SECURITIES PURCHASE AGREEMENT
BY AND AMONG
SIMULA, INC.
AND
CERTAIN SUBSIDIARIES OF SIMULA, INC.,
AS COMPANY PARTIES,
AND
LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP,
AS PURCHASER
------------------------------------------------
$5,000,000 Principal Amount Secured Senior Note Due 2000
(Term A Note)
$15,000,000 Principal Amount Secured Senior Note Due 2003
(Term B Note)
Warrant to Purchase 850,000 Shares of Common Stock
------------------------------------------------
Dated as of December 31, 1999
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TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS; ACCOUNTING
TERMS.........................................................................2
1.1
Definitions.....................................................................
................2
1.2 Accounting Terms and
Computations..............................................................24
1.3 Independence of
Covenants......................................................................2
4
1.4 Captions; Construction and
Interpretation......................................................24
1.5
Determinations..................................................................
...............25
1.6 Knowledge of the
Company.......................................................................25
2. PURCHASE AND SALE OF THE
SECURITIES..................................................................25
2.1
Authorization...................................................................
...............25
2.2 Purchase of the Securities; Issue
Price........................................................25
2.3
Closing.........................................................................
...............25
3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY........................................................26
3.1 Organization and
Qualification.................................................................26
3.2 Corporate or Other
Power.......................................................................26
3.3 Authorization; Binding
Obligations.............................................................26
3.4
Subsidiaries....................................................................
...............27
3.5 Conflict with Other Instruments; Existing Defaults;
Ranking....................................28
3.6 Governmental and Other Third Party
Consents....................................................28
3.7
Capitalization..................................................................
...............29
3.8 Validity and Issuance of Warrant
Shares........................................................30
3.9 Company SEC
Documents.......................................................................
...30
3.10 Financial
Statements......................................................................
.....31
3.11 Existing Indebtedness; Existing Liens; Investments;
Etc........................................32
3.12 Absence of Certain
Changes.....................................................................33
3.13 Material
Contracts.......................................................................
......35
3.14 Accounts
Receivable......................................................................
......37
3.15 Labor
Relations.......................................................................
.........37
3.16 Employee Benefit Plans;
ERISA..................................................................38
3.17
Taxes...........................................................................
...............42
3.18
Litigation......................................................................
...............42
3.19 Transactions with
Affiliates...................................................................43
3.20 Investment Company
Act.........................................................................44
3.21 Public Utility Holding Company
Act.............................................................44
3.22 Compliance with Laws; Operating
Licenses.......................................................44
3.23 Title to
Property........................................................................
......45
3.24 Real
Property........................................................................
..........45
3.25 Environmental
Matters.........................................................................
.46
3.26 Intellectual
Property........................................................................
..47
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PAGE
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3.27 Nature of
Business........................................................................
.....48
3.28 Powers of
Attorney........................................................................
.....48
3.29 Listing of Common
Stock........................................................................48
3.30
Insurance.......................................................................
...............48
3.31
Customers.......................................................................
...............49
3.32
Suppliers.......................................................................
...............49
3.33 Business
Relationships...................................................................
......49
3.34 Personal Property
Leases.......................................................................49
3.35 Employment
Agreements......................................................................
....50
3.36
Solvency........................................................................
...............50
3.37 Use of Proceeds; Margin
Stock..................................................................50
3.38 Depository and Other
Accounts..................................................................50
3.39 Year 2000
Compliance......................................................................
.....51
3.40 Books and
Records.........................................................................
.....51
3.41 Burdensome Obligations; Future
Expenditures....................................................51
3.42 Brokers; Certain
Expenses......................................................................51
3.43
Disclosure......................................................................
...............52
4. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER......................................................52
4.1
Organization....................................................................
...............52
4.2
Authorization...................................................................
...............52
4.3 Due Execution and Delivery; Binding
Obligations................................................52
4.4 No
Violation.......................................................................
............52
4.5 Investment
Intent..........................................................................
....53
4.6 Accredited Investor
Status.....................................................................53
4.7 Purchaser
Consents........................................................................
.....53
4.8
Brokers.........................................................................
...............53
5. CONDUCT PRIOR TO
CLOSING.........................................................................
....53
5.1 Conduct of Business Prior to
Closing...........................................................53
5.2 Access to Information and
Documents............................................................55
5.3 Non-
Solicitation....................................................................
...........55
5.4 Covenant to
Close...........................................................................
...56
6. CONDITIONS TO THE OBLIGATIONS OF THE
PURCHASER.......................................................56
6.1 Closing
Date............................................................................
.......56
6.2 Representations and Warranties; No
Default.....................................................56
6.3 Payment of Purchaser
Expenses..................................................................56
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6.4 Purchase Permitted By Applicable
Laws..........................................................56
6.5 No Material Adverse
Change.....................................................................57
6.6 No Injunction or
Order.........................................................................57
6.7 Delivery of Certain Closing
Documents..........................................................57
6.8 Collateral
Documents.......................................................................
....58
6.9 Bank Credit
Facility........................................................................
...58
6.10 Sale of Airline
Interiors......................................................................5
8
6.11 Opinion of
Counsel.........................................................................
