EXHIBIT 10.23 SECURITIES PURCHASE AGREEMENT, DATED FEBRUARY 20, 1996 AMONG
REGISTRANT, NASSAU CAPITAL PARTNERS L.P. AND NAS PARTNERS I L.L.C.
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
among
XXXXXXX AIRCRAFT HOLDINGS, INC.
NASSAU CAPITAL PARTNERS L.P.
and
NAS PARTNERS I L.L.C.
dated as of
February 20, 1996
TABLE OF CONTENTS
Page
1. TRANSACTIONS AND CLOSING. . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 SALE AND PURCHASE OF THE SECURITIES . . . . . . . . . . . . . 2
1.2 PURCHASE PRICE FOR SECURITIES . . . . . . . . . . . . . . . . 2
1.3 PLACEMENT FEE . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . 3
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . 3
2.1 ORGANIZATION, STANDING, ETC. . . . . . . . . . . . . . . . . 3
2.2 CORPORATE ACTS AND PROCEEDINGS; ENFORCEABILITY OF AGREEMENTS 3
2.3 DUE AUTHORIZATION, ISSUANCE, ETC . . . . . . . . . . . . . . 3
2.4 CERTIFICATE OF INCORPORATION AND CODE OF REGULATIONS . . . . 4
2.5 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 NO CONFLICT; GOVERNMENTAL APPROVALS AND NOTICES. . . . . . . 5
2.7 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 6
2.9 CHANGES, DIVIDENDS, ETC. . . . . . . . . . . . . . . . . . . 7
2.10 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . 7
2.11 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 PRODUCTS LIABILITY . . . . . . . . . . . . . . . . . . . . . 8
2.13 NO BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . 9
2.14 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.15 AFFILIATE TRANSACTIONS; NO SEPARATE CONSIDERATION. . . . . . 9
2.16 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . 9
2.17 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . 10
2.18 OUTSTANDING DEBT . . . . . . . . . . . . . . . . . . . . . . 10
2.19 TITLE TO AND CONDITION OF PROPERTY . . . . . . . . . . . . . 11
2.20 ENVIRONMENTAL COMPLIANCE . . . . . . . . . . . . . . . . . . 11
2.21 EMPLOYEE PLANS . . . . . . . . . . . . . . . . . . . . . . . 15
2.22 PATENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . 18
2.23 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . 19
3. REPRESENTATIONS AND WARRANTIES OF NASSAU CAPITAL AND NAS. . . . . . . . 19
3.1 ORGANIZATION, STANDING, ETC. . . . . . . . . . . . . . . . . 19
3.2 PARTNERSHIP ACTS AND PROCEEDINGS; ENFORCEABILITY
OF AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 NO CONFLICT; GOVERNMENTAL APPROVALS AND NOTICES. . . . . . . 20
3.4 RESTRICTED SECURITIES. . . . . . . . . . . . . . . . . . . . 20
3.5 INVESTMENT INTENT. . . . . . . . . . . . . . . . . . . . . . 20
3.6 SOPHISTICATED INVESTOR . . . . . . . . . . . . . . . . . . . 20
3.7 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . . 20
3.8 NO BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . 21
4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTORS . . 21
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PAGE
4.2 CONDITION PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. . . . 23
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS . . . . . . . . . . . 24
5.2 BOARD MEMBER; ATTENDANCE AT BOARD MEETINGS . . . . . . . . . 26
5.3 RESERVATION OF SHARES. . . . . . . . . . . . . . . . . . . . 26
5.4 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . 26
6. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 27
6.2 CERTAIN PROCEDURES . . . . . . . . . . . . . . . . . . . . . 27
7. WARRANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 TERM; EXERCISE . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 SERIES OF WARRANTS AND TRIGGERING EVENT. . . . . . . . . . . 28
7.3 PUT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4 ANTIDILUTION PROVISIONS. . . . . . . . . . . . . . . . . . . 31
7.5 REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . 32
8.2 COSTS AND EXPENSES; TRANSFER TAXES . . . . . . . . . . . . . 32
8.3 CONFIDENTIALITY; PRESS RELEASES. . . . . . . . . . . . . . . 32
8.4 PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . . . 33
8.5 EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . 33
8.6 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 AMENDMENTS, WAIVERS, ETC . . . . . . . . . . . . . . . . . . 33
8.8 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 33
8.9 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . 35
8.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 35
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EXHIBITS
Exhibit A Certificate of Incorporation
Exhibit B Warrant
Exhibit C Shareholders Agreement
Exhibit D Registration Rights Agreement
Exhibit E Form of Opinion of Spolin & Xxxxxxxxx
SCHEDULES
Schedule 1.5 Xxxx Repurchase Documents
2.4(a) Certificate of Incorporation of the Company
2.4(b) Code of Regulations of the Company
2.4(c) Resolutions
2.5(a) Capital Stock - Company
2.5(b) Subscriptions, Options, Warrants, etc. - Company
2.5(c) Voting Trusts, Proxies, etc. - Company
2.5(d) Registration Rights - Company
2.6 Consents, Authorization, Approvals, etc.
2.7(a) Subsidiaries; Capital Stock
2.7(b) Subscriptions, Options, Warrants, etc. -
Subsidiaries
2.7(c) Voting Trust, Proxies, etc. - Subsidiaries
2.8 Financial Statements
2.9 Changes, Dividends, etc.
2.10 Compliance, Citations, etc.
2.11 Litigation
2.15 Affiliate Transactions; No Separate Consideration
2.16 Material Conflicts
2.17 Undisclosed Liabilities
2.18 Outstanding Debt
2.19 Real Property
2.20 Environmental Matters
2.21(a) Employee Benefit Plans
2.21(h) Present Value of Benefit Payable Presently
2.21(i) Payments, etc.
2.21(k) Labor Matters
2.22 Intangible Rights
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EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of February 20, 1996 (this
"Agreement"), is by and among XxXxxxx Aircraft Holdings, Inc., an Ohio
corporation (the "Company"), Nassau Capital Partners L.P., a Delaware limited
partnership located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx ("Nassau
Capital"), and NAS Partners I L.L.C., a Delaware limited liability company
also located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx ("NAS") (Nassau
Capital and NAS are hereinafter sometimes referred to collectively as the
"Investors", or individually as an "Investor").
W I T N E S S E T H:
WHEREAS, the Company currently is authorized to issue 8,000,000 shares
of Common Stock, without par value (the "Common Stock"), 167,702 shares of
Series A Convertible Preferred Stock, without par value (the "Series A
Stock"), 1,636,316 shares of Series B Convertible Preferred Stock, without
par value (the "Series B Stock"), and 3,000,000 shares of Series C
Convertible Preferred Stock, without par value (the "Series C Stock") having
the rights set forth in the Certificate of Incorporation of the Company,
included as Schedule 2.4(a) hereto (the "Certificate of Incorporation");
WHEREAS, the Company desires to amend the Certificate of Incorporation
to authorize 2,000,000 shares of Series D Convertible Preferred Stock,
without par value (the "Series D Stock," and, together with the Series A
Stock, Series B Stock and Series C Stock, the "Preferred Stock"), having the
rights set forth in the Amended and Restated Certificate of Incorporation of
the Company attached as Exhibit A hereto;
WHEREAS, at the Closing (as hereinafter defined), the Company desires to
sell 1,989,114 shares of newly-issued Series D Stock to Nassau Capital and
10,886 shares of newly-issued Series D Stock to NAS (collectively, the
"Shares"), and each of Nassau Capital and NAS wishes to acquire its
respective Shares, all in accordance with the terms and conditions of this
Agreement;
WHEREAS, the Company desires to authorize the issuance of certain
warrants, substantially in the form of Exhibit B hereto (together with any
such warrants which may be issued pursuant to any provision hereof or, any
provision contained in the warrants and any such warrants which may be issued
in addition to or in substitution or exchange therefor, the "Warrants"; and,
together with the Shares, the "Securities"), to purchase for a price of $0.01
per share certain shares of the Company's Common Stock; and
WHEREAS, at the closing, the Company desires to sell Warrants, initially
equal to an aggregate of 682,580 shares of
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Common Stock, subject to adjustment as set forth therein, to Nassau Capital
and Warrants, initially equal to an aggregate of 3,735 shares of Common
Stock, subject to adjustment as set forth therein, to NAS, and each of Nassau
Capital and NAS wishes to acquire its respective Warrant, all in accordance
with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and subject to
the terms and conditions set forth herein, the Company and the Investors,
intending to be legally bound, hereby agree as follows:
1. TRANSACTIONS AND CLOSING
1.1 SALE AND PURCHASE OF THE SECURITIES. Upon the terms hereof and
subject to the conditions set forth herein, the Company shall sell to Nassau
Capital and NAS, and Nassau Capital and NAS shall purchase from the Company,
at the Closing, the Securities.
1.2 PURCHASE PRICE FOR SECURITIES. The aggregate purchase price to be
paid by the Investors to the Company for the Securities shall be $6,500,000
(the "Subscription Price").
1.3 PLACEMENT FEE. Upon the terms and subject to the conditions set
forth herein, on the Closing Date (as hereinafter defined), the Company will
pay to Nassau Capital L.L.C. (an affiliate of Nassau Capital), by wire
transfer, a placement fee equal to 1% of the Subscription Price.
