-Along Rights. Odyssey may not sell any shares of Common Stock to one or more third parties if such shares, together with all shares of Common Stock previously sold by Odyssey to one or more third parties, would represent more than 15% of the aggregate number of shares of Common Stock held by Odyssey immediately after the Closing Date (as adjusted to reflect any stock dividend, split, reverse split, combination, recapitalization, reclassification of shares or capital contributions), unless each Management Stockholder is offered a pro rata right (calculated by reference to the aggregate number of shares of Common Stock held, and shares of
Common Stock underlying Roll-Over Options held, by each Management Stockholder at the time of such sale) to participate in such sale for a purchase price per share of Common Stock and on other terms and conditions not less favorable to such Management Stockholder than those applicable to Odyssey. For the purposes of this Section 4.1, a sale to a "third party" shall not include a sale to any Permitted Assignee, a sale pursuant to an effective registration statement (a "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") or a sale pursuant to Rule 144 under the Securities Act.
4.2. Drag-Along Rights. If Odyssey proposes to sell to one or more third parties shares of Common Stock which, together with all shares of Common Stock previously sold by Odyssey to one or more third parties, would represent more than 15% of the aggregate number of shares of Common Stock held by Odyssey immediately after the Closing Date (as adjusted to reflect any stock dividend, split, reverse split, combination, recapitalization, reclassification of shares or capital contributions), then, if requested by Odyssey, each Management Stockholder shall be required to join Odyssey in such sale on a pro rata basis (calculated by reference to the aggregate number of shares of Common Stock held by, and shares of Common Stock underlying Roll-Over Options held by, each Management Stockholder at the time of such sale) for a purchase price per share of Common Stock and on other terms and conditions not less favorable to each Management Stockholder than those applicable to Odyssey. For the purposes of this Section 4.2, a sale to a "third party" shall not include a sale to any Permitted Assignee or a sale pursuant to a Registration Statement.
5. Tax Liability Loans; Additional Offerings.
5.1. Tax Liability Loans. If a Management Stockholder holds Exercisable Options on the date of his or her termination of employment with Holdings for any reason other than
termination for Cause or resignation without Good Reason, and within 15 days following the date of such termination of employment such Management Stockholder notifies Holdings that he or she desires to exercise a specified portion of such Exercisable Options (the "Specified Options"), Holdings shall, or shall cause an Affiliate of Holdings to, lend to such Management Stockholder within 30 days after Holdings' receipt of such notice from such Management Stockholder an amount equal to the aggregate exercise price payable with respect to the Specified Options and the aggregate federal, state and local income tax liability, including any alternative minimum tax obligations, that will actually be incurred by such Management Stockholder as a result of his or her exercise of the Specified Options in accordance with such notice, except as otherwise provided in a written agreement between such Management Stockholder and Holdings. Any such loan pursuant to this Section 5.1 shall be pursuant to the terms of a recourse promissory note or notes which (i) shall be payable in full no later than the date on which the Management Stockholder receives payment from Holdings for the repurchase of the shares acquired upon exercise of the Specified Options, (ii) shall bear interest at the applicable federal mid-term rate determined pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as amended, (iii) shall provide that any interest due on such loan shall be converted into principal and shall not be payable currently as it is accrued, but rather shall be payable when the underlying shares are repurchased by Holdings and (iv) which shall be in a form acceptable to Holdings' (or its Affiliate's) lenders under the terms of the Financing Documents. The parties hereto agree that to the extent any of the foregoing provisions of this Section 5.1 result in adverse accounting consequences to Holdings, such provisions shall be modified in a manner mutually acceptable to the affected parties hereto.
5.2. Additional Offerings.
In the event that Odyssey desires to purchase shares of Common Stock from Holdings in an offering that is not required to be registered under the Securities Act (a "Private Offering"), Holdings shall also offer each Management Stockholder a pro rata right to participate in such Private Offering (calculated by reference to the aggregate number of shares of Common Stock held by, and shares of Common Stock underlying Roll-Over Options held by, each Management Stockholder at the time of such Private Offering) for a purchase price per share of Common Stock and on other terms and conditions not less favorable to such Management Stockholder than those applicable to Odyssey.
6. Purchase Price.
6.1. Appraisal. Holdings shall engage, from time to time, but not less often than once with respect to every fiscal year commencing with the fiscal year ending on September 30, 1999, and not later than 90 days after the end of each fiscal year, an independent valuation consultant or appraiser of recognized national standing reasonably satisfactory to Odyssey (the "Appraiser") to appraise the Fair Market Value of the shares of Common Stock as of the last day of the fiscal year then most recently ended or, at the request of Holdings, as of any more recent date (the "Appraisal Date") and to prepare and deliver a report to Holdings describing the results of such appraisal (the "Appraisal").
6.2. Fair Market Value.
(a) The "Fair Market Value" of a share of Common Stock determined for purposes of Section 2 and 3 hereof shall be (i) the fair market value of the entire Common Stock equity interest of Holdings taken as a whole, without additional premiums for control or discounts for minority interests or restrictions on transfer, divided by (ii) the number of outstanding shares of Common Stock, calculated on a fully-diluted basis. Except as set forth in
subsections (b) and (c) of this Section 6.2, the Fair Market Value of any share of Common Stock shall be calculated with reference to the most recent Appraisal and as of the most recent Appraisal Date prior to the termination of the relevant Management Stockholder's employment (or as of the first Appraisal and the first Appraisal Date in the event that such termination occurs prior to September 30, 1999).
(b) For the purposes of Section 8.3, the Fair Market Value of any share of Common Stock shall be calculated with reference to the most recent Appraisal and as of the most recent Appraisal Date prior to the date of the Involuntary Transfer.
(c) Beginning with the fiscal year commencing October 1, 1999, if the effective date of termination of the relevant Management Stockholder's employment is on or after the first day of the seventh month of any fiscal year, the Fair Market Value of any share of Common Stock shall equal the Appraisal determined as of the most recent Appraisal Date prior to the effective date of such termination of employment (the "Prior Appraisal Date"), plus (or minus) the product of (A) the increase (or decrease) in the Fair Market Value from such Prior Appraisal Date to the Appraisal Date next following the effective date of such termination of employment and (B) a fraction, the denominator of which is the number of days in the period between the Appraisal Dates immediately preceding and following the effective date of such termination of employment and the numerator of which is the number of days elapsed from the Prior Appraisal Date through the effective date of such termination of employment.
6.3. Notice to Stockholders. Promptly after receipt of each Appraisal, Holdings shall deliver to each Management Stockholder a copy of the letter as to value included with the Appraisal.
6.4. Carrying Value. For the purposes of this Agreement, the "Carrying Value" of any share of Common Stock being purchased by Holdings shall be equal to the price paid by the selling Management Stockholder for any such share plus simple interest at a rate per annum equal to 6% which shall be deemed to be the carrying cost, from the date of the purchase of such share by the selling Management Stockholder through the date of such purchase by Holdings, less the amount of dividends paid to such Management Stockholder in respect of such share (to the extent that the amount of such dividends does not exceed such simple interest).
7. Prohibited Purchases. Notwithstanding anything to the contrary herein, Holdings shall not be permitted or obligated to purchase any shares of Common Stock from a Management Stockholder hereunder to the extent (a) Holdings is prohibited from purchasing such shares by applicable law or by any debt instruments or agreements, including any amendment, renewal, extension, substitution, refinancing, replacement or other modification thereof (the "Financing Documents") entered into by TransDigm or Holdings in connection with the Merger or thereafter, (b) a default has occurred under any Financing Document and is continuing, (c) the purchase of such shares would, or in the opinion of the Committee might, result in the occurrence of an event of default under any Financing Document or create a condition which would or might, with notice or lapse of time or both, result in such an event of default or (d) the purchase of such shares would, in the reasonable opinion of the Committee, be imprudent in view of the financial condition (present or projected) of TransDigm and/or Holdings or the anticipated impact of the purchase of such shares on TransDigm's and/or Holdings' ability to meet their respective obligations under any Financing Document. If shares of Common Stock which Holdings has the right or obligation to purchase on any date exceed the total amount permitted to be purchased on such date pursuant to the preceding sentence (the "Maximum Amount"),
Holdings shall purchase on such date only that number of shares of Common Stock up to the Maximum Amount (and shall not be required to purchase more than the Maximum Amount) in such amounts as the Committee shall determine in good faith applying the following order of priority:
(a) First, the shares of Common Stock of all Management Stockholders that are Roll-Over Shares, which shares are being repurchased by Holdings by reason of the Management Stockholder's termination of employment for any reason and, to the extent that the number of shares of Common Stock that Holdings is obligated to purchase from such Management Stockholders (but for this Section 7) exceeds the Maximum Amount, such shares of Common Stock pro rata among such Management Stockholders on the basis of the number of shares of Common Stock held by each of such Management Stockholders that Holdings is obligated or has the right to purchase;
(b) Second, to the extent that the Maximum Amount is in excess of the amount Holdings purchases pursuant to clause (a) above, the shares of Common Stock of all Management Stockholders whose shares of Common Stock are being purchased by Holdings by reason of termination of employment due to death or Disability and, to the extent that the number of shares of Common Stock that Holdings is obligated to purchase from such Management Stockholders (but for this Section 7) exceeds the Maximum Amount, such shares of Common Stock pro rata among such Management Stockholders on the basis of the number of shares of Common Stock held by each of such Management Stockholders that Holdings is obligated or has the right to purchase; and
(c) Third, to the extent that the Maximum Amount is in excess of the amount Holdings purchases pursuant to clauses (a) and (b) above, the shares of Common Stock of
all Management Stockholders whose shares of Common Stock are being purchased by Holdings by reason of termination of employment without Cause or due to Retirement or resignation for Good Reason up to the Maximum Amount and, to the extent that the number of shares of Common Stock that Holdings is obligated to purchase from such Management Stockholders (but for this Section 7) exceeds the Maximum Amount, such shares of Common Stock pro rata among such Management Stockholders on the basis of the number of shares of Common Stock held by each of such Management Stockholders that Holdings is obligated or has the right to purchase; and
(d) Fourth, to the extent the Maximum Amount is in excess of the
amounts Holdings purchases pursuant to clauses (a), (b) and (c) above, the
shares of Common Stock of all other Management Stockholders whose shares
of Common Stock are being purchased by Holdings up to the Maximum Amount
and, to the extent that the number of shares of Common Stock that Holdings
is obligated to purchase from such Management Stockholders (but for this
Section 7) exceeds the Maximum Amount, the shares of Common Stock of such
Management Stockholders in such order of priority and in such amounts as
the Committee, in its sole discretion, shall in good faith determine to be
appropriate under the circumstances.
