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Exhibit 10.7
EXECUTION COPY
NOTE PURCHASE AGREEMENT
Dated as of November 22, 2005
By and Between
Navtech Systems Support Inc.
And
The Purchasers Referred to Herein
TABLE OF CONTENTS
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NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT , dated as of November 22, 2005 (this “ Agreement ”), by and among Navtech Systems Support Inc., an Ontario corporation (the “ Company ”), and the Persons listed on Annex 1 attached hereto (the “ Purchasers ”). Unless otherwise indicated herein, capitalized terms used in this Agreement have the meanings set forth in Section 1 .
WHEREAS , the Purchasers have agreed to purchase, and the Company has agreed to issue and sell to the Purchasers, Notes of the Company; and
WHEREAS , pursuant to a Warrant Agreement, dated as of the date hereof, the Purchasers have agreed to purchase, and the Parent has agreed to issue and sell to the Purchasers, Warrants of the Parent.
NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1A. Definitions . For the purposes of this Agreement, the following terms have the meanings set forth below:
“ ABRY ” means ABRY Mezzanine Partners, L.P.
“ Accounts Receivable ” has the meaning set forth in Section 6V .
“ Accrued Amount ” means, for any Note at any time, the principal amount of such Note, plus all accrued and unpaid interest thereon.
“ Acquisition Agreement ” means that certain Securities Purchase Agreement, dated as of the date hereof, by and among EAG Holdco, the Parent and SAS, as in effect on the date hereof.
“ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “ control ” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
“ Agreement ” has the meaning set forth in the preamble of this Agreement.
“ Articles ” means the Certificate of Incorporation of the Company, as amended, modified, restated, superseded or replaced from time to time.
“ Board of Directors ” means the board of directors of the Parent.
“ By-laws ” means the by-laws of the Company, as amended, modified, restated, superseded or replaced from time to time.
“ Cambridge Information Group Preferred Stock ” means the Series A Convertible Participating Preferred Stock of the Parent, $0.01 par value per share.
“ Capital Lease(s) ” means any lease of any property (whether real, personal or mixed) that, in conformity with GAAP, should be accounted for as a capital lease.
“ Change of Control ” shall be deemed to occur (a) upon the consummation of a transaction, whether in a single transaction or in a series of related transactions, pursuant to which a Person or group (as that term is used in Section 13(d)(3) of the Exchange Act) of Persons acquire assets constituting all or substantially all of the assets of the Company Group, (b) if a Person or group of Persons (other than Cambridge Information Group, Inc.) becomes the beneficial owner (whether by merger, consolidation, reorganization, redemption, transfer or issuance of equity securities or otherwise) of securities of the Parent (or any surviving or resulting corporation) representing more than 50% of the combined voting power of the outstanding securities of the Parent (or such surviving or resulting corporation) ordinarily having the right to vote in the election of directors, (c) if a majority of the members of the Board of Directors are not a sufficient number to control and direct the operations and affairs of the Parent or (d) if the Parent ceases to be the beneficial owner (whether by merger, consolidation, reorganization, redemption, transfer or issuance of equity securities or otherwise) of securities of the Company (or any surviving or resulting corporation) representing 100% of the combined voting power of the outstanding securities of the Company (or such surviving or resulting corporation) ordinarily having the right to vote in the election of directors.
“ Claim ” means any action, claim, lawsuit, demand, suit, charge, complaint, inquiry, hearing, investigation, notice of a violation or noncompliance, litigation, proceeding, arbitration, appeals or other dispute, whether civil, criminal, administrative or otherwise.
“ Closing ” has the meaning set forth in Section 2B .
“ Closing Date ” has the meaning set forth in Section 2B .
“ COBRA ” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and of any similar state Law.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Commitment Fee Amount ” has the meaning set forth in Section 10A .
“ Commitment Letter ” has the meaning set forth in Section 10D .