1.4 CLOSING. The closing of the purchase and sale of the Securities
(the "Closing") will take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, two Business Days after the
date on which all the conditions specified in Section 4 hereof shall have
been satisfied, or on such other date or at such other place as the Investors
and the Company may agree (the "Closing Date"). The Company will give the
Investors five days' notice of the Closing Date and the time of Closing. At
the Closing, the Company will deliver to the Investors (a) the Shares,
registered in the Investors' names and in such denominations as the Investors
shall request and (b) the Warrants, registered in the Investors' names or
those of the Investors' nominees, against payment of the Subscription Price
by transfer in lawful money of the United States of America in immediately
available funds to such bank and account as the Company may direct in
writing. If at the Closing the Company shall fail to (x) tender to the
Investors any of the Shares (y) tender to the Investors any of the Warrants
or (z) have satisfied any of the Closing conditions specified herein, or if
such closing conditions shall not have been waived by the Investors, the
Investors shall, at the Investors' election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights
the Investors may have by reason of such failure.
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1.5 USE OF PROCEEDS. The Company shall use the proceeds which it
receives from the sale of the Securities hereunder solely for the
consummation of the repurchase by the Company of the 25% minority interest in
Xxxx Components, Inc., a subsidiary of the Company (the "Xxxx Repurchase")
pursuant to the terms and conditions of the Xxxx Repurchase Documents, set
forth on Schedule 1.5 hereto, and for the payment of certain fees and
expenses incurred by the Company in connection therewith.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investors as follows:
2.1 ORGANIZATION, STANDING, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Ohio, and each Subsidiary (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Company and each Subsidiary have all
requisite corporate power and authority to own and operate its material
properties and assets and to carry on its business as now conducted. The
Company and each Subsidiary are duly qualified to do business as foreign
corporations and are in good standing in the State of Ohio and in each other
jurisdiction in which the character or location of the properties and assets
owned or operated by it or the nature of the material business conducted by
it makes such qualification necessary, except to the extent that the failure
to be so qualified could not reasonably be expected to have a material
adverse effect on business, assets, liabilities, results of operations,
financial condition or prospects of the Company and its Subsidiaries, taken
as a whole (a "Material Adverse Effect").
2.2 CORPORATE ACTS AND PROCEEDINGS; ENFORCEABILITY OF AGREEMENTS. (a)
The Company has all requisite corporate power and authority to enter into
this Agreement, the Shareholders Agreement (as hereinafter defined), the
Registration Rights Agreement (as hereinafter defined) and such documents
necessary or advisable to consummate the Xxxx Repurchase (the "Xxxx
Repurchase Documents") and to perform its obligations contemplated hereunder
and thereunder.
(b) Within a reasonable period of time after the Closing Date, the
Company will deliver to Nassau Capital a set of closing binders containing
true and complete copies of the final, executed Xxxx Repurchase Documents.
(c) All corporate action on the part of the Company and its
subsidiaries, officers, directors and stockholders necessary for the
authorization, execution and delivery by the Company of this Agreement, the
Shareholders Agreement, the Registration Rights Agreement and the Xxxx
Repurchase Documents,
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the performance of all obligations of the Company hereunder and thereunder
(including the authorization, issuance, sale and delivery of the Securities
to be issued hereunder), has been taken.
(d) This Agreement has been, and the Shareholders Agreement, the
Registration Rights Agreement and the Xxxx Repurchase Documents when executed
and delivered by the parties thereto will be, duly executed and delivered by
authorized officers of the Company and constitutes, or when executed and
delivered by the parties thereto will constitute, a valid and binding
obligation of the Company and is, or when executed and delivered by the
parties thereto will be, enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and to general principles of equity (whether considered in a
proceeding in equity or at law).
2.3 DUE AUTHORIZATION. ISSUANCE, ETC. The Securities being issued
hereunder, when issued and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly authorized and
validly issued, fully paid and nonassessable.
2.4 CERTIFICATE OF INCORPORATION AND CODE OF REGULATIONS. Schedule
2.4(a) hereto is a complete and correct copy of the Certificate of
Incorporation as currently in effect and on file with the Secretary of State
of the State of Ohio. Schedule 2.4(b) hereto is a complete and correct copy
of the Code of Regulations of the Company (the "Code of Regulations") as
currently in effect. Schedule 2.4(c) hereto contains complete and correct
copies of all resolutions of the Board of Directors of the Company,
authorizing the execution, delivery and performance of this Agreement, the
Shareholders Agreement, the Registration Rights Agreement and the Xxxx
Repurchase Documents and the performance of all the obligations of the
Company contemplated hereunder and thereunder and such resolutions are
currently in full force and effect.
2.5 CAPITALIZATION. (a). The authorized capital stock of the Company
consists of 8,000,000 shares of Common Stock and 167,702 shares of Series A
Stock, 1,636,316 shares of Series B Stock and 3,000,000 shares of Series C
Stock. The rights, preferences, convertibility and other characteristics of
the shares of Common Stock and Preferred Stock (not including the Series D
Stock) of the Company are as set forth in the Certificate of Incorporation
and the Code of Regulations, subject to the terms of the Second Amended and
Restated Shareholders Agreement. As of the date of this Agreement, 301,840
shares of Common Stock have been issued and are outstanding, and the
beneficial and record ownership of such shares is as set forth on Schedule
2.5(a). All of such shares of Common Stock have been duly authorized and
validly issued and are fully paid and
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non assessable. As of the date of this Agreement, 167,702 shares of Series A
Stock, 1,583,537 shares of Series B Stock and 2,346,471 shares of Series C
Stock have been issued and are outstanding and the beneficial and record
ownership of each such series is as set forth on Schedule 2.5(a). All of
such shares of Preferred Stock (not including the Series D Stock) have been
duly authorized and validly issued and are fully paid and non assessable.
(b) Except as set forth on Schedule 2.5(b) and except for the
transactions contemplated by this Agreement, the Shareholders Agreement and
the Registration Rights Agreement, there are no outstanding subscriptions,
options, warrants, calls, contracts, preemptive rights, demands, commitments,
conversion rights or other agreements or arrangements of any character or
nature whatsoever under which the Company is or may be obligated to issue or
acquire its capital stock.
(c) Except as set forth on Schedule 2.5(c), the Company is not a party
to, and the Company has no knowledge of any, voting trusts, proxies or any
other agreements or understandings with respect to the voting of any capital
stock of the Company.
(d) Except as set forth in Schedule 2.5(d), the Company has not granted
or agreed to grant any rights relating to the registration of its securities
under applicable federal and state securities laws, including piggyback
rights.
(e) Except as set forth on Schedule 2.5(b), the consummation of the
transactions contemplated by this Agreement will not trigger the anti-dilution
provisions or other price adjustment mechanisms of any outstanding
subscriptions, options, warrants, calls, contracts, preemptive rights,
demands, commitments, conversion rights or other agreements or arrangements
of any character or nature whatsoever under which the Company is or may be
obligated to issue or acquire its capital stock.
2.6 NO CONFLICT: GOVERNMENTAL APPROVALS AND NOTICES. The execution and
delivery of this Agreement as of the date hereof, and the Shareholders
Agreement, the Registration Rights Agreement and the Xxxx Repurchase
Documents, as of the Closing Date (collectively, the "Closing Documents"),
and the consummation of the transactions contemplated by any of the Closing
Documents will not (i) violate the Certificate of Incorporation or Code of
Regulations of the Company or any Subsidiary, (ii) conflict with or
constitute a violation of any law, statute, judgment, order, decree or
regulation applicable or relating to the Company or any of its Subsidiaries
or to which any of its assets or properties is subject, or (iii) result in a
breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any asset or property of the Company or any
Subsidiary pursuant to, any agreement or
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other instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any portion of their respective
properties, assets or rights are bound or affected, except for those
breaches, defaults, liens and encumbrances which in the aggregate could not
reasonably be expected to have a Material Adverse Effect. No consent,
authorization, approval, permit or order of, or notice to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance of any of the Closing Documents by the Company and except for
(x) consents, authorizations, approvals, permits and orders which have been
obtained and filings which have been made as of the date hereof, (y)
consents, authorizations, approvals, permits, orders and filings set forth on
Schedule 2.6.
2.7 SUBSIDIARIES. (a) As used herein, "Subsidiary" shall mean (i) any
corporation of which a majority of the securities entitled to vote generally
in the election of directors thereof, at the time as of which any
determination is being made, are owned by the Company, either directly or
indirectly and (ii) any joint venture, general or limited partnership or
other legal entity in which the Company is the record or beneficial owner,
directly or indirectly, of a majority of the equity interests. Schedule
2.7(a) accurately sets forth each Subsidiary, including its name, place of
incorporation or formation, the number of shares authorized for each class of
the capital stock thereof, the number of shares issued and outstanding for
each class of the capital stock thereof, and the record ownership of all
capital stock issued thereby. All shares of capital stock of any Subsidiary
directly or indirectly owned by the Company have been duly authorized and
validly issued, are fully paid, non assessable and, except as set forth on
Schedule 2.7(a), are directly or indirectly owned by the Company free of any
security interest, lien, pledge or other encumbrance.
(b) Except as set forth on Schedule 2.7(b), there are no outstanding
subscriptions, options, warrants, calls, contracts, preemptive rights,
demands, commitments, conversion rights or other agreements or arrangements
of any character or nature whatsoever under which any Subsidiary is or may be
obligated to issue or acquire its capital stock.
(c) Except as set forth on Schedule 2.7(c), there are no voting trusts,
proxies or any other agreements or understandings with respect to the voting
of any capital stock of any Subsidiary.