Notwithstanding anything to the contrary contained in this Agreement, if Holdings is unable to make any payment when due to any Management Stockholder under this Agreement by reason of this Section 7, Holdings shall issue a note to such Management Stockholder for the amount of such payment, the terms of which note shall be acceptable to the lenders to the Financing Documents and shall not result in a breach or violation of any of the Financing Documents. A note issued to a Management Stockholder by Holdings under this Section 7 shall
bear simple interest at the prime rate as published in the Wall Street Journal on the date such payment is due and owing plus one percent (1%) from the date such payment is due and owing to the date such payment is made and such note will remain outstanding until the earliest practicable date on which Holdings is able to make payment therefor. All payments of interest accrued hereunder shall be paid only at the date of payment by Holdings for the shares of Common Stock being purchased and Options being canceled.
8. Sales to Third Parties.
8.1. General. At any time after the fifth anniversary of the Closing Date, a Management Stockholder may sell his or her shares of Common Stock to a third party, provided that such sale is made in compliance with the provisions of Sections 8.2 and 14.4.
8.2. Right of First Refusal.
(a) Procedure. If a Management Stockholder who is entitled to sell shares of Common Stock to third parties pursuant to Section 8.1 (the "Offering Stockholder") shall have received a bona fide offer or offers from a third party or parties to purchase any shares of Common Stock, then prior to selling any such shares of Common Stock to such third party or parties such Offering Stockholder shall deliver to Holdings a letter signed by such Offering Stockholder setting forth:
(i) the name of the third party or parties;
(ii) the prospective purchase price per share of Common Stock;
(iii) all material terms and conditions contained in the offer of the third party or parties;
(iv) the Offering Stockholder's offer (irrevocable by its terms for 60 days following receipt) to sell to Holdings all (but not less than all) of the shares of Common Stock covered by the offer of the third party or parties, for a purchase price per share and
on other terms and conditions not less favorable to Holdings than those contained in the offer of the third party or parties (an "Offer"); and
(v) closing arrangements and a closing date (not less than 60 nor more than 90 days following the date of such letter) for any purchase and sale that may be effected by Holdings.
(b) Effecting Sales. If, upon the expiration of 60 days following receipt by Holdings of the letter described in Section 8.2(a), Holdings shall not have accepted the Offer, the Offering Stockholder may sell to such third party or parties all (but not less than all) of the shares of Common Stock covered by the Offer, for the purchase price and on the other terms and conditions contained in the Offer. If Holdings shall have accepted such Offer, the closing of the purchase and sale pursuant to such acceptance shall take place as set forth in the letter of such Stockholder to Holdings pursuant to subparagraph (v) of Section 8.2(a).
8.3. Involuntary Transfers. In the case of any transfer of title or beneficial ownership of shares of Common Stock upon default, foreclosure, forfeit, divorce, court order or otherwise than by a voluntary decision on the part of a Management Stockholder (each, an "Involuntary Transfer"), Holdings shall have the right to purchase such shares pursuant to this Section 8.3. Upon the Involuntary Transfer of any shares of Common Stock, such Management Stockholder shall promptly (but in no event later than two days after such Involuntary Transfer) furnish written notice (the "Notice") to Holdings indicating that the Involuntary Transfer has occurred, specifying the name of the person to whom such shares have been transferred (the "Involuntary Transferee"), giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon the receipt of the Notice, and for 60 days thereafter, Holdings shall have the right to purchase, and the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the shares of Common Stock acquired by the
Involuntary Transferee for a purchase price equal to the lesser of (a) the Fair Market Value of such shares of Common Stock as determined pursuant to the Appraisal as of the most recent Appraisal Date prior to the date of the Involuntary Transfer and (b) the amount of the indebtedness or other liability that gave rise to the Involuntary Transfer plus the excess, if any, of the Carrying Value of such shares of Common Stock over the amount of such indebtedness or other liability that gave rise to the Involuntary Transfer.
9. Election of Directors.
9.1. Board Make-up. Each Management Stockholder that holds shares of Common Stock (each, a "Voting Stockholder") agrees that from and after the Closing Date such Voting Stockholder will use his or her best efforts to nominate and elect and will vote all of the shares of Common Stock owned or held of record by him or her to elect and, thereafter from such period, to continue in office each nominee to the Board of Directors of Holdings (the "Board") designated by Odyssey.
9.2. Irrevocable Proxy. In order to effectuate Section 9.1 and, in addition to and not in lieu of Section 9.1, each Voting Stockholder hereby grants to the Secretary of Holdings an irrevocable proxy solely for the purpose of voting all of the shares of Common Stock of Holdings owned by the grantor of the proxy for the election of directors nominated in accordance with Section 9.1.
10. Termination of Rights and Obligations Under Certain Sections. All rights and obligations pursuant to Sections 1, 2, 3, 4, 5, 6, 8, 9, 12.1 and 14.4 of this Agreement shall terminate upon the earlier of the tenth anniversary of the Closing Date and the closing of a public offering pursuant to a Registration Statement (a "Registration") that covers (together with prior Registrations) (i) not less than 50% of the outstanding shares of Common Stock, on a
fully-diluted basis or (ii) shares of Common Stock that, after the closing of such public offering, will be traded on the New York Stock Exchange, the American Stock Exchange or the National Association of Securities Dealers Automated Quotation System.
11. Stock Certificate Legend. A copy of this Agreement shall be filed with the Secretary of Holdings and kept with the records of Holdings. Each certificate representing shares of Common Stock owned by any Management Stockholder shall bear upon its face the following legends, as appropriate:
(i) THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS, IN THE OPINION OF COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE, SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT, SUCH LAWS AND THE MANAGEMENT STOCKHOLDERS' AGREEMENT DATED AS OF DECEMBER 3, 1998 BY AND AMONG TRANSDIGM HOLDING COMPANY, ODYSSEY INVESTMENT PARTNERS FUND, LP AND THOSE EMPLOYEES OF THE COMPANY LISTED ON SCHEDULE A ATTACHED THERETO (THE "MANAGEMENT STOCKHOLDERS' AGREEMENT").
(ii) THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS SPECIFIED IN THE MANAGEMENT STOCKHOLDERS' AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST.
(iii) THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF EACH CLASS OR SERIES OF SHARES AUTHORIZED TO BE ISSUED AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND OR RIGHTS."
In addition, certificates representing shares of Common Stock owned by residents of certain states shall bear any legends required by the laws of such states.
All Stockholders shall be bound by the requirements of such legends. Upon a Registration that covers any shares of Common Stock held by a Management Stockholder, the certificate representing such registered shares shall be replaced, at the expense of Holdings, with certificates not bearing the legends required by Sections 10(i) and 10(ii).
12. Covenants; Representation and Warranties.
12.1. New Management Stockholders. Each of the Stockholders hereby agrees that any employee of Holdings or TransDigm who after the date of this Agreement is offered shares of any class of Common Stock or holds stock options to purchase shares of Common Stock shall, as a condition precedent to the acquisition of such shares of Common Stock or the grant of such options, (i) become a party to this Agreement by executing the same and (ii) if such employee is a resident of a state with a community property system, cause his or her spouse to execute a Spousal Waiver in form and substance satisfactory to the Committee and deliver such Agreement and Spousal Waiver, if applicable, to Holdings at its address specified in Section 20 hereof. Upon such execution and delivery, such employee shall be a Management Stockholder for all purposes of this Agreement.