“ Common Stock ” means the Parent’s common stock, par value $0.001 per share, and any shares of any class of the Parent hereafter authorized which is not limited to a fixed sum with respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Parent.
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“ Common Stock Equivalents ” means any capital or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock.
“ Company Group ” means the Parent, Company and its Subsidiaries (which, for the avoidance of doubt and unless expressly stated otherwise, shall include (i) EAG following the acquisition thereof by the Company or any Affiliate thereof and (ii) any Subsidiary that becomes party hereto in accordance with Section 4I ); provided that the “Company Group” shall not include EAG for purposes of Sections 3J and 6 herein.
“ Company Intellectual Property Rights ” has the meaning set forth in Section 6O(i) .
“ Company Software ” has the meaning set forth in Section 6O(i) .
“ Consolidated ” means, as applied to the Company and its Subsidiaries, consolidated in accordance with GAAP.
“ Consolidated EBITDA ” means, for any 12-month period, the Consolidated earnings of the Company Group for such period before any provision for (i) interest expense paid in cash for such period and (ii) amounts in respect of depreciation and amortization for such period, minus (x) income Taxes for such period paid or required to be paid in cash within one (1) year and minus (y) distributions and one time gains during such period, plus any non-recurring extraordinary expenses, the exclusion of which from the calculation of operating income has not been objected to by the Company Group’s independent auditors or the addition of which the Majority Noteholders have approved for purposes of computing Consolidated EBITDA, all of the foregoing determined on a Consolidated basis in accordance with GAAP; provided that for purposes of calculating Consolidated EBITDA hereunder, any income or losses associated with foreign exchange rates and any expenses associated with the issuance or exercise of any stock option, warrant or similar Equity Security issued by the Company Group shall be disregarded.
“ Debt Security ” means any note, bond, debenture or other instrument or security evidencing Indebtedness.
“ EAG ” means European Aeronautical Group AB, a limited liability company with its registered address STOOV, S-19587 Stockholm, Sweden, a company duly organized and registered under the Laws of Sweden, reg. no. 556278-5864.
“ EAG Holdco ” means Navtech (Sweden) A.B.
“ Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA and whether or not such plan is subject to ERISA) and any other employee benefit plan, program or arrangement of any kind.
“ Environmental, Health, and Safety Requirements ” means all federal, state, provincial, territorial and local or municipal Laws concerning public health and safety, worker health and safety, occupational health and safety, product liability, pollution, or protection or preservation of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing,
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processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances, or wastes, as such requirements are enacted and in effect on the Closing Date.
“ Equity Security ” means (i) any capital stock or other equity security, or ownership interests (including limited liability company, partnership and joint venture interests), (ii) any security directly or indirectly convertible into or exchangeable for any capital stock or other equity security or security containing any profit participation features, (iii) any warrants, options or other rights, directly or indirectly, to subscribe for or to purchase any capital stock, other equity security or security containing any profit participation features or directly or indirectly to subscribe for or to purchase any security directly or indirectly convertible into or exchangeable for any capital stock or other equity security or security containing profit participation features, and (iv) any stock appreciation rights, phantom stock rights or other similar rights.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ Event of Default ” has the meaning set forth in Section 9A .
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any similar Law then in force and the rules and regulations promulgated thereunder.
“ Fiscal Quarter ” means a fiscal quarter of the Company ending on the last day of January, April, July or October of any Fiscal Year.
“ Fiscal Year ” means a fiscal year of the Company ending on October 31 of any calendar year.
“ GAAP ” means United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis.
“ Governmental Entity ” means any agency, division, subdivision, group or office of the United States of America or Canada, any state, province, territory or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government, including any court.