2.8 FINANCIAL STATEMENTS. Schedule 2.8 includes true and complete
copies of (i) the audited balance sheets of the Company as at December 31,
1992, 1993 and 1994, and the related audited statements of operations and of
cash flows of the Company for the fiscal years then ended, including the
auditors' opinions thereon and all notes thereto, and (ii) the unaudited
balance sheet of the Company as at November 30, 1995, and the related
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unaudited statement of operations of the Company for the period January 1,
1995 through November 30, 1995. Each of the foregoing financial statements
(the "Financial Statements") was prepared in accordance with generally
accepted accounting principles consistently applied (except, with respect to
unaudited statements, for the omission of footnote disclosures and normal
year end audit adjustments). Such balance sheets present fairly the
financial position of the Company as of the dates stated thereon, and such
statements of operations present fairly the results of the operations of the
Company for the periods stated on such statements of operations.
2.9 CHANGES, DIVIDENDS, ETC. Except as set forth on Schedule 2.9,
since December 31, 1994, (i) neither the Company nor any of its Subsidiaries
has paid any management fee or declared or made any payment, loan, advance,
dividend or other distribution to its affiliates or stockholders as such, or
purchased or redeemed any shares of its capital stock, or obligated itself to
do so; (ii) neither the Company nor any of its Subsidiaries has sold,
transferred, encumbered or leased any of its assets except in the usual and
ordinary course of business, or merged or consolidated with or into any other
person, firm or entity; (iii) neither the Company nor any of its.
Subsidiaries has issued or sold any shares of its capital stock or other
securities or granted any options or other rights with respect thereto; (iv)
neither the Company nor any of its Subsidiaries has incurred any material
obligation or liability except in the ordinary course of business; (v) there
has not been any termination, discontinuation, closing or disposition of any
material business operation of the Company or any of its Subsidiaries; and
(vi) there has not been any change in the method of accounting or accounting
practice or policy of the Company or any of its Subsidiaries; nor, except as
set forth on Schedule 2.9, has the Company or any of its Subsidiaries (A)
agreed to do any of the foregoing, other than pursuant to this Agreement, or
(B) suffered any physical damage, destruction or other loss (whether or not
covered by insurance) which has had or may have a Material Adverse Effect.
Except as set forth on Schedule 2.9 hereto or in the Financial Statements,
since December 31, 1994, there has been no Material Adverse Effect, nor is
the Company aware of the occurrence of any event which constitutes or which
would, with the giving of notice or the passage of time, constitute a default
under any material agreement entered into by the Company or any of its
Subsidiaries.
2.10 COMPLIANCE WITH LAWS. (a) Except as set forth in Schedule 2.10
attached hereto, the Company has not received notice of, or citation or
summons for, and no complaint has been filed, no penalty has been assessed
and no investigation or review is in process or, to the best knowledge of the
Company, threatened by any governmental authority with respect to, any
violation or alleged violation of any law, regulation, order or other legal
requirement, or failure by the Company to have any permit, certificate,
license, approval, registration or
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authorization (including industry certificates and approvals and including,
without limitation, FAA Supplemental Type Certificates ("STCs") required in
connection with the operation of its business. The Company is not in default
with respect to any order, writ, judgment, award, injunction or decree of any
federal, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to or in connection with its
business or any of its assets, properties or operations.
(b) Except as set forth in Schedule 2.10 attached hereto, with respect
to the operation of its business, the Company possesses and is in compliance
with all material permits, certificates, licenses, approvals, registrations
and authorizations (including industry certificates and approvals and
including, without limitation, STCs) required under all applicable laws,
rules and regulations, all of which are in full force and effect, and the
business has been conducted and is now being conducted in compliance with all
applicable laws, rules, regulations, judgments and orders of the United
States and states, counties, municipalities and agencies thereof, including,
without limitation, laws, rules and regulations relating to pollution and
environmental control, equal employment opportunity, health and safety and
zoning.
2.11 LITIGATION. Except as set forth in Schedule 2.11 attached hereto,
there are no claims, actions, suits, proceedings, labor disputes or
investigations in process by or against the Company or any of its
Subsidiaries or, to the best knowledge of the Company, threatened either by a
written communication directed to the Company or by an oral communication
directed to the Company by a stockholder of the Company, before any federal
or state court, arbitrator or governmental authority by or against the
Company which, if adversely determined, may reasonably be expected to have a
Material Adverse Effect or in any liability on the part of the Company which
would be material to the Company or which to the best knowledge of the
Company, includes a claim against or involving the Company in excess of
$100,000 or which questions the validity or legality of or seeks damages in
connection with this Agreement or any action taken or to be taken pursuant to
this Agreement. Except as set forth in Schedule 2.11 attached hereto, there
are no outstanding judgments, decrees or orders of any court or governmental
authority against the Company.
2.12 PRODUCTS LIABILITY. Except for lawsuits, claims (asserted or
unasserted), damages and expenses adequately covered by the Company's
insurance, there are no (i) liabilities of the Company, fixed or contingent,
asserted or, to the best knowledge of the Company, unasserted, with respect
to any product liability or any similar claim that relates to any product
sold by the Company to others prior to the Closing Date, or (ii) liabilities
of the Company, fixed or contingent, asserted or, to the best knowledge of
the Company, unasserted, with respect to any claim
9
for the breach of any express or implied product warranty or any other
similar claim with respect to any product sold by the Company to others prior
to the Closing Date, other than standard warranty obligations (to replace,
repair or refund) made by the Company in the ordinary course of the conduct
of its business to purchasers of its products, and except, in each case,
where such liabilities do not or would not reasonably be expected to have a
Material Adverse Effect.
2.13 NO BROKERS OR FINDERS. No person, firm or entity (other than
Alex. Xxxxx & Sons Incorporated) has or will have, as a result of any act or
omission of the Company, any right, interest or valid claim against the
Company or the Investors for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this
Agreement.
2.14 TAXES. The Company and its Subsidiaries have timely filed with
all appropriate governmental authorities all material tax returns and reports
which are required to be filed prior to the date hereof. Subject to any
extensions duly requested and granted, the Company and its Subsidiaries have
duly and timely paid in full all taxes shown as due on such returns and
reports or, to the extent such taxes are accrued but not yet due, have
adequately reserved for the timely payment of any and all such taxes when
due. No issue has been raised by any taxing authority which could result in
a deficiency in the amount of taxes shown as due and owing on any tax return
or report required to be filed by the Company or any of its Subsidiaries.
2.15 AFFILIATE TRANSACTIONS; NO SEPARATE CONSIDERATION. Except as set
forth on Schedule 2.15 hereto, there are no existing agreements,
understandings or arrangements between the Company or any of its
Subsidiaries, on one hand, and any shareholder set forth on Schedule 2.5(a)
or any affiliate of any such shareholder, on the other hand, relating to the
properties, assets or conduct of the business and operations of the Company
or any of its Subsidiaries.
2.16 MATERIAL CONTRACTS. All contracts material to the business of the
Company and its Subsidiaries, including all contracts involving payments of,
or the provision of services valued at, amounts in excess of $100,000 per
year (the "Material Contracts") are set forth on Schedule 2.16 and are valid
and binding and enforceable in accordance with their respective terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and to general principles of
equity (whether considered in a proceeding in equity or at law). Except as
set forth on Schedule 2.16, to the knowledge of the Company, there are no
existing defaults, nor have any events or circumstances occurred which, with
or without notice or the lapse of time or both, would constitute defaults,
under any of the Material Contracts.
10
2.17 ABSENCE OF UNDISCLOSED LIABILITIES. Except for (a) liabilities
reflected or reserved against in full in the Financial Statements or incurred
after the date thereof in the ordinary course of business in an amount not
exceeding $100,000 in the aggregate, (b) liabilities not yet due and payable
or obligations to be performed or satisfied after the date hereof under the
Material Contracts, (c) liabilities incurred in the ordinary course of
business and not required to be reflected in the Financial Statements, and
(d) as set forth on Schedule 2.17, neither the Company nor any of its
Subsidiaries has, or will have upon consummation of the Xxxx Repurchase, any
material liability or obligation of any nature, whether accrued, absolute or
contingent.
2.18 OUTSTANDING DEBT. Except as set forth in Schedule 2.18, the
Company does not, and each of its Subsidiaries do not, have any outstanding
secured or unsecured Debt or commitments for any Debt, and as of the Closing
Date there will exist no default or event of default by the Company or any of
its Subsidiaries under the provisions of any instrument evidencing such Debt
or of any agreement relating thereto that has or would be expected to have a
Material Adverse Effect. As used in this Agreement, "Debt" shall mean, as to
any person (calculated for any person without duplication): (i) all
liabilities, whether recourse is limited or otherwise, for borrowed money or
for the deferred purchase price of property or services (but excluding trade
expenses and accounts payable incurred in the ordinary course of business and
which are not overdue by more than 90 days unless being contested in good
faith), including obligations under leases which would be treated as capital
leases; (ii) reimbursement obligations with respect to letters of credit;
(iii) any obligation secured by any property or asset of such person; (iv)
any obligation with respect to currency or hedging agreements; and (v) any of
the foregoing liabilities which such person has guaranteed.
2.19 TITLE TO AND CONDITION OF PROPERTY. The Company and its
Subsidiaries have good and marketable title to all material property and
assets (real, personal or mixed) reflected on the Financial Statements, free
and clear of any security interest, mortgage, pledge, or other lien or
encumbrance, except for (i) liens, mortgages and security interests securing
indebtedness reflected on the Financial Statements, and (ii) security
interests, mortgages, pledges and other liens and encumbrances which do not
materially interfere with the operation of the business of the Company and
its Subsidiaries. Such property and assets include all property and assets
necessary to conduct the business and operations of the Company as now
conducted. The Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all leases necessary in any material respect for
the operation of its properties and businesses; and none of such leases
contain any unusual or burdensome provisions which might materially affect or
impair the operation of such properties and businesses. Schedule 2.19 sets
11
forth a description of all real property owned or leased by the Company or
any Subsidiary.