....59
6.12 Delivery of Corporate
Documents................................................................59
6.13 Repayment of Existing Indebtedness; UCC Termination
Statements.................................60
6.14
Insurance.......................................................................
...............60
6.15 Completion of Due Diligence
Investigation......................................................60
6.16 Phase I Environmental
Assessments..............................................................60
6.17 Delivery of Financial
Projections..............................................................61
6.18 [Intentionally
Omitted]........................................................................
61
6.19 Third Party
Consents........................................................................
...61
6.20 Capital
Structure.......................................................................
.......61
6.21 Proceedings
Satisfactory....................................................................
...61
7. CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY.........................................................61
7.1 Representations and
Warranties.................................................................62
7.2 Purchase Permitted By Applicable
Laws..........................................................62
7.3 No Injunction or
Order.........................................................................62
7.4 Payment for
Securities......................................................................
...62
8. INDEMNIFICATION; FEES AND
EXPENSES...................................................................62
8.1 Transfer
Taxes...........................................................................
......62
8.2
Losses..........................................................................
...............62
8.3 Indemnification
Procedures.....................................................................6
4
8.4
Contribution....................................................................
...............64
8.5 Reimbursement of Deal-Related Costs and
Expenses...............................................65
8.6 Costs of
Collection......................................................................
......65
9. AFFIRMATIVE
COVENANTS.......................................................................
.........66
9.1 Payment of Notes and Other
Obligations.........................................................66
9.2 Performance of Investment
Documents............................................................66
9.3 Information Reporting
Requirements.............................................................66
9.4 SEC
Documents.......................................................................
...........69
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9.5 Compliance with
Laws...........................................................................7
0
9.6 Legal
Existence.......................................................................
.........70
9.7 Books and Records;
Inspections.................................................................70
9.8 Maintenance of
Properties......................................................................
71
9.9
Insurance.......................................................................
...............71
9.10
Taxes...........................................................................
...............72
9.11 ERISA
Matters.........................................................................
.........72
9.12 Communication with
Accountants.................................................................73
9.13 Compliance with Material
Contracts.............................................................73
9.14 Fiscal Year
End.............................................................................
...73
9.15 Environmental
Matters.........................................................................
.73
9.16 Additional Company
Parties.....................................................................75
9.17 NYSE
Listing.........................................................................
..........75
9.18 C&C
Notes...........................................................................
...........75
9.19 Bridge
Fee.............................................................................
........75
9.20 Dissolution of Simula Protective UK and Intaero
Ltd............................................76
9.21 Future
Information.....................................................................
........76
9.22 Further
Assurances......................................................................
.......76
9.23 Survival of Certain Affirmative
Covenants......................................................76
10.NEGATIVE AND FINANCIAL
COVENANTS.....................................................................77
10.1 Limitations on
Indebtedness....................................................................
77
10.2 Limitations on
Liens...........................................................................
77
10.3 Limitations on
Investments.....................................................................
78
10.4 Limitations on Restricted Payments by the
Company..............................................78
10.5 Limitations on Payment Restrictions Affecting
Subsidiaries.....................................78
10.6 Limitations on Transactions With
Affiliates....................................................78
10.7 Change in
Business........................................................................
.....79
10.8 Sales of
Receivables.....................................................................
......79
10.9 Fundamental
Changes.........................................................................
...79
10.10 Agreements Affecting Capital Stock and Indebtedness; Amendments to
Material
Contracts.......................................................................
......80
10.11 Conditional
Sales...........................................................................
...80
10.12 Margin
Stock...........................................................................
........80
10.13 No Payments Upon a Simula Change of
Control....................................................80
10.14 Sublease of Airline Interiors
Lease............................................................81
10.15 Financial
Covenants.......................................................................
.....81
10.16 Survival of Certain Negative
Covenants.........................................................84
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(CONTINUED)
PAGE
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11.DEFAULTS AND
REMEDIES........................................................................
........84
11.1 Events of
Default.........................................................................
.....84
11.2
Acceleration....................................................................
...............88
11.3 Other
Remedies........................................................................
.........88
11.4 Appointment of
Receiver........................................................................
88
11.5 Waiver of Past
Defaults........................................................................
89
12.TERMINATION..................................................................
........................89
12.1
Termination.....................................................................
...............89
12.2 Effect of
Termination.....................................................................
.....90
12.3
Waiver..........................................................................
...............90
12.4 Alternative Transaction
Fee....................................................................90
13.MISCELLANEOUS................................................................
........................91
13.1 Survival of Representations and Warranties; Purchaser
Investigation............................91
13.2 Consent to
Amendments......................................................................
....91
13.3 Entire
Agreement.......................................................................
........91
13.4
Severability....................................................................
...............92
13.5 Successors and Assigns;
Assignments............................................................92
13.6
Notices.........................................................................
...............92
13.7
Counterparts....................................................................
...............93
13.8 Governing
Law.............................................................................
.....94
13.9 Consent to Jurisdiction and
Venue..............................................................94
13.10
Confidentiality.................................................................
...............95
13.11 Limitation of
Liability.......................................................................
.95
13.12
Publicity.......................................................................