“ Guarantee ” means any guarantee of the payment or performance of any Indebtedness or other obligation and any other arrangement whereby credit is extended to one obligor on the basis of any promise of such Person, whether that promise is expressed in terms of an obligation to pay the Indebtedness of such obligor, to provide reimbursement, or to purchase an obligation owed by such obligor, or to purchase goods and services from such obligor pursuant to a take-or-pay contract, or to maintain the capital, working capital, solvency or general financial condition of such obligor, whether or not any such arrangement is listed in the balance sheet of such Person, or referred to in a footnote thereto, but shall not include endorsements of items for deposit or collection in the Ordinary Course of Business; and the term “Guaranteed” shall have a correlative meaning.
“ Increase Period ” has the meaning set forth in Section 9B(iv) .
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“ Incur ” means, with respect to any Indebtedness or other Liability of any Person, to create, issue, incur (including by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence,” “Incurred” and “Incurring” shall have meanings correlative to the foregoing). The accrual of interest, the accretion or amortization of original issue discount and, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, will not be deemed to be an Incurrence of Indebtedness.
“ Indebtedness ” of a Person means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness of such Person for borrowed money, (ii) any indebtedness evidenced by any Debt Security of such Person, (iii) any indebtedness for the deferred purchase price of property or services with respect to which such Person is liable, (other than trade payables and other current Liabilities Incurred in the Ordinary Course of Business), (iv) any commitment by which such Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (v) any Indebtedness of other obligation of any other Person Guaranteed in any manner by such Person (including Guarantees in the form of an agreement to repurchase or reimburse), (vi) such Person’s obligations under Capital Leases, (vii) any obligation secured by a Lien on such Person’s assets or (viii) such Person’s redemption, repurchase or similar obligations in respect of any Equity Security that has a scheduled maturity, repurchase or redemption date, or the holder of which could require the issuer to repurchase, redeem (other than by reason of a Change of Control), prior to the date that is six (6) months after the Scheduled Redemption Date (the amount of which obligations at such time shall be the amount that such person would be required to pay if such maturity, redemption, repurchase or similar event were to occur at such time).
“ Indemnitees ” has the meaning set forth in Section 10B .
“ Intellectual Property Rights ” means all (i) patents, patent applications and patent disclosures; (ii) trademarks, service marks, trade dress, trade names, logos, slogans, corporate names, Internet domain names and registrations and applications for registration thereof, together with all of the goodwill associated therewith (and all translations, adaptations, derivations and combinations of the foregoing); (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof; (iv) mask works and registrations and applications for registration thereof; (v) software (including source code and executable code), firmware, data, databases and documentation thereof; (vi) trade secrets and other confidential information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, algorithms, financial models, manufacturing and production processes and techniques, research and development information, customer accounts, identifying information regarding customers, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information); (vii) domain names, (viii) other intellectual property or proprietary rights; and (ix) copies and tangible embodiments thereof (in whatever form or medium).
“ Interest Rate Trigger Event ” has the meaning set forth in Section 9B(iv) .
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“ Investment ” as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any Debt Securities, Equity Securities, obligations or instruments of any other Person and (ii) any capital contribution, loan or advance by such Person to any other Person.
“ Junior Securities ” means any Equity Securities or Debt Securities of any member of the Company Group other than Senior Debt.
“ Knowledge ” means, with respect to any Person, the actual knowledge of the chief executive officer, president or chief financial officer of such Person (after making reasonable inquiry with respect to the particular matter in question), and shall include, with respect to the Knowledge of the Company Group, David Strucke and Gordon Heard so long as they are the chief executive officer, president or chief financial officer (as applicable) of the Company or Parent.
“ Latest Balance Sheet ” has the meaning set forth in Section 2E(a)(ii) of the Warrant Agreement.
“ Laws ” means all constitutions, statutes, laws, codes, ordinances, regulations, rules, orders, judgments, writs, injunctions, acts or decrees of any Governmental Entity.
“ Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by any member of the Company Group.
“ Leases ” means all leases, subleases, licenses, concessions and other agreements (written or oral) pursuant to which any member of the Company Group holds or is permitted to use or occupy any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of such member of the Company Group thereunder.
“ Legal Requirement ” means any requirement arising under any action, Law, treaty, determination or direction of an arbitrator or Governmental Entity.