2.20 ENVIRONMENTAL COMPLIANCE. Except as set forth on Schedule 2.20
attached hereto:
(a) The Company and each of its Subsidiaries have obtained all
environmental, health and safety permits, licenses and other authorizations
required under any and all Environmental Laws the absence of which permit,
license or other authorization would have a material adverse effect to the
Company ("Environmental Permits") to carry on their respective business as
now being or as proposed to be conducted. No modification, revocation,
reissuance, alteration, transfer, or amendment of the Environmental
Permits, or any review by, or approval of, any third party of the
Environmental Permits is required in connection with the execution of this
Agreement or the consummation of the transactions contemplated hereby or
the continuation of the business of the Company following such
consummation. Each Environmental Permit is in full force and effect and
the Company and each of its Subsidiaries are in compliance with the terms
and conditions thereof, and is, and has been, also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
provisions, requirements, obligations, schedules and timetables contained
in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, including, without limitation,
the requirement to have obtained in the past then applicable Environmental
Permits except as would not reasonably be expected to result in liability
under Environmental Laws. To the best knowledge of the Company, there is no
condition that could be reasonably expected to prevent or interfere with
future compliance with Environmental Laws, including but not limited to
compliance with required Environmental Permits.
(b) To the best knowledge of the Company, no notice, notification,
demand, request for information, citation, summons or order has been
issued, no complaint has been filed, no penalty has been assessed and no
investigation, litigation, arbitration, administrative proceeding or review
is pending or threatened by any governmental or other entity with respect
to any past or present actual or alleged noncompliance with any
Environmental Law, any Hazardous Material, or any alleged or actual failure
by the Company or any of its Subsidiaries to have or to have had when
necessary, any Environmental Permit.
(c) Neither the Company nor any of its Subsidiaries now or previously
owns, operates or leases a treatment, storage or disposal facility
requiring a permit under the
12
Resource Conservation and Recovery Act of 1976, as amended, or under any
comparable state or local statute; and, except as would not reasonably be
expected to result in liability under any Environmental law,
(i) no polychlorinated biphenyls (PCBs) are or have been present
at any site or facility now or previously owned, operated or leased
by the Company or any of its Subsidiaries;
(ii) no asbestos or asbestos-containing material is or has been
present at any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries;
(iii) there are no landfills, underground storage tanks or surface
impoundments, in each case either active or abandoned, at any site or
facility now or previously owned, operated or leased by the Company
or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released at, on or under
any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries in a reportable quantity
established by statute, ordinance, rule, regulation or order; and
(v) no Hazardous Materials are present, have been otherwise
Released or threatened to be Released, at, on, under, from or about
any site or facility now or previously owned, operated, leased or
otherwise used by the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has disposed of,
transported or arranged for the transportation of any Hazardous Material to
any location that is listed on the National Priorities List ("NPL") under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion on the NPL by
the Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided for by 40 C.F.R.
Section 300.5 ("CERCLIS"), or on any similar state or local list or that
is the subject of Federal, state or local enforcement actions or other
investigations that may lead to environmental liability against any
Company or any of its Subsidiaries, or to any other location in a manner
that could be expected to result in liability under any Environmental
Law.
(e) No Hazardous Material generated by the Company or any of its
Subsidiaries has been recycled, treated, stored disposed of or Released by
the Company or any of its
13
Subsidiaries at any location other than those listed in Schedule 2.20.
(f) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site or facility now or previously owned, operated or
leased by any Company and each of its Subsidiaries is listed or proposed
for listing on the NPL, CERCLIS or any similar state list of sites
requiring investigation or clean-up.
(g) No liens have arisen under or pursuant to any Environmental Laws
on any site or facility owned, operated or leased by the Company or any of
its Subsidiaries, and no government action has been taken or is in process
that could subject any such site or facility to such liens and none of the
Company or any of its Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property on which such site or
facility is located.
(h) All environmental investigations, studies, audits' tests, reviews
or other analyses conducted by or that are in the possession of the Company
or any of its Subsidiaries in relation to facts, circumstances or
conditions at or affecting any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries and that could
result in liability under any Environmental Law have been made available to
the Investors.
(i) There are no past or present actions, activities, events,
conditions or circumstances, including without limitation the Release,
threatened Release, emission, discharge, generation, treatment, storage or
disposal of Hazardous Materials, in regard to any property currently or
formerly owned, operated, leased or otherwise used by the Company or any
of its Subsidiaries or the past and present operations or business of the
Company or any of its Subsidiaries that would reasonably be expected to
give rise to liability under any Environmental Laws or any contract or
agreement.
(j) Neither the Company nor any of its Subsidiaries has assumed,
contractually or by operation of law, any liabilities, potential
liabilities or obligations under any Environmental Laws.
(k) Neither the Company nor any of its Subsidiaries has entered into,
has agreed to, or is subject to any judgment, decree, order or other
similar requirement of any governmental authority under any Environmental
Laws, including without limitation those relating to compliance
14
with Environmental Laws or to investigation, cleanup, remediation or
removal of Hazardous Substances.
(l) No submission to or filing with, or any review or approval by,
any third party is required under any Environmental Law, including without
limitation the New Jersey Industrial Site Recovery Act, the Connecticut
Transfer Act, the Illinois Responsible Property Transfer Act, and the
Indiana Responsible Property Transfer Act, in connection with the
execution of this Agreement or the consummation of the transactions
contemplated hereby or the continuation of the business of the Company
or its Subsidiaries following such consummation.
(m) No matter or item referenced in Schedule 2.20 could reasonably be
expected to result in a Material Adverse Effect.
For purposes of this Section 2.20, the following definitions shall
apply:
"Environmental Laws" means any and all federal, state, and local laws,
ordinances, rules, regulations, codes, duties under the common law or
orders, including, without limitation, any requirements imposed under
any permits, licenses, judgments, decrees, agreements or recorded
covenants, conditions, restrictions or easements, the purpose of which
is to protect the environment, human health, public safety or welfare,
or which pertain to Hazardous Materials.
"Hazardous Materials" means any product, substance, chemical, force,
material or waste, whose presence, nature, quantity and/or intensity of
existence, use, manufacture, processing, treatment, storage, disposal,
transportation, spill, release or effect, either by itself or in
combination with other materials expected to be on the property owned or
leased by the Company or any of its Subsidiaries (the "Property") is
either (A) potentially injurious to public health, safety, welfare, or
the environment, or to the Property; (B) regulated, monitored or subject
to reporting by any governmental agency; or (C) a basis for potential
liability to any governmental agency or a third party under any
applicable statute or common law theory. Without limiting the
foregoing, the term, "Hazardous Materials," includes but is not limited
to any material, waste or substance which is or contains (A) petroleum
or petroleum products, including crude oil or any fraction thereof,
natural gas, or synthetic gas or any mixture thereof, (B) asbestos, (C)
polychlorinated biphenyls, (D) flammable explosives; (E) radioactive
materials; (F) radon in excess of EPA recommended exposure limits or (G)
paint containing concentrations of lead or mercury.
15
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including, without limitation, the
movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
2.21 EMPLOYEE PLANS. (a) Schedule 2.21(a) contains a true and
complete list of each "employee benefit plan" (within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject
to ERISA (including any funding mechanism therefor now in effect or required
in the future as a result of the transaction contemplated by this Agreement
or otherwise), whether formal or informal, oral or written, legally binding
or not under which any employee or former employee of the Company has any
present or future right to benefits or under which the Company has any
present or future liability. All such plans, agreements, programs, policies
and arrangements shall be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Company has delivered to the
Investors a current, accurate and complete copy (or, to the extent no such
copy exists, an accurate description) thereof and, to the extent applicable,
(i) any related trust agreement, annuity contract or other funding
instrument; (ii) the most recent determination letter; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company to its employees concerning the extent of the
benefits provided under a Company Plan; and (iv) for the three most recent
years (A) the Form 5500 and attached schedules; (B) audited financial
statements; (C) actuarial valuation reports; and (D) attorney's response to
an auditor's request for information.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Code and other applicable laws, rules and regulations; (ii)
each Company Plan which is intended to be qualified within the meaning of
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
is so qualified and has received a favorable determination letter as to its
qualification and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification; (iii) with respect to any
Company Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or threatened, no facts or
circumstances exist which could give rise to any such actions, suits or claims
16
and the Company will promptly notify the Investors in writing of any pending
or threatened claims arising between the date hereof and the Closing Date;
(iv) neither the Company nor any other party has engaged in a prohibited
transaction, as such term is defined under Code section 4975 or ERISA section
406, which would subject the Company or the Investors to any taxes, penalties
or other liabilities under Code section 4975 or ERISA sections 409 or 502(i);
(v) no event has occurred and no condition exists that would subject the
Company, either directly or by reason of its affiliation with any member of
its Controlled Group (as hereinafter defined), to any tax, fine or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations
including, but not limited to the taxes imposed by Code sections 4971, 4972,
4977, 4979, 4980B, 4976(a) or the fine imposed by ERISA section 502(c); (vi)
all insurance premiums required to be paid with respect to Company Plans as
of the Closing Date have been or will be paid prior thereto and adequate
reserves have been provided for on the Company's balance sheet for any
premiums (or portions thereof) attributable to service on or prior to the
Closing Date; (vii) for each Company Plan with respect to which a Form 5500
has been filed, no material change has occurred with respect to the matters
covered by the most recent Form since the date thereof; (viii) all
contributions required to be made prior to the Closing Date under the terms
of any Company Plan, the Code, ERISA or other applicable laws, rules and
regulations have been or will be timely made and adequate reserves have been
provided for on the Company's balance sheet for all benefits attributable to
service on or prior to the Closing Date; (ix) no Company Plan provides for an
increase in benefits on or after the Closing Date; and (x) each Company Plan
may be amended or terminated without obligation or liability (other than
those obligations and liabilities for which specific assets have been set
aside in a trust or other funding vehicle or reserved for on the Company's
balance sheet). "Controlled Group" shall mean any organization which is a
member of a controlled group of organizations within the meaning of Code
sections 414(b), (c), (m) or (o).