12.2. No Other Arrangements or Agreements. Each Management Stockholder hereby represents and warrants to each other Stockholder that, except for (i) any written employment agreement between such Management Stockholder and Holdings, (ii) any Option Agreement
between such Management Stockholder and Holdings, (iii) the Merger Agreement or
(iv) the [LLC Agreement], each as amended from time to time, he or she has not
entered into or agreed to be bound by any other arrangements or agreements of
any kind with any other party with respect to the shares of Common Stock,
including, but not limited to, arrangements or agreements with respect to the
acquisition, disposition or voting of shares of Common Stock or any interest
therein (whether or not such arrangements and agreements are with Holdings,
TransDigm, other Stockholders or holders of Common Stock that are not parties to
this Agreement). Each Management Stockholder agrees that, except as disclosed
above, he or she will not enter into any such other arrangements or agreements
as he has represented and warranted to above with any other party as long as any
of the terms of this Agreement remain in effect, except for any such agreement
with Holdings or TransDigm entered into in connection with the grant of any
stock options or restricted stock pursuant to the 1994 Plan, the 1998 Plan or
any other equity incentive plan of Holdings, TransDigm or any of their
subsidiaries.
13. Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of Holdings, Odyssey and the Majority Management Stockholders. If Holdings, Odyssey and such Majority Management Stockholders shall have so agreed, Holdings shall notify all other Stockholders promptly after such amendment, modification or supplement shall take effect.
14. Parties.
14.1. Assignment by Holdings. Holdings shall have the right to assign to one or more Permitted Assignees, and/or the right to cause one or more Permitted Assignees to assume, all or any portion of its rights and obligations under Sections 2, 3, 8.2 and 8.3, provided that any such assignment or assumption is accepted by the proposed assignee or assignees. If Holdings has not
exercised its right to purchase shares of Common Stock pursuant to any such Sections within 20 days of receipt by Holdings of the letter or notice giving rise to such right (or, in the case of Section 3, the giving of notice by Holdings), then Odyssey shall have the right to require Holdings to assign such right to one or more Permitted Assignees. If such right to purchase is assigned to a Permitted Assignee or Permitted Assignees pursuant to this Section 14.1, such Permitted Assignee or Permitted Assignees shall be deemed to be Holdings for purposes of such purchases under Section 2, 3, 8.2 or 8.3, as the case may be.
14.2. Assignment Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, that Holdings shall not be permitted to assign this Agreement without the consent of Odyssey, and no Management Stockholder shall be permitted to assign any of his or her obligations pursuant to this Agreement without the prior written consent of Odyssey, unless such assignment is in connection with a Transfer explicitly permitted by this Agreement and, prior to such assignment, such assignee complies with the requirements of Section 14.4.
14.3. Termination. Any party to, or person who is subject to, this Agreement which ceases to own shares of Common Stock or any interest therein shall cease to be a party to, or person who is subject to, this Agreement and thereafter shall have no rights or obligations hereunder; provided, however, that a Transfer of shares of Common Stock not explicitly permitted under this Agreement shall not relieve a Management Stockholder of any of his or her obligations hereunder.
14.4. Agreements to Be Bound. Notwithstanding anything to the contrary contained in this Agreement, any Transfer of shares by a Management Stockholder shall be permitted under
the terms of this Agreement only if the transferee (i) shall agree in writing to be bound by the terms and conditions of this Agreement pursuant to an instrument of assumption reasonably satisfactory in substance and form to Holdings and (ii) shall cause his or her spouse, if any, to execute a Spousal Waiver in form and substance satisfactory to the Committee, if such transferee is an individual who resides in a state with a community property system. Upon the execution of the instrument of assumption by such transferee and, if applicable, the Spousal Waiver by the spouse of such transferee, such transferee shall be deemed to be a Management Stockholder for all purposes of this Agreement, provided, however, that Sections 2.1, 3.1 and 4.1 shall not apply to any transferee who has acquired shares of Common Stock pursuant to Section 8.1.
15. Recapitalizations, Exchanges, etc. Affecting the Common Stock. Except as
otherwise provided herein, the provisions of this Agreement shall apply to the
full extent set forth herein with respect to (a) the shares of Common Stock and
(b) any and all shares of capital stock of Holdings or any successor or assign
of Holdings (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect of, in exchange for, or in substitution for the
shares of Common Stock, by reason of any stock dividend, split, reverse split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. Except as otherwise provided herein, this Agreement is not intended
to confer upon any person, except for the parties hereto, any rights or remedies
hereunder.
16. Transfer of Common Stock. If at any time Holdings purchases any shares of
Common Stock pursuant to this Agreement, Holdings may pay the purchase price
determined under this Agreement for the shares of Common Stock it purchases by
wire transfer of funds or company check in the amount of the purchase price, and
upon receipt of payment of such purchase price or, pursuant to Section 3.3 or
Section 7, any portion thereof, the selling Management Stockholder
shall deliver the certificates representing the number of shares of Common Stock being purchased in a form suitable for transfer, duly endorsed in blank, and free and clear of any lien, claim or encumbrance. Notwithstanding anything in this Agreement to the contrary, Holdings shall not be required to make any payment for shares of Common Stock purchased hereunder until delivery to it of the certificates representing such shares. If Holdings is purchasing less than all the shares of Common Stock represented by a single certificate, Holdings shall deliver to the selling Management Stockholder a certificate for any unpurchased shares of Common Stock.
17. Further Assurances. Each party hereto or person subject hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto or person subject hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
18. Governing Law. This Agreement and the rights and obligations of the parties hereunder and the persons subject hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
19. Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.
20. Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed, certified or registered mail with postage pre-
paid, (iii) sent by next-day or overnight mail or delivery or (iv) sent by telecopy or telegram, as follows:
(a) If to Holdings, to it at:
TransDigm Holding Company 26380 Curtiss Wright Parkway Richmond Heights, Ohio 44143 Attention: Corporate Secretary
with a copy to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attention: William Hopkins
(b) If to a Management Stockholder, to him or her at the address listed on the signature page hereto or as such Management Stockholder shall designate to Holdings in writing, with a copy to Odyssey at its address indicated herein.
(c) If to Odyssey, to it at:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attention: William Hopkins
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Maureen A. Riley, Esq.
or to such other person or address as any party shall specify by notice in writing to Holdings. All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery, on the day after such delivery, (x) if by certified or
registered mail, on the fifth business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by telecopy or telegram, on the next day following the day on which such telecopy or telegram was sent, provided that a copy is also sent by certified or registered mail.
21. Headings; Execution in Counterpart. The headings and captions contained herein are for convenience only and shall not control or affect the meaning or construction of any provision hereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and which together shall constitute one and the same instrument.
22. Effectiveness of Voting Agreements. Any provision contained herein which
shall be deemed to be a "Voting Trust" or "Voting Agreement" (as provided in
Section 218 of the General Corporation Law of the State of Delaware ("Section
218")) shall be effective, pursuant to this Agreement or pursuant to any
extension entered into in accordance with Section 218, only for so long a period
as provided for in Section 218.
23. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings relating to the shares of Common Stock, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter, and it is the understanding of all parties hereto that any such prior agreement is hereby terminated, null and void as of the Closing Date.
24. Injunctive Relief. The shares of Common Stock cannot readily be purchased or sold in the open market, and for that reason, among others, Holdings, Odyssey and the Management Stockholders will be irreparably damaged in the event this Agreement is not specifically
enforced. Each of the parties therefore agrees that in the event of a breach of any provision of this Agreement, the aggrieved party may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach of this Agreement. Such remedies shall, however, be cumulative and not exclusive, and shall be in addition to any other remedy which Holdings or the Management Stockholders may have. Each Management Stockholder hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts in New York for the purposes of any suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof. Each Management Stockholder hereby consents to service of process by mail made in accordance with Section 20.
25. Defined Terms. As used in this Agreement, the following terms shall have the meanings ascribed to them below:
25.1. Affiliate. "Affiliate" shall mean, with respect to any Person, a Person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such Person, and with respect to Holdings, also any entity designated by the Board in which Holdings or one of its Affiliates has an interest, and with respect to Odyssey, also any Affiliate of any partner of Odyssey.
25.2. Carrying Value. "Carrying Value" shall have the meaning set forth in
Section 6.4.
25.3. Cause. The term "Cause," used in connection with the termination of employment of a Management Stockholder, shall mean a termination of such Management Stockholder's employment by Holdings or any of its subsidiaries due to: (i) the continued failure by the Management Stockholder, after written notice from the Board, substantially to perform his or her duties and responsibilities as an officer or employee of Holdings or any of its subsidiaries (other than any such failure resulting from incapacity due to reasonably documented physical or
mental illness), or (ii) the engagement by the Management Stockholder in serious misconduct which is material to the performance by the Management Stockholder of his or her duties and obligations for Holdings or any of its subsidiaries, including, without limitation, the disclosure of material secret or confidential information of Holdings or any of its subsidiaries.
25.4. Change in Control. "Change in Control" shall mean a change in ownership or control of Holdings effected through a transaction or series of transactions (other than an offering of Holdings' common stock to the general public through a registration statement filed with the Securities and Exchange Commission whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than Holdings, any of its subsidiaries, an employee benefit plan maintained by Holdings or any of its subsidiaries, a Principal Stockholder or a "person" that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, Holdings or a Principal Stockholder) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of Holdings possessing more than fifty percent (50%) of the total combined voting power of Holdings' securities outstanding immediately after such acquisition.