...............95
13.13 WAIVER OF TRIAL BY
JURY........................................................................96
v
EXHIBITS
Exhibit A-1 -- Form of Term A Note
Exhibit A-2 -- Form of Term B Note
Exhibit B -- Form of Warrant
Exhibit C -- Form of Compliance Certificate
DISCLOSURE SCHEDULES
Schedule 3.4 -- Subsidiaries
Schedule 3.5(a) -- No Conflicts
Schedule 3.5(b) -- No Default or Breach
Schedule 3.5(c) -- Financing Restrictions
Schedule 3.5(d) -- Pari Passu Indebtedness
Schedule 3.6 -- Consents
Schedule 3.7(a) -- Capitalization (Company)
Schedule 3.7(b) -- Capitalization (Subsidiary)
Schedule 3.9 -- Company SEC Documents
Schedule 3.10(c) -- Pro Forma Closing Balance Sheet
Schedule 3.11(a) -- Existing Indebtedness, Liens, Investments, Etc.
Schedule 3.11(c) -- Post-Closing Indebtedness
Schedule 3.12(a) -- Absence of Certain Changes
Schedule 3.13(b) -- Material Contracts
Schedule 3.13(c) -- No Restrictive Agreements
Schedule 3.14 -- Accounts Receivable
Schedule 3.16 -- Employee Benefit Plans; ERISA
Schedule 3.18 -- Litigation
Schedule 3.19 -- Transactions with Affiliates
Schedule 3.22 -- Operating Licenses
Schedule 3.24 -- Real Property
Schedule 3.25 -- Environmental Matters
Schedule 3.26 -- Intellectual Property
Schedule 3.29 -- Listed Securities
Schedule 3.30 -- Insurance
Schedule 3.31 -- Significant Customers
Schedule 3.32 -- Suppliers
Schedule 3.34 -- Personal Property Leases
Schedule 3.35 -- Employment Agreements
Schedule 3.37 -- Use of Proceeds
Schedule 3.38 -- Depository and Other Accounts
vi
SIMULA, INC. AND SUBSIDIARIES
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of the 31st day
of December 1999 (this "AGREEMENT"), by and between SIMULA, INC., an Arizona
corporation (the "COMPANY"), SIMULA SAFETY SYSTEMS, INC., an Arizona corporation
("SSSI"), SIMULA TRANSPORTATION EQUIPMENT CORPORATION (formerly known as
Intaero, Inc.), an Arizona corporation ("SIMTECH"), AIRLINE INTERIORS, INC., an
Arizona corporation ("AIRLINE INTERIORS"), ARTCRAFT INDUSTRIES CORP., an Arizona
corporation ("ARTCRAFT INDUSTRIES"), SIMULA COMPOSITES CORPORATION (formerly
known as Viatech, Inc.), a Delaware corporation ("COMPOSITES"), SIMULA
AUTOMOTIVE SAFETY DEVICES, INC., an Arizona corporation ("SASD"), SIMULA
TECHNOLOGIES, INC., an Arizona corporation ("STI"), INTERNATIONAL CENTER FOR
SAFETY EDUCATION, INC., an Arizona corporation ("ICSE"), SIMULA POLYMER SYSTEMS,
INC., an Arizona corporation ("POLYMER") SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized and existing under the laws of the United Kingdom
("SIMULA AUTOMOTIVE UK"), and CCEC CAPITAL CORP., an Arizona corporation
("CCEC"), on the one hand, and LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P., a
California limited partnership (the "PURCHASER"), on the other hand. The
Company, SSSI, SimTech, Airline Interiors, Artcraft Industries, Composites,
SASD, STI, ICSE, Polymer, Simula Automotive UK and CCEC may be individually
referred to as a "COMPANY PARTY" and collectively referred to as the "COMPANY
PARTIES."
R E C I T A L S
A. The Company Parties are engaged as an integrated group in the
business of designing, manufacturing, marketing and selling advanced occupant
seating and restraint systems for installation in air, ground and sea transport
vehicles, developing armor, polymers and technologies related thereto, and
testing of safety devices and technologies related thereto, for the military,
commercial airline and automotive industries.
B. In connection with the financing of the business operations of the
Company Parties, the Company Parties have authorized the joint and several
issuance and sale to the Purchaser of Secured Senior Notes as provided herein in
the aggregate principal amount of $20,000,000, and the Purchaser is willing to
purchase such Secured Senior Notes on the terms and subject to the conditions
set forth herein.
C. To induce the Purchaser to purchase the Secured Senior Notes, the
Company is willing to issue and sell to the Purchaser a warrant to purchase
850,000 shares of Common Stock (as such term is defined herein), which shares
will represent, immediately after the closing of the transactions contemplated
hereby, approximately 4.8988% of the Common Stock on a Fully Diluted Basis (as
such term is defined herein).
D. To further induce the Purchaser to purchase the Secured Senior
Notes, the Company Parties and certain of their Affiliates (as such term is
defined herein) are willing to enter into other Investment Documents (as such
term is defined herein), including, without limitation, an Investor Rights
Agreement under which the Company will grant to the Purchaser or one of its
Affiliates certain investment monitoring and other rights with respect to the
Company and its Affiliates in connection with the transactions contemplated by
this Agreement.