(d) (i) No Company Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA section 302 and Code section 412
(whether or not waived); (ii) no event or condition exists which could be
deemed a reportable event within the meaning of ERISA section 4043 which
could result in a liability to the Company or any member of its Controlled
Group and no condition exists which could subject the Company or any member
of its Controlled Group to a fine under ERISA section 4071; (iii) as of the
Closing Date, the Company and each member of its Controlled Group have made
all required premium payments when due to the Pension Benefit Guaranty
Corporation (the "PBGC"); (iv) neither the Company nor any member of its
Controlled Group is subject to any liability to the PBGC for any plan
termination occurring on or prior to the Closing Date; (v) no amendment has
occurred which has required or could require the Company or any member of its
Controlled Group to provide
17
security pursuant to Code section 401(a)(29); and (vi) neither the Company
nor any member of its Controlled Group has engaged in a transaction which
could subject it to liability under ERISA section 4069.
(e) With respect to each of the Company Plans which is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Closing Date, the assets of each such
Company Plan are at least equal in value to the present value of the accrued
benefits (vested and unvested) of the participants in such Company Plan on a
termination and projected basis, based on the actuarial methods and
assumptions indicated in the most recent actuarial valuation reports.
(f) With respect to any multiemployer plan (within the meaning of
section 4001(a)(3) of ERISA) to which the Company or any member of its
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) the Company and each
member of its Controlled Group has or will have, as of the Closing Date, made
all contributions to each such multiemployer plan required by the terms of
such multiemployer plan or any collective bargaining agreement; (ii) neither
the Company nor any member of its Controlled Group has incurred any
withdrawal liability under Title IV of ERISA or would be subject to such
liability if, as of the Closing Date, the Company or any member of its
Controlled Group were to engage in a complete withdrawal (as defined in ERISA
section 4203) or partial withdrawal (as defined in ERISA section 4205) from
any such multiemployer plan; (iii) no such multiemployer plan is in
reorganization or insolvent (as those terms are defined in ERISA sections
4241 and 4245, respectively); and (iv) neither the Company nor any member of
its Controlled Group has engaged in a transaction which could subject it to
liability under ERISA section 4212(c).
(g) (i) Each Company Plan which is intended to meet the requirements
for tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of
the Code meets such requirements; and (ii) the Company has received a
favorable determination from the Internal Revenue Service with respect to any
trust intended to be qualified within the meaning of Code section 501(c)(9).
(h) Schedule 2.21(h) sets forth, on a plan by plan basis, the present
value of benefits payable presently or in the future to present or former
employees of the Company under each unfunded Company Plan.
(i) Except as set forth on Schedule 2.21(i), no Company Plan exists
which could result in the payment to any Company employee of any money or
other property or rights or accelerate or provide any other rights or
benefits to any Company employee as a result of the transaction contemplated
by this
18
Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code section 280G.
(j) The transaction contemplated by this Agreement does not constitute
a change in the ownership or effective control of a corporation or the
ownership of a substantial portion of the assets of a corporation for
purposes of Code section 280G or the regulations thereunder.
(k) Except as set forth in Schedule 2.21(k) attached hereto, (a) there
are no open National Labor Relations Board claims, petitions, proceedings,
charges, complaints or notices with respect to the Company, (b) the Company
has no labor negotiations in process with any labor union or other labor
organization, (c) no labor disputes, including, but not limited to, strikes,
slowdowns, picketing or work stoppages or other labor difficulty exist or to
the best of the Company's knowledge are threatened, with respect to any
employees of the Company, (d) no grievance or arbitration proceeding arising
out of or under any collective bargaining agreement relating to the employees
of the Company is in process, and to the best knowledge of the Company, no
claim thereunder exists, (e) the Company is not experiencing any labor
disputes, including but not limited to strikes, slowdowns, picketing or work
stoppages with respect to the employees of the Company and (f) no "plant
closing" or "mass layoff" has been effectuated by the Company (in each case
as defined in the Worker Adjustment and Retraining Notification Act (29
U.S.C. Section 2101, ET SEQ.), as amended). To the best knowledge of the
Company, there are no efforts in process by unions to organize any employees
of the Company who are not now represented by recognized collective
bargaining agents.
2.22 PATENTS, ETC. All patents, trademarks, service-marks, trade
names, permits, licenses, franchises or other rights (including industry
certificates and approvals and including, without limitation, STC approvals)
(collectively, "Intangible Rights") owned or held by the Company or any of
its Subsidiaries that are material to the business of the Company or any of
its Subsidiaries are described on Schedule 2.22 attached hereto. Except as
described on Schedule 2.22, all such Intangible Rights are free and clear of
any lien. Nothing has come to the attention of the Company to the effect
that (i) any activity in operating the business of the Company or any of its
Subsidiaries as presently conducted or as proposed to be conducted may
infringe any patent, trademark, service-xxxx, trade name, copyright, permit,
license, franchise or other right owned by any other person, (ii) there is
pending or threatened any claim or litigation against or affecting the
Company or any of its Subsidiaries contesting its right to carry on such
activities or (iii) there is, or there is pending or proposed, any statute,
law, rule, regulation, standard or code which would prevent or inhibit, or
substantially reduce the projected revenues of, or otherwise adversely affect
the business, condition (financial or otherwise), or operations of, the
Company.
19
2.23 FULL DISCLOSURE. No representation or warranty made by the
Company herein nor any certificate, schedule, or instrument furnished or to
be furnished by the Company pursuant hereto or in connection herewith,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF NASSAU CAPITAL AND NAS
Nassau Capital and NAS hereby jointly and severally represent and
warrant to the Company as follows:
3.1 ORGANIZATION, STANDING, ETC. Nassau Capital is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware. NAS is a limited liability company duly
organized, validly existing and in good standing under the laws of the State
of Delaware.
3.2 PARTNERSHIP ACTS AND PROCEEDINGS; ENFORCEABILITY OF AGREEMENTS.
Each of Nassau Capital and NAS has all requisite power and authority to
enter into this Agreement, the Shareholders Agreement and the Registration
Rights Agreement and to perform its obligations hereunder and thereunder.
All action on the part of Nassau Capital and its partners and by NAS and its
members, officers and managers necessary for the authorization, execution and
delivery of this Agreement, the Shareholders Agreement and the Registration
Rights Agreement by Nassau Capital and NAS, and the performance of all
obligations of Nassau Capital and NAS hereunder and thereunder, has been
taken. This Agreement has been, and the Shareholders Agreement and the
Registration Rights Agreement when executed will be, duly executed and
delivered by each of Nassau Capital and NAS and constitutes or when executed
will constitute a valid and binding obligation of each of Nassau Capital and
NAS, and is or when executed will be enforceable against each of Nassau
Capital and NAS in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the rights of creditors generally and to general principles of equity
(whether considered in a proceeding in equity or at law).
3.3 NO CONFLICT; GOVERNMENTAL APPROVALS AND NOTICES. Neither the
execution and delivery of this Agreement, the Shareholders Agreement and the
Registration Rights Agreement nor the consummation of the transactions
contemplated hereby and thereby will (i) violate the partnership agreement of
Nassau Capital, (ii) conflict with or constitute a violation of any law,
statute, judgment, order, decree or regulation applicable or relating to
Nassau Capital or NAS, or (iii) result in a breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon
any asset or property of Nassau Capital or NAS pursuant to, any agreement or
other instrument to
20
which Nassau Capital or NAS is a party or by which either or any portion of
their properties, assets or rights are bound or affected which could
reasonably be expected to have a material adverse effect on the transactions
contemplated hereunder. No consent, authorization, approval, permit or order
of, or notice to or filing with, any governmental authority is required in
connection with Nassau Capital's and NAS's execution, delivery and
performance of this Agreement, the Shareholders Agreement or the Registration
Rights Agreement, except to the extent that the failure to obtain any such
Governmental Consent could not reasonably be expected to have a material
adverse effect on the transactions contemplated hereby.
3.4 RESTRICTED SECURITIES. Each of Nassau Capital and NAS understands
that none of the Shares has been registered under the Securities Act of 1933,
as amended (the "1933 Act"), or registered or qualified under any state
securities laws, and, in addition to the restrictions on transfer set forth
in the Shareholders Agreement, that they may not transfer the Shares in a
manner inconsistent with their status as restricted securities.
3.5 INVESTMENT INTENT. The Securities are being purchased for Nassau
Capital's and NAS's own account and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the
meaning of the 1933 Act. Each of Nassau Capital and NAS understands that the
Shares have not been registered under the 1933 Act by reason of their
contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the 1933 Act pursuant to Section 4(2)
thereof, that certificates representing the Shares shall bear the legend
provided under the Shareholders Agreement (which legends shall be removed by
the Company at the request of Nassau Capital or NAS when appropriate) and
that the reliance of the Company and others upon this exemption is predicated
in part upon this representation and warranty by Nassau Capital and NAS.
Neither Nassau Capital nor NAS was formed for the specific purpose of
purchasing the Securities.