25.5. Closing Date. The "Closing Date" is defined in the Recitals hereto.
25.6. Disability. The termination of the employment of any Management Stockholder by Holdings or any of its subsidiaries shall be deemed to be by reason of a "Disability" if, as a result of such Management Stockholder's incapacity due to reasonably documented physical or mental illness, such Management Stockholder shall have been unable for more than six months within any 12-month period to perform his or her duties with Holdings or such subsidiary on a full-time basis and within 30 days after written notice of termination has been given to such
Management Stockholder, such Management Stockholder shall not have returned to the full-time performance of his or her duties.
25.7. Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
25.8. Exercisable Options. "Exercisable Options" of a Management Stockholder, as of any date of determination, shall mean those Options (or portions thereof ) that are then exercisable Options.
25.9. Fair Market Value. "Fair Market Value" shall have the meaning set forth in Section 6.2.
25.10. Good Reason. The termination of a Management Stockholder's employment with Holdings or any of its subsidiaries shall be for "Good Reason" if such Management Stockholder voluntarily terminates his or her employment with Holdings or a subsidiary as a result of any of the following: (i) a material diminution in such Management Stockholder's title, duties or responsibilities, without his or her prior written consent, (ii) a reduction of such Management Stockholder's aggregate compensation, bonus opportunities, benefits or perquisites, without his or her prior written consent or (iii) the occurrence of a Change in Control, or as otherwise defined in a written agreement between Holdings and such Management Stockholder.
25.11. Involuntary Transfer. "Involuntary Transfer" shall have the meaning set forth in Section 8.3.
25.12. Majority Management Stockholders. "Majority Management Stockholders" as of any date of determination shall mean those Management Stockholders who then hold 50% or more of the total combined voting power of all shares of Common Stock then held by the Management Stockholders.
25.13. Merger; Merger Agreement. "Merger" shall mean the merger contemplated pursuant to that certain Agreement and Plan of Merger, dated August 3, 1998, entered into by and between Phase II Acquisition Corp. and Holdings, as amended (the "Merger Agreement").
25.14. Permitted Assignee. A "Permitted Assignee" shall mean, (i) Odyssey and Odyssey Coinvestors, LLC (together the "Odyssey Stockholders"), (ii) any general or limited partner or member of any Odyssey Stockholder (an "Odyssey Partner"), (iii) any corporation, partnership, limited liability company or other entity that is an Affiliate of any Odyssey Stockholder or of any Odyssey Partner (collectively, the "Odyssey Affiliates"), (iv) any managing director, member, general partner, director, limited partner, officer or employee of (a) any Odyssey Stockholder, (b) any Odyssey Partner or (c) any Odyssey Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing Persons referred to in this clause (iv) (collectively, the "Odyssey Associates"), (v) any trust, the beneficiaries of which, or corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, include only Odyssey Stockholders, Odyssey Partners, Odyssey Affiliates, Odyssey Associates, their spouses or their lineal descendants; and (v) a voting trustee for one or more Odyssey Stockholders, Odyssey Affiliates, Odyssey Partners or Odyssey Associates.
25.15. Person. "Person" shall mean 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.
25.16. Principal Stockholder. "Principal Stockholder" shall mean Odyssey Investment Partners Fund, LP and any of its Permitted Assignees.
25.17. Roll-Over Options. "Roll-Over Options" shall have the meaning ascribed to such term in the Recitals hereto.
25.18. Roll-Over Shares. "Roll-Over Shares" shall mean those shares of Common Stock that are acquired by a Management Stockholder upon exercise of a Roll-Over Option.
25.19. Transfer. "Transfer" (or any variation thereof used herein) shall mean any direct or indirect sale, assignment, mortgage, transfer, pledge, hypothecation or other disposal.
[signature pages follow]
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
TRANSDIGM HOLDING COMPANY
By: /s/ Peter Radekevich
-------------------------------------
Title: Chief Financial Officer
Date: December 3, 1998
|
ODYSSEY INVESTMENT PARTNERS FUND, LP
By: /s/ William Hopkins
-------------------------------------
Title: Managing Principal
Date: 12/3/98
-----------------------------------
|
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Douglas W. Peacock ----------------------------------------- Douglas W. Peacock |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ W. Nicholas Howley ----------------------------------------- W. Nicholas Howley |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ John D. Peterson, Sr. ----------------------------------------- John D. Peterson, Sr. |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Robert S. Henderson ----------------------------------------- Robert S. Henderson |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Raymond F. Laubenthal ----------------------------------------- Raymond F. Laubenthal |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Peter B. Radekevich ----------------------------------------- Peter B. Radekevich |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Albert J. Rodriguez ----------------------------------------- Albert J. Rodriguez |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Bernt G. Iversen, II ----------------------------------------- Bernt G. Iversen, II |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ James F. Skulina ----------------------------------------- James F. Skulina |
IN WITNESS WHEREOF, this Management Stockholders' Agreement has been signed by each of the parties hereto on the date indicated below such party's signature hereto, and shall be effective as of the date first above written.
/s/ Gary W. McMurtrey ----------------------------------------- Gary W. McMurtrey |
SCHEDULE A
Management Stockholders
Douglas W. Peacock
W. Nicholas Howley
John D. Peterson, Sr.
Robert S. Henderson
Raymond F. Laubenthal
Peter B. Radekevich
Albert J. Rodriguez
Bernt G. Iversen, II
James F. Skulina
Gray W. McMurtrey
SCHEDULE B
Roll-Over Optionees
Number of
Shares
Subject to
Roll-Over Exercise Price
Name of Optionholder Option (per share)
-------------------- ------ -----------
Douglas W. Peacock 2,992 $100.00
3,097 $335.00
W. Nicholas Howley 3,890 $100.00
1,900 $335.00
John D. Peterson, Sr. 770 $200.00
500 $335.00
Robert S. Henderson 172 $154.00
400 $200.00
200 $335.00
Raymond F. Laubenthal 80 $100.00
400 $200.00
300 $335.00
Peter B. Radekevich 368 $200.00
200 $335.00
Albert J. Rodriguez 283 $200.00
300 $335.00
Bernt G. Iversen, II 62 $200.00
400 $335.00
James F. Skulina 100 $200.00
100 $335.00
Gray W. McMurtrey 40 $1.00
|
Exhibit 10.3
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (the "Agreement") is entered into as of December 3, by and between TransDigm Holding Company, ("Parent") and Transdigm Inc. (the "Subsidiary");
WHEREAS, Parent and Subsidiary are members of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"), of which Parent is the common parent corporation (the "Group"); and
WHEREAS, Parent and Subsidiary desire to provide for the sharing and allocation of income taxes in accordance with this Agreement.
NOW, THEREFORE, in consideration of their mutual covenants set forth herein, the parties hereto agree as follows:
1. Agreement to File Consolidated Income Tax Returns. Subsidiary, on behalf of Subsidiary and the subsidiaries of Subsidiary that are members of the Group within the meaning of Section 1504(a) of the Code (a "Sub-Subsidiary" or "Sub-Subsidiaries"), consents to the filing with the Group of consolidated Federal income tax returns for all taxable periods in which each of them is eligible to be a member of the Group. Parent, as an agent of the Group, agrees to file such consents, elections, returns and other documents, and to take such other actions as may be necessary or appropriate to file a consolidated Federal income tax return for each taxable period for which the Group is required or permitted to file such a tax return. Any taxable period ending after the date of this Agreement for which Parent and Subsidiary is included in a consolidated Federal income tax return filed by the Group is referred to as a "Consolidated Return Year."
2. Payments by Subsidiary; Audit Adjustments. On each due date (including extensions) for the payment of any Federal income tax (or any portion thereof, including installments of estimated tax) by the Group for each Consolidated Return Year, Subsidiary shall pay to Parent the amount of income tax liability it would have had on such due date if it had filed a separate consolidated Federal income tax return for the affiliated group consisting of it and Sub-Subsidiaries ( the "Subsidiary Group") for such taxable year and all prior taxable years. In the event that upon audit of any consolidated Federal income tax return for the Parent Group, there are adjustments that affect the computations under the preceding sentence of this paragraph or paragraphs 3 or 4 hereof, appropriate adjustments and payments shall be made to reflect the difference between the amounts previously paid and the amounts due taking into account the effect of such adjustments.
3. Computation of Subsidiary Group Separate Income Tax Liability. The amount of the Federal income tax liability that the Subsidiary Group would have had for any Consolidated Return Year if it had not joined in a consolidated Federal income tax return with the Group shall be computed as if it were filing a separate consolidated Federal income tax return. Subsidiary shall be entitled to credit against any income tax liability so computed the net amount of any credit at the time outstanding to its account arising by reason of the provisions of paragraph 4 hereof.