E. To further induce the Purchaser to purchase the Secured Senior
Notes, and in consideration therefor, the Company Parties have agreed, at the
request of one another, to guaranty absolutely and unconditionally the
Guarantied Obligations (as such term is defined herein). Each Company Party has
derived and expects to derive, directly or indirectly, a substantial benefit
from the purchase by the Purchaser of the Secured Senior Notes, both in its
separate capacity and as a member of the integrated group.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS; ACCOUNTING TERMS.
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to the
singular and the plural forms thereof):
"AFFILIATE" shall mean, with respect to any specified Person,
(i) any other Person that, directly or indirectly, owns or controls, or
has the right to acquire, whether beneficially or of record, or as a
trustee, guardian or other fiduciary (other than a commercial bank or
trust company), five percent (5%) or more of the Capital Stock of such
specified Person, (ii) any other Person that, directly or indirectly,
controls, is controlled by, is under direct or indirect common control
with, or is included in the Immediate Family of, such specified Person
or any Affiliate of such specified Person, or (iii) any officer,
director, joint venturer, partner or member of such specified Person,
or any Person included in the Immediate Family of any of the foregoing.
For the purposes of this definition, the term "CONTROL," when used with
respect to any specified Person, shall mean the power to direct or
cause the direction of management or policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED"
have meanings correlative of the foregoing. Notwithstanding anything to
the contrary, for the purposes of this Agreement and the other
Investment Documents, neither the Purchaser nor any of its Affiliates,
officers, directors, partners or employees shall be deemed to be an
Affiliate of the Company or any other Company Party.
2
"AGREEMENT" shall mean this Agreement, together with the
Exhibits and the Disclosure Schedules, in each case as amended,
restated, supplemented or otherwise modified from time to time.
"AIRLINE INTERIORS" shall have the meaning set forth in the
preamble.
"AIRLINE INTERIORS BUYER" shall mean Weber Aircraft, Inc., a
Delaware corporation, as "purchaser" under the Airline Interiors Sale
Agreement.
"AIRLINE INTERIORS SALE" shall mean the sale by Airline
Interiors to the Airline Interiors Buyer of all or substantially all of
its assets pursuant to the terms of the Airline Interiors Sale
Agreement.
"AIRLINE INTERIORS SALE AGREEMENT" shall mean the Asset
Purchase Agreement dated as of December 24, 1999, by and among Airline
Interiors, SimTech, the Company and the Airline Interiors Buyer, with
respect to the Airline Interiors Sale.
"ALTERNATIVE TRANSACTION" shall have the meaning set forth in
SECTION 5.3.
"ALTERNATIVE TRANSACTION FEE" shall have the meaning set forth
in SECTION 12.4.
"APPLICABLE LAWS" shall mean all applicable provisions of all
(i) constitutions, treaties, statutes, laws, rules, regulations and
ordinances of any Governmental Authority, (ii) any Consents of any
Governmental Authority and (iii) any orders, decisions, rulings,
judgments or decrees of any Governmental Authority.
"ARTCRAFT INDUSTRIES" shall have the meaning set forth in the
preamble.
"ASSET SALE" shall mean any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or other
dispositions) by the Company or any other Company Party, including any
disposition by means of a merger, consolidation or similar transaction,
of (i) any shares of Capital Stock of any Company Party (other than the
Company) or (ii) any other assets of the Company or any other Company
Party other than inventory in the ordinary course of business.
"ASSIGNEE" shall have the meaning set forth in SECTION 13.5.
"ASSIGNMENT" shall mean an assignment or other transfer of any
Note pursuant to the terms of such Note.
"AUDIT REPORTS" shall mean any reports issued by any
Governmental Authority with respect to the compliance or non-compliance
of the Company or any of its
3
Subsidiaries with Applicable Laws with respect to its customer
contracts to which any Governmental Authority is a party.
"BANK" shall mean The CIT Group/Business Credit, Inc., a New
York corporation.
"BANK CREDIT AGREEMENT" shall mean the Financing Agreement
dated of even date herewith, among the Bank, the Company and the other
Company Parties.
"BANK CREDIT DOCUMENTS" shall mean the Bank Credit Agreement
and all notes and other instruments, guaranties, security agreements,
pledge agreements and other documents contemplated by the Bank Credit
Agreement and executed and delivered in connection therewith.
"BANKRUPTCY LAWS" shall mean Title 11 of the United States
Code (11 U.S.C. Section 101 ET SEQ.) and any similar federal or state
law for the relief of debtors, as amended from time to time.
"BARCLAYS MORTGAGE" shall mean the Mortgage (Fixed) dated
December 31, 1997, between Barclays Mercantile Business Finance Limited
and Simula Automotive UK.
"BENEFIT PLAN" shall have the meaning set forth in SECTION
3.16.
"BOARD OF DIRECTORS" shall mean, with respect to any Person,
the board of directors (or similar governing body) of such Person.
"BRIDGE FEE" shall have the meaning set forth in SECTION 9.19.
"BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or, in the City of New York, New York or in Los Angeles,
California, a day on which banking institutions are authorized or
required by law to close.