3.6 SOPHISTICATED INVESTOR. Each of Nassau Capital and NAS has such
knowledge and experience in financial and business matters and in investments
of this type that it is capable of evaluating the merits and risks of its
investment in the Securities and of making an informed investment decision.
Each of Nassau Capital and NAS is capable of bearing the economic risk
inherent in ownership of the Securities and retaining the Securities for an
indefinite period.
3.7 ACCESS TO INFORMATION. Each of Nassau Capital and NAS has been
given the opportunity to ask questions of, and receive and evaluate answers
and information from, the Company concerning the Company and its Subsidiaries
and the terms and conditions of its investment in the Securities, and been
provided with, or had access to, such documents and other information as it
deems necessary or useful in its evaluation of the merits and
21
risks of an investment in the Securities. Each of Nassau Capital and NAS has
received such advice as to the federal and state tax consequences of the
transactions contemplated by this Agreement from its own tax advisors as it
deems necessary.
3.8 NO BROKERS OR FINDERS. No person, firm or entity has or will
have, as a result of any act or omission by Nassau Capital or NAS, any right,
interest or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, in connection
with the transactions contemplated by this Agreement.
4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTORS. The
obligations of the Investors to consummate the purchase of the Securities is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and any of its Subsidiaries contained herein,
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though made on and as of the
Closing Date, except to the extent that any representation or warranty is
made as of a specified date, in which case such representation or warranty
shall be true and correct as of such date. Each Investor shall receive at
Closing a certificate of the Secretary or Assistant Secretary of the
Company, dated the Closing Date, certifying the foregoing.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have occurred or
been threatened any event which could have a Material Adverse Effect.
(c) SHAREHOLDERS AGREEMENT. The Company shall have entered into the
Third Amended and Restated Shareholders Agreement with the Investors and
certain of its other shareholders, substantially in the form of Exhibit C
hereto (the "Shareholders Agreement").
(d) REGISTRATION RIGHTS AGREEMENT. The Company shall have entered
into the Third Amended and Restated Registration Rights Agreement with the
Investors and certain of its other shareholders, substantially in the form
of Exhibit D hereto (the "Registration Rights Agreement").
(e) CERTIFICATE OF INCORPORATION. The Company shall have duly
adopted and filed the Amended and Restated Certificate of Incorporation,
in the form of Exhibit A attached hereto.
22
(f) XXXX REPURCHASE. Consummation of the Xxxx Repurchase shall occur
simultaneously with the Closing on the terms and conditions set forth on
Schedule 1.5 hereto and the Investors shall have received copies of the
Xxxx Repurchase Documents, certified by the Secretary or Assistant
Secretary of the Company as true and complete copies thereof together with
evidence of authorization by the Company of each Xxxx Repurchase Document,
and the transactions contemplated therein.
(g) NO LITIGATION. No action, suit, investigation, arbitration, or
administrative or governmental proceeding shall be pending, seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement, the Shareholders Agreement the Registration Rights Agreement
or the Xxxx Repurchase Documents.
(h) LEGAL OPINION. The Investors shall have received from Spolin &
Xxxxxxxxx, counsel for the Company, an opinion in the form of Exhibit E
hereto, addressed to the Investors.
(i) APPROVALS AND CONSENTS. The Company shall have duly received all
authorizations, waivers, consents, approvals, licenses, franchises, permits
and certificates (collectively, the "Approvals") by or of all federal,
state and local governmental authorities, and all material Approvals by or
of all other persons, necessary or advisable for the issuance of the
Shares, and all such Approvals shall be in full force and effect at the
time of the Closing. The Company shall have delivered to the Investors an
Officers' Certificate, dated the Closing Date, to such effect.
(j) PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Securities shall not, to the knowledge of the Company,
violate any applicable law or governmental regulation (including, without
limitation, Section 5 of the 0000 Xxx) and shall not as a result of any act
or omission by Company subject the Investors to any tax, penalty, liability
or other onerous condition under or pursuant to any applicable law or
governmental regulation. The Investors shall have received such
certificates or other evidence of compliance as the Investors may request.
(k) COMPLIANCE WITH SECURITIES LAWS. The issuance, offering and sale
of the Securities under this Agreement shall have complied with all
applicable requirements of federal and state securities laws, and the
Investors shall have received such evidence of compliance as the Investors
may request.
(l) INFORMATION AND MATERIALS. The Investors shall have received
such other information, as the Investors or their counsel may reasonably
request including, but not
23
limited to, an environmental audit report in form and substance
satisfactory to the Investors with respect to any environmental hazards,
conditions, liabilities or potential liabilities to which the Company and
its Subsidiaries may be subject.
(m) AMENDMENTS, WAIVERS, CONSENTS, ETC. The Investors and their
counsel shall have received evidence satisfactory to them that any and all
amendments or waivers of, or consents to, any agreement, instrument, or
document to which the Company is party or by which the Company is bound,
necessary or advisable, in the sole opinion of the Investors, to effectuate
the transactions contemplated hereby shall have been obtained by the
Company, including, without limitation, (i) a waiver of Sections 2.10(c)
and 9.24 of the Credit Agreement, dated as of November 2, 1994, among the
Company, the Subsidiary Guarantors parties thereto, the Lenders parties
thereto, and Internationale Nederlanden (U.S.) Capital Corporation, as
Agent thereunder, and (ii) a waiver of Sections 7K and 16F of the
Securities Purchase Agreement, dated as of November 2, 1994, among the
Company, Electra Investment Trust P.L.C. and Electra Associates, Inc., in
each and every case on terms satisfactory to the Investors.
(n) COMPLIANCE WITH AGREEMENTS. The Company and each of its
Subsidiaries shall be in compliance with all of the material covenants,
terms and conditions of all loan documents, shareholder agreements and
other material agreements of the Company (including all existing or
proposed credit facilities, loan agreements and the like) which will
remain or be outstanding immediately after the Closing Date, and such
agreements shall permit the performance by the Company and its
Subsidiaries of all of the obligations and transactions contemplated by
this Agreement. The Company shall have delivered to the Investors an
Officers' Certificate, dated the Closing Date, to such effect.
4.2 CONDITION PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the issuance and sale of the
Securities is subject to the condition that the representations and
warranties of Nassau Capital and NAS contained herein shall be true and
correct in all material respects on and as of the Closing Date, with the same
force and effect as though made on and as of the Closing Date, except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation or warranty shall be true and correct as of
such date. The Company shall receive at Closing a certificate from each of
the General Partner of Nassau Capital and the Manager of NAS, each dated the
Closing Date, certifying the foregoing.
24
5. AFFIRMATIVE COVENANTS
The Company covenants that from and after the date of this
Agreement through the Closing and thereafter (unless otherwise provided
below):
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. For so long as the
Company does not have any class of securities registered under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the Company will deliver,
or cause to be delivered to each Investor:
(a) within 30 days prior to the end of each fiscal year, but no
earlier than 60 days prior to the end of such fiscal year, a budget (on a
monthly basis) for the Company and its Subsidiaries for the following
fiscal year (including consolidating and consolidated statements of income,
cash flow and balance sheets prepared in accordance with GAAP), in form
heretofore provided to the Investors; PROVIDED, HOWEVER, that
notwithstanding the registration by the Company of any class of securities
under the 1934 Act, the Company will deliver such budgets to each Investor
if the Investors are not entitled at such time to a Designee on the Board
(each, as defined in Section 5.2(a) hereof);
(b) as soon as available and in any event within 30 days after the
end of each month, consolidating and consolidated statements of income and
cash flow of the Company and its Subsidiaries for such month and for the
period from the beginning of the current fiscal year to the end of such
month and a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such period and, beginning in fiscal year 1996, setting
forth, in each case, in comparative form, figures for the corresponding
month and period in the preceding fiscal year and the budget for such
month and for the period from the beginning of the current fiscal year
to the end of such month, all in reasonable detail and reasonably
satisfactory in form and scope to the Investors and certified by an
authorized financial officer of the Company as fairly presenting in all
material respects the financial condition and results of operations of
the Company and its Subsidiaries on a consolidated basis in accordance
with GAAP;
(c) as soon as practicable and in any event within 45 days after
the end of each fiscal quarter of the Company, consolidating and
consolidated statements of income and cash flow of the Company and its
Subsidiaries for such quarter and for the period from the beginning of
the current fiscal year to the end of such quarter and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
quarter, setting forth, in each case, in comparative form, figures for
the corresponding quarter in the preceding fiscal year and the budget for
such quarter, all in
25
reasonable detail and satisfactory in form and scope to the Investors, and
certified by an authorized financial officer of the Company as fairly
presenting in all material respects the financial condition and results of
operations of the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP;
(d) as soon as available and in any event within 120 days after the end
of each fiscal year, consolidating and consolidated statements of income,
stockholders' equity and cash flow of the Company and its Subsidiaries for
such fiscal year, and the related consolidating and consolidated balance
sheets of the Company and its Subsidiaries as at the end of such fiscal
year, setting forth, in each case, in comparative form, corresponding
consolidated and consolidating figures from the preceding fiscal year, all
in reasonable detail and reasonably satisfactory in form and scope to the
Investors, and accompanied (i) in the case of said consolidated statements
and balance sheet of the Company, by an opinion thereon of independent
certified public accountants of recognized national standing (which shall
be generally recognized as one of the "Big Six" independent public
accounting firms), which opinion shall state that said consolidated
financial statements fairly present the consolidated financial condition
and results of operations of the Company and its Subsidiaries as at the end
of, and for, such fiscal year in accordance with GAAP, and (ii) in the case
of said consolidating statements and balance sheets, by a certificate of an
authorized financial officer of the Company, which certificate shall state
that said consolidating financial statements fairly present the respective
individual unconsolidated financial condition and results of operations of
the Company and of each of its Subsidiaries, in each case in accordance
with GAAP, consistently applied, as at the end of, and for, such fiscal
year;
(e) promptly upon transmission thereof to the shareholders of the
Company generally or to any other security holder of the Company,
including, without limitation, any holder of Debt, copies of all financial
statements, financial analyses, notices, certificates (including, without
limitation, the compliance certificate to be furnished under the Credit
Agreement, dated November 2, 1994, between the Company, the Subsidiary
Guarantors named therein, the Lenders named therein, The Provident Bank
("Provident") and Internationale Nederlanden (U.S.) Capital Corporation
("ING"), as the same has been, or may be, amended, modified or
supplemented (the "Credit Agreement")), annual reports and proxy
statements so transmitted;
(f) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by independent
accountants in connection with
26
any annual, interim or special audit of the books of the Company or any of
its Subsidiaries made by such accountants, or any management letters or
similar document submitted to the Company or any of its Subsidiaries by
such accountants;
(g) promptly upon any material revision to the budgets referred to in
paragraph (a) above, such monthly budgets, as revised;
(h) promptly upon any officer of the Company obtaining knowledge of
any event of default under any credit agreement, loan agreement or
indenture that the Company is party to; and
(i) with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as such Investor may
reasonably request.