“ Leverage Ratio ” has the meaning set forth in Section 4F(i) .
“ Liability ” means any liability, loss, expense or obligation of whatever kind or nature (whether known or unknown, whether assert or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability or obligation for Taxes.
“ Lien ” means, with respect to any Person, any mortgage, pledge, restriction, security interest, hypothec, encumbrance, option, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against such Person, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute (other than to reflect ownership by a third party of property leased to such Person under a lease which is not in the nature of a conditional sale or title retention agreement), or any subordination arrangement in
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favor of another Person (other than any subordination arising in the Ordinary Course of Business).
“ Line of Credit ” has the meaning set forth in Section 4F(iii) .
“ Losses ” has the meaning set forth in Section 10B .
“ Malicious Code ” has the meaning set forth in Section 6O(v) .
“ Majority Noteholders ” means, at any time, the holders of a majority of the principal amount of the Notes outstanding at such time.
“ Material Adverse Effect ” means a material and adverse effect upon the business, operations, assets, liabilities or financial condition of the Company Group (excluding EAG, for purposes of Sections 3J and 6 ), taken as a whole.
“ Material Contracts ” has the meaning set forth in Section 6N .
“ 90 Day Period ” has the meaning set forth in Section 9B(iv) .
“ Notes ” has the meaning set forth in Section 2A(i) .
“ Officer’s Certificate ” means, with respect to any Person, a certificate of such Person signed on such Person’s behalf by such Person’s president, its chief financial officer or of any other officer of such Person whose responsibilities extend to the subject matter of such certificate.
“ Optional Redemption Date ” means November 22, 2007.
“ Options ” means any rights, warrants or options directly or indirectly to subscribe for or purchase Common Stock or Common Stock Equivalents.
“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency) of the Person in question.
“ Parent ” means Navtech, Inc., a Delaware corporation.
“ Parent Guaranty ” has the meaning set forth in Section 3F .
“ Permitted Investments ” means investments in (a) direct obligations of the United States, Canada, France, the United Kingdom, Sweden or any other country that is a member of the European Union or the Organization for Economic Cooperation and Development (the “ OECD ”) or any agency thereof, or obligations guaranteed by the United States, Canada, France, the United Kingdom, Sweden or any other OECD country, or any agency thereof, in each case maturing within one year from the date of acquisition thereof, so long as such investments are consistent with investment policies approved by the Board of Directors, (b) commercial paper maturing within one year from the date of creation thereof rated at least A1 or the equivalent by
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Standard & Poor’s Corporation or P1 or the equivalent by Moody’s Investors Service, Inc. at the time of the acquisition thereof, (c) deposits maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any office located in the United States, Canada, France, the United Kingdom, Sweden or any other OECD country, or any other bank or trust company which at the time of the acquisition thereof (i) is organized under the Laws of the United States (or any state thereof), Canada, France, the United Kingdom, Sweden or any other OECD country, (ii) has capital, surplus and undivided profits aggregating at least $500,000,000 (as of the date of such bank’s or trust company’s most recent financial reports) and (iii) has a short-term deposit rating of no lower than A-1 or P-1, as such rating is set forth from time to time, by Standard & Poor’s Corporation or Moody’s Investors Service, Inc., respectively, (d) deposits in money market funds investing exclusively in investments described in clauses (a), (b) or (c) hereinabove and having a rating in the highest or second highest investment category granted thereby by a nationally recognized credit rating agency at the time of acquisition and (e) any other short-term investments of cash not then needed for the Company Group’s operations and made in accordance with investment policies approved by the Board of Directors.