"C&C NOTES" shall mean, collectively, (i) the Promissory Note
dated October 21, 1999, issued by Coach & Car Equipment Corp. in favor
of CCEC in the original principal amount of $8,118,008, and (ii) the
Promissory Note dated October 21, 1999, issued by Coach & Car Equipment
Corp. in favor of CCEC in the original principal amount of $1,996,000,
in each case as amended, supplemented or otherwise modified from time
to time in accordance with SECTION 10.10.
"CAPITAL EXPENDITURES" shall mean, for any period, all
expenditures of the Company and its Subsidiaries (whether paid in cash
or accrued or financed by the incurrence of Indebtedness) during such
period, including all Capital Lease Obligations,
4
for any property, plant, equipment or other fixed assets, or for
improvements thereto, or for replacements, substitutions or additions
thereto, that have a useful life of more than one (1) year or are
required to be capitalized on the consolidated balance sheet of the
Company and its Subsidiaries in accordance with GAAP.
"CAPITAL LEASE" shall mean any lease or agreement of the
Company or its Subsidiaries for property (whether real, personal or
mixed) which has been or is required to be capitalized on the
consolidated balance sheet of the Company and its Subsidiaries in
accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean all liabilities or
other obligations for the payment of rent for any property (whether
real, personal or mixed) which has been or is required to be
capitalized on the consolidated balance sheet of the Company and its
Subsidiaries in accordance with GAAP with respect to a Capital Lease.
"CAPITAL STOCK" shall mean, with respect to any Person, (i) if
such Person is a corporation, any and all shares of capital stock,
participations in profits or other equivalents (however designated) or
other equity interests of such Person, (ii) if such Person is a limited
liability company, any and all membership units or other interests, or
(iii) if such Person is a partnership or other entity, any and all
partnership or entity units or other interests.
"CASH INTEREST EXPENSE" shall mean, for any period, without
duplication and only to the extent deducted in determining Net Income
(Loss), calculated without regard to any limitation on the payment
thereof and determined in accordance with GAAP, (i) total consolidated
interest expense of the Company and its Subsidiaries (including,
without limitation, interest paid to Affiliates and the portion of any
Capitalized Lease Obligations allocable to interest expense), whether
paid or accrued, MINUS (ii) to the extent included in total
consolidated interest expense, any non-cash interest expense,
including, without limitation, any payment-in-kind interest,
amortization of original issue discount, non-cash losses on hedging
agreements and amortization of capitalized up-front costs..
"CCEC" shall have the meaning set forth in the preamble.
"CHANGE IN CONTROL" shall mean the occurrence of one or more
of the following events:
(i) any "person" (other than the Purchaser) or
"group" (as such terms are used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act or any successor provisions to
either of the foregoing), including any group acting for the
purpose of acquiring, holding, voting or disposing of
securities within the meaning of Rule 13d-5(b)(1) of the
Exchange Act, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 of the Exchange Act (PROVIDED that a
Person will
5
be deemed to have "beneficial ownership" of all shares that
any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of
time)), directly or indirectly, of (a) fifty percent (50.0%)
or more of the voting power of the Voting Stock of the Company
or (b) if a "Change of Control" under any Simula Change of
Control Agreement shall concurrently occur and any
"Compensation" (as such term is defined therein) or other
consideration is thereafter required to be paid to the Simula
Change of Control Party who is a party thereto, twenty percent
(20.0%) or more of the voting power of the Voting Stock of the
Company;
(ii) the sale, transfer, assignment, lease,
conveyance or other disposition, directly or indirectly, of
all or substantially all of the assets of the Company or any
other Company Party shall have occurred;
(iii) the Company merges, consolidates or amalgamates
with or into any other Company Party or any other Person, or
any other Company Party or any other Person merges,
consolidates or amalgamates with or into the Company, and in
any such event any Person who is not an Affiliate of the
Company as of the date hereof acquires "control" (as such term
is defined in the definition of "Affiliate") of the Company;
(iv) Donald W. Townsend shall cease to be the
President and Chief Executive Officer of the Company with
significant daily senior management responsibilities, PROVIDED
that the Company does not replace Mr. Townsend with an
individual who is reasonably acceptable to the Purchaser
within ninety (90) days after Mr. Townsend's effective
resignation or termination date;
(v) James A. Saunders shall cease to be the Chief
Operating Officer of the Company with significant daily senior
management responsibilities, PROVIDED that the Company does
not replace Mr. Saunders with an individual who is reasonably
acceptable to the Purchaser within ninety (90) days after Mr.
Saunders's effective resignation or termination date;
(vi) (A) During the Fiscal Year ending December 31,
2000 or December 31, 2001, Stanley P. Desjardins shall sell,
transfer or otherwise dispose of more than ten percent (10.0%)
of the number of shares of Common Stock beneficially owned or
held by him on January 1st of such Fiscal Year, or (B) during
the Fiscal Year ending December 31, 2002 or December 31, 2003,
Mr. Desjardins shall sell, transfer or otherwise dispose of
more than fifteen percent (15.0%) of the number of shares of
Common Stock beneficially owned or held by him on January 1st
of such Fiscal Year (it being understood, by way of example,
that if Mr. Desjardins beneficially owns 1,000,000 shares of
Common Stock on January 1, 2000, he may sell up to 100,000
shares during the Fiscal
6
Year ending December 31, 2000; if Desjardins sells only 90,000
in such Fiscal Year, he may sell only 91,000 shares in the
Fiscal Year ending December 31, 2001); notwithstanding the
above, Mr. Desjardins may sell one million (1,000,000) shares
of such Common Stock in addition to the shares permitted to be
sold in clauses (A) and (B) above without causing a Change in
Control under this clause (vi); or
(vii) the Board of Directors or the shareholders of
the Company or any other Company Party shall have approved any
plan of liquidation or dissolution of the Company or any other
Company Party, as applicable.