4. Tax Benefits. If, on the basis of the computations made by Parent in accordance with paragraph 3 hereof, the Subsidiary Group would have had a net loss, tax credit or claim for a refund of Federal income taxes, Parent will credit to Subsidiary an amount equal to such net loss, tax credit or refund, the extent such net loss, tax credit or refund reduced the
consolidated Federal income tax liability of the Group (excluding the Subsidiary Group). As used herein, the term "net loss" shall include a capital loss. Any such credit to Subsidiary shall be applied against payments due under paragraph 2 hereof (as described in paragraph 3 hereof) after the date of such credit; provided, however, that if Parent would have a shortfall in its cash to pay the Group's tax liability currently due if such credit were to be allowed, such credit would be carried forward to be used in the future.
5. State, Local or Foreign Income Tax Returns. In the event Parent files combined or consolidated state, local or foreign income tax returns with Subsidiary, the provisions of paragraphs 1 through 5 hereof shall apply and govern the amount and time of payment by Subsidiary to Parent and by Parent to Subsidiary, as if such combined or consolidated income tax returns filed were consolidated Federal income tax returns.
6. Obligations and Entitlements of Sub-Subsidiaries. Each Sub-Subsidiary shall be obligated to make such payments to Subsidiary, and shall be entitled to receive such payments and other credits from Subsidiary, pursuant to paragraphs 1 through 6 hereof as if each Sub-Subsidiary were in Subsidiary position and Subsidiary were in Parent's position.
7. New Subsidiaries. Any future directly or indirectly owned subsidiary of Subsidiary that is acquired or established subsequent to the date of this Agreement shall be bound by the terms of this Agreement.
8. Further Actions. The parties will execute and deliver such further instruments and do such further acts and things (including, without limitation, by causing their subsidiaries to do such acts and things) as may be required to carry out the intent and purposes of this Agreement.
9. Termination of Prior Tax Sharing Agreements. Any and all tax sharing agreements or arrangements binding on any of Parent, Subsidiary or Sub-Subsidiaries shall be terminated and have no further force and effect as of the date hereof.
10. Successors. This Agreement shall be binding on and shall inure to the benefit of any successor, by merger, acquisition of assets or otherwise, to any of the parties hereto, to the same extent as if such successor had been an original party to this Agreement.
11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the state of New York, without giving effect to the conflict laws of such state.
12. Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement.
13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
14. Headings. The headings of the paragraphs of this Agreement are for reference only and shall not modify, define, expand or limit any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers duly authorized as of the day and year first above written.
Parent: TRANSDIGM HOLDING COMPANY
By: /s/ Peter Radekevich
-------------------------------------
Name: Peter Radekevich
------------------------------------
Title: Chief Financial Officer
|
Subsidiary: TRANSDIGM INC.
By: /s/ Peter Radekevich
-------------------------------------
Name: Peter Radekevich
------------------------------------
Title: Chief Financial Officer
|
Exhibit 10.6
1997 Incentive Program Measurables
AEROCONTROLEX
1997 Income = $13,693 = 1.304
----------- -------
1997 Objective = $10,500
1997 ROI = 163.73% = 1.408
-------- -------
1997 Objective = 116.25%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.339
|
ADEL WIGGINS
1997 Income = $10,721 = 1.105
----------- -------
1997 Objective = $9,700
1997 ROI = 114.87% = 1.457
-------- -------
1997 Objective = 78.85%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.222
|
CORPORATE
1997 Income = $23,713 = 1.226
----------- -------
1997 Objective = $19,338
1997 ROI = 135.15% = 1.402
-------- -------
1997 Objective = 96.42%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.285
|
1997 Senior Staff Incentive Award Recommendations
`97 Base Incentive Target Award Corporate Group Indiv. Incentive `97 Total
Name Salary Target Factor Factor Factor Award Comp.
=====================================================================================================================
Saugstad, V.* $80,000 15% $12,000 1.50 1.22 0.95 $7,000 $87,000
Skulina, J. $78,500 15% $11,775 1.35 1.34 1.10 $23,500 $102,000
DiFranco, R. $71,660 15% $10,750 1.35 1.34 1.10 $21,400 $93,060
Henderson, R. $109,000 20% $21,800 1.50 1.22 1.15 $45,900 $154,900
Laubenthal, R. $90,000 20% $18,000 1.35 1.34 1.15 $37,500 $127,500
Smith, M.* $80,000 10% $8,000 - - - $4,000 $84,000
Tomerlin, R.* $85,000 10% $8,500 - - - $5,000 $90,000
Iversen, B. $80,000 20% $16,000 1.50 1.22 0.95 $27,800 $107,800
Rodriguez, A. $90,000 20% $18,000 1.35 1.34 1.15 $37,500 $127,500
Burger, C. $60,780 15% $9,117 1.35 1.01 1.05 $13,100 $73,880
Gambino, V.* $48,000 10% $4,800 - - - $3,600 $51,600
Hussell, S. $53,688 15% $8,053 1.35 1.08 1.05 $12,400 $66,088
Kleinberger, R. $72,700 15% $10,905 1.50 1.33 0.50 $10,900 $83,600
Long, D.* $53,796 10% $5,380 - - - $2,700 $56,496
Riley, J. $58,000 15% $8,700 1.35 1.45 1.05 $17,900 $75,900
Stinson, D. $73,800 15% $11,070 1.50 0.967 1.05 $16,900 $90,700
Total $1,184,924 $182,850 $287,100 $1,472,024
|
* Part year in position or discretionary modification of awards.
1997 - Field Sales Commission Program
`97 Base Target Corp. Group Individual Comm. `97 Total
Name Salary Award Factor Factor Factor Award Compensation
=============================================================================================
Dratwa, D. $67,000 $10,050 1.35 1.66 1.00 $22,500 $89,500
Flynn, B. $66,600 $9,990 1.35 1.015 1.00 $13,700 $80,300
Norwood, J. $66,200 $9,930 1.35 1.393 0.70 $13,100 $79,300
Piwetz, W. $67,600 $10,140 1.35 1.10 0.80 $12,000 $79,600
Total $267,400 $40,110 $61,300 $328,700
|
Corporate Staff Compensation Recommendations
INCENTIVE COMPENSATION RECOMMENDATIONS:
Name Base Salary Award
---- ----------- -----
W. Nicholas Howley $175,000 $125,000
John D. Peterson, Sr. $168,000 $80,000
Peter B. Radekevich $108,000 $40,000
|
BASE SALARY PROGRAM RECOMMENDATIONS:
Name New Base Percent Date
---- -------- ------- ----
W. Nicholas Howley $185,000 5.7% 1/1/98
John D. Peterson, Sr. $175,000 4.2% 1/1/98
Peter B. Radekevich $113,000 4.6% 1/1/98
Eileen M. Fallon $50,000 11.1% 1/1/98
|
1998 TransDigm Incentive Program - Summary
o Annual program based on business plan parameters
o Target awards are a percentage of base salary and vary depending on
position and responsibilities
o Target awards are multiplied by a three factor formula
Actual Incentive Award = Target Award
x Corporate Performance Factor
x Group Performance Factor
x Individual Performance Factor
|
o Corporate Performance Factor is set at the discretion of the Board of Directors, based on the performance of TransDigm.
o Group Performance Factor is defined by the following measurables:
Earnings Factor = Actual Earnings/Plan
Investment Factor = Actual ROI/Plan
Bookings Factor = Actual Bookings/Plan
|
The 1998 Program is based on the following earnings and investment factors:
Earnings = Group Operating Income
Group Business Plan Earnings
----- ----------------------
AdelWiggins = $14.261 Million
AeroControlex = $18.840 Million
Marathon = $6.005 Million
TransDigm = $36.369 Million
ROI = Earnings/Average Group Investment
Group Business Plan ROI
----- -----------------
Adel Wiggins = 137.6%
AeroControlex = 159.3%
Marathon = 45.9%
TransDigm = 110.9%
For Corporate and Group Staff:
Group Performance Factor = .67 x Earnings Factor +
.33 x Investment Factor
|
For Product Managers and Sales Specialists:
Group Performance Factor = Bookings Factor
o Individual Performance Factor is set at the discretion of the Office of the Chairman
Senior Staff Base Salary and
Incentive Program Recommendations
Fiscal Year - 1998
`97 Existing Percent Incent. Incent. 98 Target
Name Position Base Increase New Base % Target Comp.