“ Permitted Liens ” means (i) Liens with respect to Taxes not yet due and payable or which are being contested in compliance with Section 4C(vi) ; (ii) deposits or pledges made in connection with, or to secure payment or performance of, bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds, utilities or similar services, workers’ compensation, unemployment insurance, old age pensions or other social security obligations; (iii) carriers’, warehousemen’s, mechanics’, materialmen’s, contractors’ and other like Liens imposed by Law securing payment for amounts not yet due and payable or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP; (iv) purchase money Liens and Liens securing rental payments under Capital Lease arrangements; (v) judgment Liens in respect of judgments that do not constitute an Event of Default under Section 9A ; (vi) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by Law or arising in the Ordinary Course of Business; (vii) Liens described on the “ Assets Schedule ”; (viii) Liens securing Senior Debt Incurred in accordance with Section 4F(i) ; (ix) any Lien existing on any property or asset prior to the acquisition thereof by the Company or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior the time such Person becomes a Subsidiary, provided that such acquisition is permitted under this Agreement and such Lien is not created in contemplation of such Person becoming a Subsidiary or such acquisition, (x) leases of the properties of the Company or any Subsidiary entered into in the Ordinary Course of Business, (xi) Liens on property that is the subject of and are incurred in connection with the conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any Subsidiary in the Ordinary Course of Business, (xii) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by the Company or any Subsidiary, in each case granted in the Ordinary Course of Business in favor of the bank or banks with which such accounts are maintained, (xiii) licenses of Intellectual Property Rights granted by the Company or any Subsidiary in the Ordinary Course of Business, (xiv) Liens in existence on the Closing Date and set forth on the “ Permitted Liens Schedule ”, and (xv) extensions, renewals and replacements of any of the foregoing.
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“ Person ” means an individual, a partnership, a corporation, a limited or unlimited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any other similar entity or organization or a Governmental Entity.
“ Potential Event of Default ” means any event or circumstance that, with the passage of time or the giving of notice, or both, would constitute an Event of Default.
“ Public Reports ” has the meaning set forth in Section 2F(a) of the Warrant Agreement.
“ Purchasers ” has the meaning set forth in the preamble of this Agreement.
“ Put Notice ” has the meaning set forth in Section 8A of this Agreement.
“ Redemption Date ” as to any Note means the date specified in the notice of any redemption at the Company’s option or at the holder’s option or the applicable date specified herein in the case of any other redemption; provided , that no such date shall be the Redemption Date for such Note for purposes of Section 7F unless the Accrued Amount of such Note (and any required premium with respect thereto, as Section 7 or Section 9B may require), is actually paid in full on such date, and if not so paid in full, the Redemption Date shall be the date on which such amount is fully paid.
“ Redemption Notice Date ” has the meaning set forth in Section 7C .
“ Registration Rights Agreement ” means that certain Registration Rights Agreement, dated as of the Closing Date, by and among the Parent, the Series A Investors (as defined therein) party thereto and the Purchasers, in the form of Exhibit B to the Warrant Agreement, as amended, modified, restated, superseded or replaced from time to time.
“ Rule 144 ” means Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC.
“ Sarbanes-Oxley Act ” has the meaning set forth in Section 2F(b) of the Warrant Agreement.
“ SAS ” means SAS AB, a limited liability company with its registered office at SE-195 87 Stockholm, a company duly organized and registered under the Laws of Sweden, reg. no. 556606-8499.
“ Scheduled Redemption Date ” has the meaning set forth in Section 7A .
“ SEC ” means the Securities and Exchange Commission and any Governmental Entity succeeding to the functions thereof.
“ Securities Act ” means the Securities Act of 1933, as amended, or any similar Law then in force and the rules and regulations promulgated thereunder.
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“ Senior Debt ” means any Indebtedness permitted to be incurred pursuant to the terms hereof (including in compliance with the covenants set forth in Section 4F ) and as to which the Purchasers execute a Subordination Agreement.
“ Subordination Agreement ” has the meaning set forth in Section 4J .