"CLOSING" shall have the meaning specified in SECTION 2.3.
"CLOSING DATE" shall have the meaning specified in SECTION
2.3.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, as set forth in Section 4980B
of the Code and Part 6 of Title I of ERISA.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute, and the treasury regulations
promulgated thereunder.
"COLLATERAL" shall mean the collateral under the Collateral
Documents, however defined.
"COLLATERAL DOCUMENTS" shall mean, collectively, the Security
Agreement, the Pledge Agreement, the Intellectual Property Security
Agreement, the landlord waivers and consents, the notices of security
interest in deposit accounts, the UCC financing statements and all
other agreements, instruments and documents delivered from time to time
in connection therewith or otherwise to secure the Obligations or any
other obligations of the Company Parties or any other Person under this
Agreement, the Notes or any other Investment Document, in each case as
amended, restated, supplemental or otherwise modified from time to
time.
"COMMISSION" shall mean the Securities and Exchange
Commission, or any successor agency.
"COMMON STOCK" shall mean the common stock, $.01 par value per
share, of the Company.
"COMPANY" shall have the meaning set forth in the preamble.
7
"COMPANY PARTY" and "COMPANY PARTIES" shall have the meaning
set forth in the preamble.
"COMPOSITES" shall have the meaning set forth in the preamble.
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning
specified in SECTION 3.26.
"COMPANY SEC DOCUMENTS" shall mean all registration
statements, prospectuses, reports, schedules, forms, statements and
other documents (including all exhibits, schedules and other
information included or incorporated by reference therein) which are
filed or are required to be filed by the Company (or any of its
Subsidiaries) with the Commission under the Securities Act, the
Exchange Act or the rules and regulations promulgated thereunder, and
all applications, filings, reports and other documents which are filed
or are required to be filed by the Company with the NYSE.
"COMPANY STOCK PLANS" shall mean the 1992 Restricted Stock
Plan, the 1992 Stock Option Plan, the 1994 Stock Option Plan, Employee
Stock Purchase Plan and the 1999 Incentive Compensation Option Plan, in
each case as in effect and amended to date.
"CONSENT" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, license, exemption or order of, any
registration, certificate, qualification, declaration or filing with,
or any notice to, any Person, including, without limitation, any
Governmental Authority.
"CONTINGENT OBLIGATIONS" shall mean, with respect to any
Person, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) with respect to any Indebtedness or other obligation of
another Person, including, without limitation, any direct or indirect
guarantee of such Indebtedness (other than any endorsement for
collection or deposit in the ordinary course of business) or any other
direct or indirect obligation, by agreement or otherwise, to purchase
or repurchase any such Indebtedness or obligation or any security
therefor, or to provide funds for the payment or discharge of any such
Indebtedness or obligation (whether in the form of loans, advances,
stock purchases, capital contributions, dividends or otherwise),
letters of credit and reimbursement obligations for letters of credit,
(ii) to provide funds to maintain the financial condition of any other
Person, or (iii) otherwise to indemnify or hold harmless the holders of
Indebtedness or other obligations of another Person against loss in
respect thereof. The amount of any Contingent Obligation under clauses
(i) and (ii) above shall be the maximum amount guaranteed or otherwise
supported by the Contingent Obligation.
8
"CONVERTIBLE SECURITIES" shall mean, with respect to any
Person, any securities or other obligations issued or issuable by such
Person or any other Person that are exercisable or exchangeable for, or
convertible into, any Capital Stock of such Person, including, without
limitation, with respect to the Company, the Series A Preferred.
"DEFAULT" shall mean any Event of Default or any event or
condition which, with the giving of notice or the lapse of time or
both, becomes an Event of Default.
"DESJARDINS NOTES" shall mean (i) the Promissory Note dated
October 15, 1999, issued by the Company in favor of Stanley P.
Desjardins in the original principal amount of $1,000,000, and (ii) the
Promissory Note dated December 31, 1999 and effective December 14, 1999
(the "REMAINING DESJARDINS NOTE"), issued by the Company in favor of
Stanley P. Desjardins in the original principal amount of $1,000,000.
"DISCLOSURE SCHEDULES" shall have the meaning specified in the
introductory paragraph of SECTION 3.