========================================================================================================
Baker, R Manufacturing $ 92,700 3.6% $ 96,000 20% $ 19,200 $ 115,200
Burger, C Product Line $ 60,780 8.5% $ 66,000 15% $ 9,900 $ 75,900
Beemer, R Product Line $ 70,000 -- $ 70,000 15% $ 10,500 $ 80,500
DiFranco, R Manufacturing $ 71,660 2.7% $ 73,500 15% $ 11,000 $ 84,500
Dratwa, D Sales $ 67,000 3.0% $ 69,000 15% $ 10,350 $ 79,350
Flynn, B Sales $ 66,600 3.6% $ 69,000 15% $ 10,350 $ 79,350
Gambino, V Sales $ 48,000 4.2% $ 50,000 10% $ 5,000 $ 55,000
Gentry, J Controller $ 53,000 -- $ 53,000 15% $ 8,000 $ 61,000
Henderson, R Manufacturing $ 109,000 5.5% $ 115,000 20% $ 23,000 $ 138,000
Howell, L Sales $ 90,500 3.8% $ 94,000 20% $ 18,800 $ 112,800
Hussell, S Sales $ 53,688 6.2% $ 57,000 15% $ 8,550 $ 65,550
Iverson, B Marketing $ 80,000 10.0% $ 88,000 20% $ 17,600 $ 105,600
Laubenthal, R Manufacturing $ 90,000 5.5% $ 95,000 20% $ 19,000 $ 114,000
Lemire, P Sales $ 34,000 5.8% $ 36,000 10% $ 3,600 $ 39,600
Long, D Sales $ 53,796 3.7% $ 55,800 10% $ 5,580 $ 61,380
McLatcher, D Sales $ 86,462 2.9% $ 89,000 10% $ 8,900 $ 97,900
Riley, J Product Line $ 58,000 6.9% $ 62,000 15% $ 9,300 $ 71,300
Rodriguez, A Marketing $ 90,000 5.5% $ 95,000 20% $ 19,000 $ 114,000
Saugstad, V Controller $ 80,000 6.3% $ 85,000 15% $ 12,750 $ 97,750
Scardaville, P Engineering $ 93,800 4.5% $ 98,000 20% $ 19,600 $ 117,600
Skulina, J Controller $ 78,500 4.5% $ 82,000 15% $ 12,300 $ 94,300
Smith, M Manufacturing $ 80,000 3.8% $ 83,000 10% $ 8,300 $ 91,300
Stinson, D Product Line $ 73,800 4.3% $ 77,000 15% $ 11,550 $ 88,550
Tomerlin, R Engineering $ 85,000 5.9% $ 90,000 15% $ 13,500 $ 103,500
Tremont, R Sales $ 48,000 4.2% $ 50,000 10% $ 5,000 $ 55,000
Vorderkunz, G Manufacturing $ 62,400 5.8% $ 66,000 10% $ 6,600 $ 72,600
Wissinger, R Product Line $ 79,000 -- $ 79,000 15% $ 11,850 $ 90,850
Total $1,955,686 $2,043,300 $ 319,080 $2,362,380
|
EXHIBIT
1998 BOOKINGS TARGETS
AEROCONTROLEX GROUP Burger, C. $13,178,000 Dratwa, D. $7,645,278 Gambino, V. $2,624,765 Hussel, S. $1,437,157 Lemire, P. $1,239,500 Long, D. $792,287 Riley, J. $27,784,000 Tramont, R. $5,309,000 ADEL WIGGINS GROUP Beemer, R. $5,865,000 Flynn, B. $6,225,000 Stinson, D. $6,875,000 Wissinger, R. $22,595,000 MARATHON POWER TECHNOLOGIES McLatcher, D. $12,680,000 |
1994 STAFF INCENTIVE AWARD RECOMMENDATIONS
CORPORATE PERFORMANCE FACTOR
FY-94 EARNINGS $10,174,000
PROGRAM TARGET $9,947,000
|
RECOMMENDED CORPORATE FACTOR = 1.000
GROUP PERFORMANCE FACTORS
ADELWIGGINS GROUP
FY-94 EARNINGS $6,203,000
PROGRAM TARGET $6,822,000
EARNINGS FACTOR = 0.909
FY-94 AVERAGE ROI 49.1%
PROGRAM TARGET 59.1%
INVEST FACTOR = 0.831
GROUP PERFORMANCE FACTOR = 0.883
AEROCONTROLEX GROUP
FY-94 EARNINGS $3,971,000
PROGRAM TARGET $3,125,000
EARNINGS FACTOR = 1.271
FY-94 AVERAGE ROI 33.7%
PROGRAM TARGET 21.0%
INVEST FACTOR = 1.605
GROUP PERFORMANCE FACTOR = 1.381
|
1994 SENIOR STAFF INCENTIVE AWARD RECOMMENDATIONS
94-BASE INCENTV TARGET INDIVL INCENTV 94-TOTAL
NAME SALARY TARGET AWARD FACTOR AWARD COMP
BALLINGER, N $73,500 15% $11,025 0.50 $7,613 $81,113
BUNDY, D $75,700 15% $11,355 0.70 $7,021 $82,721
CANNON, C $90,000 15% $13,500 0.60 $7,155 $97,155
McMURTREY, G $70,000 20% $14,000 0.95 $18,367 $88,367
SAKHAVI, M $79,500 20% $15,900 0.40 $5,618 $85,118
DiFRANCO, R $59,500 15% $8,925 1.05 $12,941 $72,441
LAUBENTHAL, R $70,000 20% $14,000 1.00 $19,333 $89,333
FLOWERS, M $67,000 20% $13,400 0.80 $9,470 $76,470
RODRIGUEZ, A $70,000 20% $14,000 1.05 $20,300 $90,300
TURRIFF, J $75,000 20% $15,000 1.00 $13,251 $88,251
MURG, L $58,000 10% $5,800 0.85 $6,808 $64,808
RADEKEVICH, P $90,000 20% $18,000 1.00 $18,000 $108,000
TOTAL $154,905 $145,877
|
1994 PRODUCT MANAGER INCENTIVE AWARD RECOMMENDATIONS
INCENTV FY-94 BOOKINGS
NAME TARGET BOOKINGS FACTOR
BURGER, C $5,630,000 $5,811,000 1.032
IVERSEN, B $11,742,000 $12,363,000 1.053
KNUROWSKI, R $1,200,000 $1,180,000 0.983
LUNTZ, M $3,475,000 $3,925,281 1.130
WATSON, D $6,173,000 $6,350,000 1.029
|
94-BASE INCENTV TARGET INDIVL INCENTV 94-TOTAL
NAME SALARY TARGET AWARD FACTOR AWARD COMP
BURGER, C $55,000 15% $8,250 0.95 $8,089 $63,089
IVERSEN, B $60,000 15% $9,000 1.05 $9,950 $69,950
KNUROWSKI, R $64,400 15% $9,660 1.00 $9,499 $73,899
LUNTZ, M $40,800 15% $6,120 1.15 $7,950 $48,750
WATSON, D $103,000 20% $20,600 1.00 $21,191 $124,191
TOTAL $53,630 $56,679
|
1994 FIELD SALES COMMISSION/INCENTIVE AWARDS
BOOKINGS BOOKINGS BOOKINGS EXPECTA- PAYOUT TARGET ACTUAL
NAME TARGET ACTUALS RATIO TIONS FACTOR AWARD AWARD
DRATWA, D $4,204,000 $4,838,090 1.151 0.700 1.275 $8,850 $11,287
FLYNN, W $7,092,000 $5,687,571 0.802 0.750 1.51 $8,250 $9,496
NORWOOD, J $4,204,000 $4,838,090 1.151 0.000 0.575 $9,000 $5,179
PIWETZ, W $3,767,000 $5,346,224 1.419 0.500 1.210 $9,000 $10,887
WILP, W $4,010,000 $5,368,649 1.339 1.000 1.669 $8,700 $14,524
|
TransDigm Incentive Program - Summary
o Annual program based on business plan parameters
o Target awards are a percentage of base salary and vary depending on position and responsibilities
o Target awards are multiplied by a three factor formula
Actual Incentive Award = Target Award
x Corporate Performance Factor
x Group Performance Factor
x Individual Performance Factor
o Corporate Performance Factor is set at the discretion of the Board of Directors, based on the performance of TransDigm.