5.2 BOARD MEMBER: ATTENDANCE AT BOARD MEETINGS.
(a) For so long as the Investors hold not less than 5% of the
Common Equivalent Shares (as defined in the Shareholders Agreement), at the
Investors' request, the Company will cause one person designated by the
Investors (the "Designee") to be included in any list of persons nominated by
management of the Company for election as members of the Board of Directors
of the Company (the "Board") and will take all actions reasonably within its
power to cause the Designee to be elected a member of the Board. The
Designee, as a director, will have the right to be a member of the Audit
Committee and the Compensation Committee of the Board, or such other
committees of the Board performing the functions typically performed by such
committees.
(b) The Company will reimburse such director for all costs and
expenses (including travel expenses) incurred in connection with such
director's attendance at meetings of the Board or any committee of the Board
upon which such director serves. The Company will pay such director annual
fees and fees for attending Board or committee meetings, if any such fees are
paid to directors.
5.3 RESERVATION OF SHARES. The Company will reserve and keep
reserved at all times sufficient shares of its Common Stock for issuance upon
conversion of the Securities and, upon such conversion, the Company will
promptly issue and deliver the shares of Common Stock required to be
delivered, and such shares, when issued and delivered, will be validly
issued, fully paid and nonassessable.
5.4 USE OF PROCEEDS. The Company will use the proceeds from the
sale and issuance of the Securities for the purpose described in Section 1.5
hereof.
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6. INDEMNIFICATION
6.1 INDEMNIFICATION.
(a) From and after the Closing, the Company shall indemnify and
save harmless the Investors and their respective officers, directors,
members, stockholders, partners and employees (as applicable) (the "Investor
Indemnitees") from and against any and all loss, cost, damage or expense
(including court costs and reasonable attorneys' fees) whatsoever asserted
against or incurred by such Investor Indemnitee resulting from or arising out
of any breach of any representation, warranty or covenant of the Company
contained in this Agreement.
(b) From and after the Closing, each Investor shall severally
indemnify and save harmless the Company and its officers, directors,
stockholders and employees (the "Company Indemnitees") from and against any
and all loss, cost, damage or expense (including court costs and reasonable
attorneys' fees) whatsoever asserted against or incurred by such Company
Indemnitee resulting from or arising out of any breach of any representation
or warranty made by such Investor in this Agreement.
6.2 CERTAIN PROCEDURES. In the event that a claim is made by a
third party against any Investor Indemnitee or Company Indemnitee (the
"Claimant") which, if successful, would entitle such Claimant to
indemnification hereunder, or any Claimant desires to make a claim against
any party to this Agreement (the "Indemnitor") under this Section 6, the
Claimant shall give prompt notice to the Indemnitor of any actions, suits,
proceedings and demands at any time instituted against or made upon Claimant
and for which the Claimant claims a right to indemnification hereunder
(including the amount and circumstances surrounding any claim); PROVIDED that
the failure of a Claimant to give notice as provided in this Section 6.2
shall not relieve the Indemnitor of its obligations hereunder, except to the
extent that the Indemnitor is actually prejudiced by such failure to give
notice. The Indemnitor shall within 30 days after receipt of notice
undertake to defend, adjust, compromise or settle the action, suit,
proceeding or demand on which such notice is based, in the name of the
Claimant or otherwise as the Indemnitor shall elect. Notwithstanding the
foregoing, the Claimant shall have the right to defend, adjust, compromise or
settle any action, suit, proceeding or demand on its own behalf and to be
indemnified therefor if (a) the Indemnitor does not provide the undertaking
referred to in the previous sentence, (b) the Indemnitor has not employed
counsel reasonably satisfactory to the Claimant, or (c) in the sole
discretion of the Claimant, there is a conflict or potential conflict of
interest between the Claimant and the Indemnitor or a legal defense available
to it which differs from or is additional to those available to Indemnitor,
in such action, suit or proceeding. The Indemnitor shall not, except with
the consent of the Claimant, enter into
28
any settlement that does not include as a term thereof an unconditional
release of the Claimant from all liability with respect to the applicable
claim.
7. WARRANTS
7.1 TERM; EXERCISE. Subject to the terms and conditions contained
in this Agreement and in the Warrants, the Warrants are exercisable, in the
manner set forth in the Warrants, in whole or in part, at any time and from
time to time during the period commencing on the Effective Date (as defined
in each such Warrant) and ending at 5:00 p.m. New York City time on December 31,
2003, (the "Expiration Date"), and shall be void thereafter.
7.2 SERIES OF WARRANTS AND TRIGGERING EVENT. (a) At the Closing,
the Investors will receive the following Warrants exercisable into a maximum
of 7% of the Common Stock on a Fully Diluted basis (hereinafter defined):
Percentage of
Series Shares for Which
of Warrant Exercisable
---------- ----------------
Series E up to 2%
Series F 2%
Series G 3%
(b) The Series E Warrants will be essentially identical to the
Series F and Series G Warrants in all respects, except that, in contrast to
the Series F and Series G Warrants, the occurrence of one or more Registered
Public Offerings (hereinafter defined) prior to December 31, 1997 will
determine the Warrant Value (as defined in the Series E Warrant), and,
provided that a Triggering Event (hereinafter defined) shall not have
occurred prior to December 31, 1997, cause such Warrant to become exercisable
and freely transferable as of December 31, 1997. The Warrant Value shall be
determined in accordance with the terms of such Warrant. If a Triggering
Event occurs prior to December 31, 1997, whether or not a Registered Public
Offering shall have occurred prior to the occurrence of such Triggering
Event, the Series E Warrants, and all other Warrants not then exercisable,
shall be void as of the date of such Triggering Event.
(c)(i) The Series F and Series G Warrants will be identical in all
respects and will become exercisable and may only be transferred if not
terminated pursuant to paragraph (ii) below prior to the following
corresponding dates:
29
Series of Warrant
If Not Terminated Becoming Exercisable
Prior To: and Freely Transferable
----------------- -----------------------
December 31, 1998 Series F
December 31, 1999 Series G
(ii) With respect to the Series F and Series G Warrants, (A) if one
or more Registered Public Offerings occurs prior to December 31, 1997, but no
Triggering Event shall have occurred, then the Series F and Series G Warrants
shall remain unaffected and shall not be void as a result of such Registered
Public Offering, and (B) if a Triggering Event occurs prior to the date any
series of Warrant would otherwise become exercisable or transferable, then
such series of Warrant, and all other series of Warrants not then
exercisable, shall be void as of the date of occurrence of such Triggering
Event.
(d) For purposes hereof, the following terms shall have the
following meanings:
"Fully Diluted" shall mean, at any point in time, the number of
common shares outstanding, increased by all common equivalent shares (stock
options, warrants, convertible securities and any other security or
instrument, whether in or out of the money, that could result in additional
common shares being issued at any time in the future) at the time outstanding.
"Registered Public Offering" shall mean the closing prior to
December 31, 1997 of an underwritten public offering for shares of Common
Stock of the Company pursuant to a registration statement under the 1933 Act,
with proceeds to the Company of $25,000,000 or more, and valuing the total
common equity of the Company, on a Fully Diluted basis, at an amount equal to
or greater than $60,000,000 but less than $75,000,000.
"Triggering Event" shall mean the occurrence of (i) the sale of all
or substantially all of the stock or assets of the Company for cash in an
amount equivalent to a common equity valuation of $60,000,000 or more or (ii)
a Nassau QPO.
"Nassau QPO" shall mean the closing of an underwritten public
offering for shares of Common Stock of the Company pursuant to a registration
statement under the 1933 Act, with proceeds to the Company of $25,000,000 or
more, and valuing, at closing, the total common equity of the Company, on a
Fully Diluted basis, at an amount equal to or greater than the Minimum Equity
Market Value applicable to the year in which such offering occurs.