"EBITDA" shall mean, for any period, without duplication and
determined on a consolidated basis and in accordance with GAAP:
(i) the sum of (A) Net Income (Loss), (B) interest
expense deducted in determining Net Income (Loss) (including, without
limitation, cash interest, payment-in-kind interest and amortization of
original issue discount), (C) the amount of Taxes, based on or measured
by income, deducted in determining Net Income (Loss), (D) the amount of
depreciation and amortization expense deducted in determining Net
Income (Loss), and (E) any extraordinary or unusual non-cash losses
(PROVIDED that such extraordinary or unusual non-cash losses do not at
any time result in any cash outlay), in each case for such period;
MINUS
(ii) any extraordinary or unusual income or gains for
such period.
"ENVIRONMENTAL CONDITIONS" shall mean any Release of any
Hazardous Materials (whether or not such Release constituted at the
time thereof a violation of any Environmental Laws) or any violation of
any Environmental Law as a result of which any Environmental Person has
or may become liable to any Person or by reason of which the business,
condition or operations of such Environmental Person or any of its
assets or properties may suffer or be subjected to any Lien or
liability.
"ENVIRONMENTAL LAWS" shall mean all Applicable Laws relating
to Hazardous Materials or the protection of human health or the
environment, including all requirements pertaining to reporting,
permitting, investigating or remediating Releases or threatened
Releases of Hazardous Materials into the environment, or relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or
9
handling of Hazardous Materials. Without limiting the generality of the
foregoing, the term "ENVIRONMENTAL LAWS" shall include the
Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. Section 9601 ET seq.) ("CERCLA"), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.)
("RCRA"), the Federal Clean Water Act (33 U.S.C. Section 1251 ET SEQ.),
the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 ET SEQ.) and the
Occupational Safety and Health Act (29 U.S.C. Section 651 ET SEQ.), as
such laws may be amended from time to time, and any other present or
future federal, state, local or foreign statute, ordinance, rule,
regulation, order, judgment, decree, permit, license or other binding
determination of any Governmental Authority imposing liability or
establishing standards of conduct for the protection of human health or
the environment.
"ENVIRONMENTAL PERSONS" shall mean, collectively, (i) the
Company, any of its Subsidiaries and any of their respective
Subsidiaries or other Affiliates, (ii) any other Person in which any of
the Persons listed in clause (i) above was at any time, or is, a
partner, joint venturer, member or other participant, and (iii) any
predecessor or former partnership, joint venture, trust, association,
corporation, limited liability company or other Person, whether in
existence as of the date hereof or at any time prior to the date
hereof, the assets, properties, liabilities or obligations of which
have been acquired or assumed by any of the Persons listed in clause
(i) above or to which any of the Persons listed in clause (i) above has
succeeded.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
warrants, options or other rights to subscribe for or purchase, or
obligations to issue, any Capital Stock of such Person, or any
Convertible Securities of such Person, including, without limitation,
any options or similar rights issued or issuable under any employee
stock option plan, pension plan or other employee benefit plan of such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute, including the rules and
regulations promulgated thereunder, in each case as amended from time
to time.
"ERISA AFFILIATE" shall mean any Person that is or was a
member of the controlled group of corporations or trades or businesses
(as defined in Sections (b), (c), (m) or (o) of Section 414 of the
Code) of which any Company Party is or was a member at any time within
the last six (6) years.
"EVENT OF DEFAULT" shall have the meaning specified in SECTION
11.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations promulgated
thereunder.
10
"EXISTING INDEBTEDNESS" shall have the meaning set forth in
SECTION 3.12.
"EXISTING LIENS" shall have the meaning set forth in SECTION
3.12.
"FEE LETTER" shall have the meaning set forth in SECTION
6.7(l).
"FINANCIAL STATEMENTS" shall have the meaning specified in
SECTION 3.10(a).
"FISCAL QUARTER" shall mean any quarter of a Fiscal Year.
"FISCAL YEAR" shall mean the fiscal year of the Company, which
shall be the twelve (12) month period ending on December 31 in each
calendar year, or such other period as the Company may designate in
writing and the Purchaser may approve in writing.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any
period, the ratio of (i) EBITDA for such period to (ii) Fixed Charges
for such period.
"FIXED CHARGES" shall mean, for any period and without
duplication, the sum of (i) Cash Interest Expense; (ii) scheduled
payments of principal on any Indebtedness of the Company and its
Subsidiaries, not including Indebtedness under the Term A Note or the
Term Loan Promissory Note made payable to the Bank in the principal
amount of $5,000,000 repaid due to the consummation of the Airline
Interiors Sale or any Asset Sale; (iii) Capitalized Lease Obligations
of the Company or any of its Subsidiaries for such period representing
principal and having a scheduled due date; (iv) Cash Taxes of the
Company and its Subsidiaries, based on or measured by income; (v) cash
dividends or distributions, if any, paid by the Company or any of its
Subsidiaries; and (vi) Capital Expenditures, in each case for such
period.
"FULLY DILUTED BASIS" shall mean, at any time, a basis that
includes all shares of Capital Stock of the Company issued and
outstanding at such time and all additional shares of Capital Stock of
the Company which would be issued upon the conversion or exercise of
all Equity Rights of the Company outstanding at such time.
"GAAP" shall mean generally accepted accounting principles and
practices set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, all as in effect on the date hereof, applied on a basis
consistent with prior periods.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
and any state or political subdivision thereof, any entity exercising
executive, legislative, judicial,
11
regulatory or administrative functions of or pertaining to government
(including, without limitation, the Commission and the United States
Environmental Protection Agency ("EPA")), and any court, tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory
organization.