o Group Performance Factor is defined by the following measurables:
Earnings Factor = Actual Earnings/Plan
Investment Factor = Actual ROI/Plan
Bookings Factor = Actual Bookings/Plan
|
The 1994 Program is based on the following earnings and investment factors:
Earnings = Group Operating Income
Less
Net Consolidation Expense
|
Group Business Plan Earnings ----- ---------------------- Adel Wiggins $6,822 AeroControlex $3,125 TransDigm $9,947 |
ROI = Earnings/Average Group Investment
Group Business Plan ROI ----- ----------------- AdelWiggins 59.1% AeroControlex 21.0% TransDigm 37.6% |
For Corporate and Group Staff:
Group Performance Factor = .67 x Earnings Factor +
.33 Investment Factor
For Product Managers:
Group Performance
Factor = Bookings Factor
|
o Individual Performance Factor is set at the discretion of the Office of the Chairman
1995 TransDigm Incentive Program Recommendations
o Continue program based on Business Plan parameters
o Continue Target Awards based on position and responsibilities
o Continue three factor formula, as used in 1994
o Revise Earnings and ROI targets
Earnings ROI
Organization Target Target
------------ ------ ------
AdelWiggins $8,631 To Be Established
AeroControlex $5,980 By 12/30/94
TransDigm $14,611
|
Incentive Staff Base Salary Program Recommendations
Fiscal Year - 1995
Existing New Percent Date
Name Position/Location Base Base Increase Effective
---- ----------------- ---- ---- -------- ---------
Ballinger, Norman Controller, AeroControlex 73.5 N.C. - -
Bundy, Dale Controller, AdelWiggins 75.7 78.0 3.0 1/95
Burger, Charles Product Line, AeroControlex 52.0 54.0 3.8 1/95
Cannon, Cliff Engineering, AdelWiggins 87.5 N.C. - -
DiFranco, Rose Manufacturing, AeroControlex 59.5 62.8 5.5 1/95
Flowers, Malcolm Manufacturing, AdelWiggins 67.0 69.0 3.0 1/95
Hussell, Stephen Product Line, AeroControlex 48.0 49.5 3.0 6/95
Iversen, Bernie Product Line, AeroControlex 60.0 63.0 5.0 1/95
Knurowski, Robert Product Line, AdelWiggins 64.4 67.0 4.0 1/95
Laubenthal, Raymond Manufacturing, AeroControlex 70.0 73.5 5.0 1/95
Luntz, Matt Product Line, AdelWiggins 40.8 47.0 15.2 1/95
McMurtrey, Gary Engineering, AeroControlex 70.0 73.2 4.5 1/95
Morand, Verne Product Line, AdelWiggins 76.0 N.C. - -
Murg, Larry Product Line/QA, AeroControlex 58.0 60.0 3.5 1/95
Rodriguez, Albert Sales, AeroControlex 70.0 73.5 5.0 1/95
Stinson, Dennis Product Line, AdelWiggins 65.0 67.6 4.0 1/95
Turriff, John Sales, AdelWiggins 75.0 78.4 4.5 1/95
Watson, Donald Product Line, AdelWiggins 103.0 106.0 3.0 1/95
|
Field Sales Salary & Commission/Incentive Program Recommendations
Fiscal Year - 1995
`94 Base % `95 Base Incentive Total
Name Salary Increase Salary % $ Amount
---- ------ -------- ------ - - ------
D. Dratwa 59,000 4.0 61,400 15% 9,210 70,610
B. Flynn 55,000 9.1 60,000 15% 9,000 69,000
J. Norwood 60,000 4.0 62,400 15% 9,360 71,760
W. Piwetz 61,000 4.0 63,400 15% 9,510 72,910
B. Wilp 58,000 5.2 61,000 15% 9,150 70,150
293,000 5.1 308,200 15% 46,230 354,430
|
Field Sales Commission/Incentive Structure 1995
Target commission/incentive is 15% of base salary and is made up of two parts:
% of Incentive % of Salary
-------------- -----------
Booking Quota 50% 7.5%
Expectations 50% 7.5%
|
1995 SENIOR STAFF INCENTIVE AWARD PROGRAM
95-BASE INCENTV TARGET 95-TOTAL
NAME SALARY TARGET AWARD COMP
BUNDY, D $78,000 15% $11,700 $89,700
SKULINA, J $64,000 15% 9,600 $73,600
McMURTREY, G $73,200 20% $14,640 $87,840
DiFRANCO, R $62,800 15% $9,420 $72,220
LAUBENTHAL, R $73,500 20% $14,700 $88,200
RODRIGUEZ, A $73,500 20% $14,700 $88,200
TURRIFF, J $78,400 20% $15,680 $94,080
MURG, L $60,000 10% $6,000 $66,000
FLOWERS, M $69,000 15% $10,350 $79,350
RADEKEVICH, P $95,000 20% $19,000 $114,000
TOTAL $125,790
|
1995 PROGRAM MANAGER INCENTIVE AWARD PROGRAM
INCENTV 95-BASE INCENTV TARGET 95-TOTAL
NAME TARGET SALARY TARGET AWARD COMP
BURGER, C $6,719,000 $54,000 15% $8,100 $62,100
HUSSELL, S $1,450,000 $49,500 10% $4,950 $54,450
IVERSEN, B $12,547,000 $63,000 15% $9,450 $72,450
SUBTOTAL $22,500
LUNTZ, M $13,700,000 $47,000 15% $7,050 $54,050
KNUROWSKI, R $2,100,000 $67,000 15% $10,050 $77,050
MORAND, V $2,500,000 $76,000 15% $11,400 $87,400
STINSON, D $12,000,000 $67,600 15% $10,140 $77,740
WATSON, D $7,000,000 $106,000 20% $21,200 $127,200
SUBTOTAL $59,840
|
Corporate Staff Compensation Recommendations
CORPORATE PERFORMANCE FACTOR
Recommend a corporate performance factor of 1.15 based on:
- Sales Growth of 10% (96/95)
- EBITDA Growth of 30% (96/95)
- Working Capital Reduction of $5.5 Million
- Progress of New Market/Product Programs
Recommend Award of 3rd year performance options.
INCENTIVE COMPENSATION RECOMMENDATIONS:
Name Base Salary Award ---- ----------- ----- W. Nicholas Howley $165,000 $85,000 John D. Peterson, Sr. $160,000 $25,000 Peter B. Radekevich $102,000 $25,000 |
BASE SALARY PROGRAM RECOMMENDATIONS:
Name New Base Percent Date ---- -------- ------- ---- W. Nicholas Howley $ 175,000 6.0% 1/1/97 John D. Peterson, Sr. $ 168,000 5.0% 1/1/97 Peter B. Radekevich $ 108,000 5.8% 1/1/97 Eileen M. Fallon $ 45,000 9.7% 1/1/97 |
1996 TransDigm Incentive Program - Summary
o Annual program based on business plan parameters
o Target awards are a percentage of base salary and vary depending on position and responsibilities
o Target awards are multiplied by a three factor formula
Annual Incentive Award = Target Award
x Corporate Performance Factor
x Group Performance Factor
x Individual Performance Factor
|
o Corporate Performance Factor is set at the discretion of the Board of Directors, based on the performance of TransDigm.
o Group Performance Factor is defined by the following measurables:
Earnings Factor = Actual Earnings/Plan
Investment Factor = Actual ROI/Plan
Bookings Factor = Actual Bookings/Plan
|
The 1996 Program is based on the following earnings and investment factors:
Earnings = Group Operating Income
Less
Net Consolidation Expense
Group Business Plan Earnings
AdelWiggins $7,852
AeroControlex $7,670
TransDigm $15,042
ROI = Earnings/Average Group Investment
Group Business Plan ROI
AdelWiggins 60.98%
AeroControlex 73.89%
TransDigm 66.74%
|
1996 TransDigm Incentive Program - Summary
(Continued)
For Corporate and Group Staff:
Group Performance Factor = .67 x Earnings Factor + .33 x Investment Factor
For Product Managers and Field Sales:
Group Performance Factor = Bookings Factor
o Individual Performance Factor is set at the discretion of the Office of the Chairman
1996 Incentive Program Measurables
AEROCONTROLEX
1996 Income = $9,354 = 1.220
----------- ------
1996 Objective = $7,670
1996 ROI = 129.97% = 1.769
-------- -------
1996 Objective = 73.89%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.40
|
ADELWIGGINS
1996 Income = $8,447 = 1.080
----------- ------
1996 Objective = $7,852
1996 ROI = 70.61% = 1.158
-------- ------
1996 Objective = 60.98%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.11
|
CORPORATE
1996 Income = $17,230 = 1.145
1996 Objective = $15,042
1996 ROI = 92.86% = 1.391
-------- ------
1996 Objective = 66.74%
Group Performance Factor = .667 x INC + .333 x ROI
= 1.23
|
1996 Bookings Performance
Name Position 1996 Objective 1996 Bookings Group Factor
============================================================================================
Burger, C. AC-Prod Line $8,230,000 $8,280,000 1.01
Hussel, S. AC-Prod Line $4,800,000 $5,440,000 1.13
Iversen, B. AC-Prod Line $15,100,000 $16,400,000 1.08
Kleinberger, R. AW-Prod Line $4,330,000 $3,260,000 0.87
Luntz, M. AW-Prod Line $11,200,000 $12,660,000 1.13
Stinson, D. AW-Prod Line $18,800,000 $19,600,000 1.04
Norwood, J. Field Sales $5,510,000 $7,840,000 1.42
Dratwa, D. Field Sales $4,960,000 $5,390,000 1.09
Piwetz, W. Field Sales $4,400,000 $4,270,000 0.97
Flynn, B. Field Sales $6,640,000 $6,290,000 0.95
Wilp, B. Field Sales $3,880,000 $3,660,000 0.95
|
1996 Senior Staff Incentive Award Recommendations
Name `96 Base Incentive Target Corporate Group Indiv. Incentive `96 Total
Salary Target Award Factor Factor Factor Award Comp.
======================================= =================================================================
Chomko, W. $88,000 15% $13,200 1.15 1.11 0.95 $16,000 $104,000
Skulina, J. $74,000 15% $11,100 1.15 1.40 1.10 $19,600 $93,600
McMurtrey, G. $75,800 20% $15,160 1.15 1.40 0.85 $20,700 $96,500
DiFranco, R. $65,600 15% $9,840 1.15 1.40 1.15 $18,200 $83,800
Laubenthal, R. $80,000 20% $16,000 1.15 1.40 1.15 $29,600 $109,600
Henderson, R. $103,000 20% $20,600 1.15 1.11 1.10 $28,800 $131,800
Rodriguez, A. $80,000 20% $16,000 1.15 1.40 1.15 $29,600 $109,600
Turriff, J. $85,000 20% $17,000 1.15 1.11 0.80 $17,300 $102,300
Murg, L. $62,300 10% $6,230 1.15 1.40 0.85 $8,500 $70,800
Burger, C. $58,200 15% $8,730 1.15 1.01 1.05 $10,700 $68,900
Hussell, S. $52,000 10% $5,200 1.15 1.13 0.85 $5,800 $57,800
Iversen, B. $68,600 15% $10,290 1.15 1.08 1.15 $14,700 $83,300
Kleinberger, $70,600 15% $10,590 1.15 0.87 0.90 $9,500 $80,100
R.