30
"Minimum Equity Market Value" shall mean for any period, the amount
set forth below opposite such period:
Period Minimum Equity Market Value
------ ---------------------------
From the Closing Date to
December 30, 1997 $75,000,000
December 31, 1997 to
December 30, 1998 $95,000,000
December 31, 1998 to
December 30, 1999 $120,000,000;
PROVIDED, HOWEVER, that as of the date of the closing of any underwritten
public offering (the "Calculation Date"), if there has been an increase from
the date hereof in the number of shares of Common Stock outstanding on a
Fully Diluted basis (without giving effect to the underwritten public
offering giving rise to such calculation), then the Minimum Equity Market
Value shall be adjusted and shall be equal to the product of (A) the
applicable Minimum Equity Market Value set forth above for the period in
question MULTIPLIED BY (B) a fraction (i) the numerator of which is the
number of shares of Common Stock outstanding on a Fully Diluted basis on such
Calculation Date and (ii) the denominator of which is the number of shares of
Common Stock outstanding on a Fully Diluted basis on the date hereof (after
giving effect to the purchase of Securities hereunder).
7.3 PUT. (a)(i) If no Triggering Event shall have occurred by
December 31, 2000, then, the Investors or other holder of the Warrants may,
at any time thereafter, by giving written notice to the Company (the "Put
Notice"), require the Company to repurchase (the "Put") all or any portion of
the Warrants held by the Investors or other holder of the Warrants for an
amount equal to the Put Amount (as defined in the Securities Purchase
Agreement dated as of November 2, 1994 among the Company, Electra Investment
Trust P.L.C. and Electra Associates, Inc. (the "Electra Securities
Agreement")) and corresponding to that number of shares of Common Stock then
issuable upon exercise of the Warrants designated in the Put Notice. The
Company shall pay to the Investors, subject to Section 7.3(a)(iii) hereof
such Put Amount within 30 days of the date of the Put, or, if sooner, at the
same time that ING, Provident, Banc One or Electra is required to be paid
pursuant to the terms of the ING Warrant, the Provident Warrant, the Banc One
Warrant and the Electra Warrants (each as defined in the Electra Securities
Agreement), respectively, and shall execute and deliver to the Investors a
promissory note evidencing such Put Amount; any unpaid balance of the Put
Amount shall bear interest, which interest shall be paid together with any
payment of the Put Amount, at a rate of 14% per annum.
31
(ii) Immediately upon receipt of (i) a Put Notice or (ii) notice,
whether prior to or after December 31, 2000, from the holders of any of the
ING Warrant, the Provident Warrant, the Banc One Warrant or the Electra
Warrants (such holders being referred to herein collectively as the "Put
Holders") that the Investors or such Put Holders intend to exercise put
rights in connection with the repurchase of any of their warrants by the
Company, the Company shall, before repurchasing any such warrants, give
written notice thereof to the Investors and/or all other Put Holders, as the
case may be. For a period of twenty (20) days following receipt of such
notice, the Investors and each Put Holder shall be entitled, by written
notice to the Company, the Investors and/or each Put Holder, as the case may
be, to elect to require the Company to repurchase for cash its pro rata share
(on the basis of the number of shares of Common Stock then issuable upon
exercise of all of the warrants held by the Investors and each such Put
Holder) of the warrants held by the Investors and each such Put Holder. If,
at the expiration of such twenty day period the Investors or any Put Holders
have not elected to have the Company repurchase their warrants, the Company
shall repurchase only those warrants for which notice has been received.
(iii) If the Company shall not have funds legally available in the
amount necessary to repurchase all warrants of the Investors and Put Holders
with respect to which notice has been received, then such warrants shall be
repurchased by the Company (A) first, on a pro rata basis in accordance with
the number of shares of Common Stock then issuable upon exercise of all of
the warrants held the Put Holders, and (B) second, to the extent of funds
legally available therefor, on a pro rata basis in accordance with the number
of shares of Common Stock then issuable upon exercise of all of the warrants
held by the Investors. Any Put not satisfied in full in cash shall remain an
obligation of the Company and shall be evidenced by a promissory note due
within 366 days and hearing interest at a rate of 14% per annum, which
interest shall be paid together with the Put Amount.
7.4 ANTIDILUTION PROVISIONS. The percentage of Common Stock for
which the Warrants may be exercised shall be adjusted as set forth in the
Warrants in order to preserve the relative position of the holder of the
Warrants vis-a-vis the percentage of the issued and outstanding shares of
Common Stock which such holder may acquire upon exercise of the Warrants.
7.5 REGISTRATION. Pursuant to the terms of the Registration
Rights Agreement, the Investors shall have and be entitled to (i) three
demand and (ii) unlimited piggyback registrations for shares of Common Stock
issuable upon exercise of the Warrants. The Investors' demand registration
rights will have preference over other demand registration rights granted by
the Company (with the exception of any such right granted to Electra pursuant
to the Electra Securities Agreement, with which
32
the right of the Investors hereunder shall rank pari passu; PROVIDED that
Electra shall have amended the Electra Securities Agreement to provide that
such right of Electra shall rank pari passu with that of the Investors
hereunder), and the Investors' piggyback registration rights will be pro rata
with any other holders of capital stock of the Company participating in such
registration, to the extent and as provided in the Registration Rights
Agreement.
7.6 VOTING. To the extent permitted by applicable law, the
Warrants shall entitle the holders thereof to vote with the Common Stock of
the Company that number of votes equal to the number of shares of Common
Stock issuable from time to time upon exercise of the Warrants on any matters
upon which the holders of Common Stock are entitled to vote.
8. MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made herein shall survive the Closing (i) with
respect to the representations and warranties of the Company set forth in
Section 2.20, until the closing of an underwritten public offering, (ii) with
respect to the representations and warranties of the Company set forth in
Section 2.14, until three months after the expiration of the applicable
statute of limitations with respect to the subject matter thereof, and
(iii) with respect to all other representations and warranties of any party
hereunder, for a period of two (2) years after the Closing Date.
8.2 COSTS AND EXPENSES; TRANSFER TAXES. Whether or not the
transactions contemplated by this Agreement are consummated, (a) the Company
shall pay all fees and expenses incurred by, or on behalf of, it and (b) the
Company shall promptly reimburse the Investors for their reasonable
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including without limitation, the
reasonable fees and expenses of their legal counsel, accountants and
advisors. The Company shall pay all transfer taxes and charges attributable
to the transfer of the Securities to the Investors.
8.3 CONFIDENTIALITY; PRESS RELEASES.
(a) Each Investor severally agrees that all information and
documents gained by such Investor and its directors, officers, employees,
agents, representatives, consultants or affiliates pursuant to such
Investor's investigations of the Company and its Subsidiaries have been and
shall be kept confidential by such Investor and will not be used by such
Investor or its directors, officers, employees, agents, representatives,
consultants or affiliates for any purpose other
33
than in connection with such Investor's investment in the Company or as
required by law.
(b) The parties hereto agree that no party shall issue or cause
publication of any press release or other announcement or public
communication with respect to this Agreement, the Shareholders Agreement, the
Registration Rights Agreement or the transactions contemplated hereby or
thereby without the consent of the others, which consent shall not
unreasonably be withheld; provided that nothing herein shall prohibit any
party from issuing or causing publication of any such press release,
announcement or public communication to the extent that such action is
required by law.
8.4 PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon, and inure to the benefit of, and be
enforceable by, only the parties hereto; PROVIDED, HOWEVER, that the parties
hereto may enforce the provisions of Section 6 hereof on behalf of their
respective Investor Indemnitees and Company Indemnitees. In no event may
either party assign either its rights or obligations hereunder without the
written agreement of the other party.
8.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this
Agreement are part of the Agreement and shall be construed with and as an
integral part of this Agreement to the same extent as if the same had been
set forth in full herein.
8.6 HEADINGS. The headings of the Sections of this Agreement have
been inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement.
8.7 AMENDMENTS, WAIVERS, ETC. Neither this Agreement nor any term
hereof may be amended except by an instrument in writing which refers to this
Agreement and is executed by the Company and each Investor whose rights are
affected thereby, and neither this Agreement nor any term hereof may be
released, waived or discharged in any manner except by an instrument in
writing which refers to this Agreement and is executed by the party against
which such release, waiver or discharge is asserted.
8.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OP NEW YORK.
8.9 NOTICES. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given on the earlier of (a) the date
actually received by the party in question, by whatever means and however
addressed, or (b) the date received if sent by telecopy, or on the date of
personal delivery if delivered by hand, or on the date signed for if sent
34
by an overnight delivery service, to the following addresses, or to such
other address as any party may request by notifying the other parties hereto:
(a) If to the Company:
XxXxxxx Aircraft Holdings, Inc.
Attention: President
0000 Xxxxxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
XxXxxxx Aircraft Holdings, Inc.
Attention: Chief Executive Officer
000 Xxxxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Spolin & Xxxxxxxxx
Attention: Xxxxxxx X. Xxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(b) If to Nassau Capital or NAS:
x/x Xxxxxx Xxxxxxx X.X.X.
Attn: Xxxxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The failure of any party to deliver any notice to any of the above
persons specified to receive copies of notices, demands or requests shall not
limit the effectiveness of any notice given in accordance herewith to the
Company or any Investor. The foregoing shall not preclude the effectiveness
of actual written notice actually received by any party delivered by any
means other than those specified above.
35
8.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.11 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances will not be
affected thereby and may be enforced to the greatest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
XXXXXXX AIRCRAFT HOLDINGS, INC.
By: /s/ R. Xxxx XxXxxxx
-------------------------------------
Name:
Title:
NASSAU CAPITAL PARTNERS L.P.
By: NASSAU CAPITAL L.L.C.
General Partner
By:
-------------------------------------
Name:
Title:
NAS PARTNERS I L.L.C.
By:
-------------------------------------
Name:
Title:
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
XXXXXXX AIRCRAFT HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
NASSAU CAPITAL PARTNERS L.P.
By: NASSAU CAPITAL L.L.C.
General Partner
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
NAS PARTNERS I L.L.C.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