"GUARANTIED OBLIGATIONS" shall have the meaning set forth in
the Guaranty.
"GUARANTORS" shall have the meaning set forth in the Guaranty.
"GUARANTY" shall mean a Joint and Several Continuing Guaranty
made by the Company Parties in favor of the Purchaser, in form and
substance satisfactory to the Purchaser, as amended, supplemented or
otherwise modified from time to time.
"HAZARDOUS MATERIALS" shall mean any substance (i) the
presence of which requires investigation or remediation under any
Applicable Laws; (ii) that is defined or becomes defined as a
"hazardous waste" or "hazardous substance" under any Applicable Laws
(including, without limitation, CERCLA or RCRA); (iii) that is toxic,
explosive, corrosive, inflammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any Governmental Authority; (iv) the presence of which on
any real property causes or threatens to cause a nuisance upon the real
property or to adjacent properties or poses or threatens to pose a
hazard to any real property or to the health or safety of Persons on or
about any real property; or (v) that contains gasoline or other
petroleum hydrocarbons, polychlorinated biphenyls or asbestos.
"HAZARDOUS MATERIALS CLAIM" shall have the meaning set forth
in SECTION 9.15.
"HOLDER" shall mean a Term A Note Holder or Term B Note
Holder, as the case may be, and the term "HOLDERS" shall mean,
collectively, the Term A Note Holder and the Term B Note Holder.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"ICSE" shall have the meaning set forth in the preamble.
"IMMEDIATE FAMILY" of a Person includes such Person's spouse,
and the parents, children and siblings of such Person or his or her
spouse and their spouses and other Persons related to the foregoing by
blood, adoption or marriage within the second degree of kinship, and,
with respect to any officer or director of the Company, shall also
include any Person who is or was a personal friend of such officer or
director prior to becoming a business associate of such officer or
director.
12
"INDEBTEDNESS" shall mean, with respect to any Person and
without duplication, (i) any indebtedness, liabilities or other
obligations, contingent or otherwise, for borrowed money; (ii) all
obligations evidenced by bonds, notes, debentures or similar
instruments; (iii) all obligations to pay the deferred purchase or
acquisition price of property or services (other than trade accounts
payable arising in the ordinary course of business so long as such
trade accounts payable are less than sixty (60) days past their due
dates) and any installment payment non-compete agreements; (iv) all
Capital Lease Obligations; (v) all obligations of others secured by a
Lien to which any property or assets owned by such Person is subject,
whether or not the obligations secured thereby have been assumed by
such Person; (vi) all obligations of such Person, contingent or
otherwise, in respect of any letters of credit or bankers' acceptances;
(vii) all obligations under facilities for the discount or sale of
receivables; (viii) the maximum fixed repurchase price of any
redeemable Capital Stock of such Person; (ix) all Contingent
Obligations; and (x) all obligations which are required to be
classified as long-term liabilities on the balance sheet of such Person
under GAAP as liabilities.
"INDEMNIFIED ENVIRONMENTAL COSTS" shall mean all actual or
threatened liabilities, claims, actions, causes of action, judgments,
orders, damages (including foreseeable and unforeseeable consequential
damages), costs, expenses, fines, penalties and losses (including sums
paid in settlement of claims and all reasonable consultant, expert and
legal fees and reasonable expenses of counsel) incurred in connection
with any Hazardous Materials Claim, any investigation of Site
conditions or any clean-up, Remedial Work or other remedial, removal or
restoration work (whether of any Real Property or any other real
property), or any resulting damages, harm or injuries to the Person or
property of any third parties or to any natural resources.
"INDEMNIFIED PARTIES" shall have the meaning specified in
SECTION 8.2.
"INITIAL FINANCIAL PROJECTIONS" shall have the meaning set
forth in SECTION 6.17.
"INTAERO LTD" shall mean Intaero, Ltd., an Arizona corporation
and a wholly owned Subsidiary of the Company.
"INTANGIBLE ASSETS" shall mean the book value of all
intangible assets (as defined under GAAP) shown on the consolidated
balance sheet of the Company and its Subsidiaries, including, without
limitation, organization costs, securities issuance costs, goodwill
(including any amounts, however designated on such balance sheet,
representing the excess of the purchase price paid for assets or stock
acquired over the value assigned thereto on the books of the Company
and its Subsidiaries), covenants not to compete, patents, trademarks,
copyrights, trade secrets, customer lists, know-how, licenses,
contracts, franchises, software costs, research and development costs,
investments in and monies from Affiliates and any other intangible
assets.
13
"INTELLECTUAL PROPERTY" shall mean all (i) inventions, whether
or not patentable, whether or not reduced to practice, and whether or
not yet made the subject of a pending patent application or
applications, (ii) ideas and conceptions of potentially patentable
subject matter, including, without limitation, any patent disclosures,
whether or not reduced to practice and whether or not yet made the
subject of a pending patent application or applications, (iii) national
(including the United States) and multinational statutory invention
registrations, patents, patent registrations and patent applications
(including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights
therein provide