Luntz, M. $52,000 15% $7,800 1.15 1.13 0.85 $8,600 $60,600
Stinson, D. $70,600 15% $10,590 1.15 1.04 1.00 $12,700 * $83,300
---------- -------- -------- ----------
Total $1,085,700 $178,330 $250,300 $1,373,100
========== ======== ======== ==========
|
* Discretionary modification of awards
1996 - Field Sales Commission Program
`96 Base Target Group Individual Comm. `96 Total
Name Salary Award Factor Factor Award Compensation
===============================================================================================
Norwood, J. $64,000 $9,600 1.42 0.85 $11,500 $75,500
Dratwa, D. $64,300 $9,700 1.09 1.10 $11,300 $75,600
Piwetz, W. $65,300 $9,800 0.97 0.90 $9,700 $75,000
Flynn, B. $64,200 $9,600 0.95 1.00 $9,800 $74,000
Wilp, B. $63,600 $9,600 0.95 1.00 $10,000 $73,600
------- -------
Total $48,300 $52,300
======= =======
|
Changed per Douglas W. Peacock December 13, 1996.
1996 - Field Sales Commission Program
`96 Base Target Group Individual Comm. `96 Total
Name Salary Award Factor Factor Award Compensation
===============================================================================================
Norwood, J. $64,000 $9,600 1.42 0.85 $10,900 $74,900
Dratwa, D. $64,300 $9,700 1.09 1.10 $10,600 $74,900
Piwetz, W. $65,300 $9,800 0.97 0.90 $9,200 $74,500
Flynn, B. $64,200 $9,600 0.95 1.00 $9,400 $73,600
Wilp, B. $63,600 $9,600 0.95 1.00 $9,400 $73,000
------- -------
Total $48,300 $49,500
======= =======
|
Senior Staff Base Salary and
Incentive Program Recommendations
Fiscal Year - 1997
Name Position Existing Percent New Base Incent. Incent. 97 Target
Base Increase % Target Comp.
=================================================================================================
Burger, C. Product Line $58,200 4.8% $61,000 15% $9,200 $70,200
Chomko, W. Controller $88,000 2.8% $90,500 15% $13,600 $104,100
DiFranco, R. Manufacturing $65,600 5.9% $69,500 15% $10,400 $79,900
Henderson, R. Manufacturing $103,000 5.8% $109,000 20% $21,800 $130,800
Hussell, S. Product Line $52,000 3.2% $53,700 10% $5,400 $59,100
Iverson, B. Product Line $68,600 9.3% $75,000 15% $11,300 $86,300
Kleinberger, R. Product Line $70,600 3.0% $72,700 15% $10,900 $83,600
Laubenthal, R. Manufacturing $80,000 12.5% $90,000 20% $18,000 $108,000
Luntz, M. Product Line $52,000 9.6% $57,000 15% $8,600 $65,600
McMurtrey, G. Engineering $75,800 2.9% $78,000 -- -- $78,000
Murg, L. QA $62,300 2.7% $64,000 -- -- $64,000
Rodriguez, A. Sales $80,000 12.5% $90,000 20% $18,000 $108,000
Skulina, J. Controller $74,000 6.1% $78,500 15% $11,800 $90,300
Stinson, D. Product Line $70,600 4.5% $73,800 15% $11,000 $84,800
Turriff, J. Sales $85,000 -- $85,000 20% $17,000 $102,000
---------- ----- ----------
Total $1,085,700 5.7% $1,147,700
========== ===== ==========
|
1996 Field Sales Salary and Commission
Incentive Program Recommendations
Fiscal Year 1997
96 Base % 97 Base Incentive Incentive 97 Total
Name Salary Increase Salary % Target Compensation
==============================================================================================
Dratwa, D. $64,300 4.4% $67,000 15% $10,100 $77,100
Flynn, B. $64,200 3.7% $66,600 15% $10,000 $76,600
Norwood, J. $64,000 3.4% $66,200 15% $10,000 $76,200
Piwetz, W. $65,300 3.6% $67,600 15% $10,100 $76,700
Wilp, B. $63,600 3.7% $66,000 15% $9,900 $75,900
------- ------- ------ -------
Total $321,400 $333,400 $50,100 $382,500
======== ======== ======= ========
|
FIELD SALES COMMISSION/INCENTIVE STRUCTURE FOR 1997
The structure will change to the three factor formula applicable to other participants with the bookings ratio used for the group factor. See below.
Annual Incentive Award = Target Award
x Corporate Performance Factor
x Bookings Ratio Factor
x Individual Performance Factor
|
Exhibit 12.1
TRANSDIGM INC.
Computation of Ratio of Earnings to Fixed Charges
Pro Forma
1994 1995 1996 1997 1998 1998
------ ------ ------ ------ ------ ---------
Earnings:
Total earnings (loss) $(5,323) $ (261) $1,175 $3,172 $14,137 $8,773
Income tax provision (credit) (2,307) 134 2,045 5,193 12,986 5,376
Extraordinary Item 1,462
---------------------------------------------------------
Pre-tax earnings (loss) (7,630) (127) 3,220 9,827 27,123 14,149
---------------------------------------------------------
Fixed charges:
Interest charges 4,823 5,193 4,510 3,463 3,175 22,789
Interest factor of operating rents 198 190 188 178 197 197
---------------------------------------------------------
Total fixed charges 5,021 5,383 4,698 3,641 3,372 22,986
---------------------------------------------------------
Earnings as adjusted (2,609) 5,256 7,918 13,468 30,495 37,135
---------------------------------------------------------
Ratio of earnings to fixed charges - - 1.7 3.7 9.0 1.6
---------------------------------------------------------
|
Pro Forma
1994 1995 1996 1997 1998 1998
------- ------- ------- ------- ------- -------
EBITDA (as defined) $ 9,875 $13,168 $17,213 $24,522 $43,547 $43,647
Interest expense 4,823 5,193 4,510 3,463 3,175 22,789
------- ------- ------- ------- ------- -------
Ratio 2.1 2.5 3.8 7.1 13.7 1.9
|
Exhibit 12.3
Pro Forma
1994 1995 1996 1997 1998 1998
------- ------- ------- ------- ------- -------
EBITDA $9,875 $13,168 $17,213 $24,522 $43,547 $43,647
Less - capital expenditures 1,941 1,702 2,494 2,285 5,061 5,061
------- ------- ------- ------- ------- -------
7,934 11,466 14,719 22,237 38,486 38,586
Interest expense 4,823 5,193 4,510 3,463 3,175 22,789
------- ------- ------- ------- ------- -------
Ratio 1.6 2.2 3.3 6.4 12.1 1.7
|
Exhibit 12.4
Pro Forma
1994 1995 1996 1997 1998 1998
------- ------- ------- ------- ------- --------
Total debt $36,399 $32,074 $19,124 $50,000 $45,000 $218,114
EBITDA (as defined) 9,875 13,168 17,213 24,522 43,547 43,647
------- ------- ------- ------- ------- --------
Ratio 3.7 2.4 1.1 2.0 1.0 5.0
|
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement, relating to $125,000,000 of 10-3/8% Senior Subordinated Notes due 2008, of TransDigm Inc. on Form S-4 of our report dated November 9, 1998 (except for Note 18 for which the date is December 3, 1998) relating to the consolidated financial statements of TransDigm Holding Company appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the headings "Summary Historical and Pro Forma Financial Data," "Selected Historical and Pro Forma Consolidated Financial Data" and "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Cleveland, Ohio January 28, 1999 |
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-4 of TransDigm, Inc. of our report dated January 17, 1997 relating to the consolidated financial statements of Marathon Power Technologies Company for the years ended December 31, 1996 and 1995, which appear in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Dallas, Texas January 28, 1999 |
| ARTICLE 5 |
| CIK: 0001077672 |
| NAME: TRANSDIGM HOLDING COMPANY |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | SEP 30 1998 |
| PERIOD END | SEP 30 1998 |
| CASH | 19,486 |
| SECURITIES | 0 |
| RECEIVABLES | 12,795 |
| ALLOWANCES | 265 |
| INVENTORY | 18,280 |
| CURRENT ASSETS | 54,260 |
| PP&E | 39,156 |
| DEPRECIATION | 17,205 |
| TOTAL ASSETS | 115,785 |
| CURRENT LIABILITIES | 37,606 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 24,281 |
| OTHER SE | 12,146 |
| TOTAL LIABILITY AND EQUITY | 115,785 |
| SALES | 110,868 |
| TOTAL REVENUES | 110,868 |
| CGS | 59,395 |
| TOTAL COSTS | 59,395 |
| OTHER EXPENSES | 21,175 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 3,175 |
| INCOME PRETAX | 27,123 |
| INCOME TAX | 12,986 |
| INCOME CONTINUING | 14,137 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 14,137 |
| EPS PRIMARY | 0 |
| EPS DILUTED | 0 |