“ Subsidiary ” means, with respect to any Person, any corporation, limited or unlimited liability company, partnership, association or other business entity of which (i) if a corporation or an unlimited liability company, a majority of the total voting power of capital entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. Unless otherwise specified, “Subsidiary” means a Subsidiary of the Company; provided that EAG shall not be deemed a “Subsidiary” for purposes of Sections 3J and 6 herein.
“ Subsidiary Guaranty ” has the meaning set forth in Section 3F .
“ Tax ” or “ Taxes ” means federal, state, provincial, county, local, foreign or other income, gross receipts, ad valorem, franchise, profits, goods and services, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, capital stock, income, license, payroll, wage or other withholding, employment, unemployment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes of any kind whatsoever (including deficiencies, penalties, additions to tax, and interest on or in respect of, or in lieu of or for non-collection of, such taxes) whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax Liability of any other Person.
“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“ Tranche A Notes ” has the meaning set forth in Section 2A(i) .
“ Tranche B Notes ” has the meaning set forth in Section 2A(i) .
“ Transaction Agreements ” means this Agreement, the Notes, the Warrant Agreement, the Warrants, the Registration Rights Agreement, the Parent Guaranty, the Subsidiary Guaranty and all other agreements, certificates and instruments executed and delivered in favor of any holders of the Notes by the Parent or the Company or any of its Subsidiaries or any other Person in connection with this Agreement.
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“ Triggering Event ” has the meaning set forth in Section 8A .
“ Triggering Event Value ” means, with respect to any share of Underlying Common Stock, the amount to which a holder of such share of Underlying Common Stock would be entitled upon a liquidation of the Parent, assuming that (a) all Options and Common Stock Equivalents that are then in the money at the valuation described in clause (b)(i) below are exercised, converted or exchanged in full, and (b) the aggregate amount to be distributed upon such liquidation is an amount equal to the sum of (i) the aggregate amount that a willing, fully-informed purchaser would pay a willing, fully-informed seller or sellers for 100% of the outstanding Equity Securities of the Parent in a single purchase, as determined by an independent appraiser experienced in valuing companies such as the Parent jointly selected by the Parent and the holders of a majority of the Underlying Common Stock and (ii) the aggregate amount of the exercise price or other consideration payable upon the exercise, conversion or exchange of all such in-the-money Options and Common Stock Equivalents. The determination of the appraiser described in clause (b)(i) above shall be made without the application of any discount for any holder’s minority position or lack of liquidity and shall be final and binding upon the parties, and the fees and expenses of such appraiser shall be borne by the Parent.
“ Underlying Common Stock ” means (i) the Common Stock issued or issuable upon exercise of the Warrants, and (ii) any Common Stock issued or issuable with respect to the securities referred to in clause (i) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. For purposes of the Transaction Agreements, any Person who holds any Warrants shall be deemed to be the holder of the Underlying Common Stock issuable upon the exercise of such Warrants regardless of any restriction or limitation on the exercise of such Warrants and such Underlying Common Stock shall be deemed to be in existence and outstanding, and such Person shall be entitled to exercise the rights of a holder of such Underlying Common Stock hereunder. All Underlying Common Stock held by Persons who are Affiliates of each other shall be aggregated for purposes of meeting any threshold tests under any Transaction Agreement.
“ Warrants ” has the meaning set forth in the Warrant Agreement.
“ Wholly-Owned Subsidiary ” means, with respect to any Person, a Subsidiary of which all of the outstanding capital or other ownership interests are owned by such Person or another Wholly-Owned Subsidiary of such Person.
Section 2. Authorization and Closing .
2A. Authorization, Purchase and Sale of the Notes .
(i) The Company has duly authorized the issuance and sale, pursuant to the terms of this Agreement, of its 9.0% Senior Subordinated Notes due 2011 in an aggregate principal amount of $6.0 million and containing the terms and conditions and in substantially the form set forth in Exhibit D attached hereto (the “ Tranche A Notes ”) and its 12.5% Senior Subordinated Notes due 2011 in an aggregate principal amount of $15.0 million and containing the terms and conditions and in substantially the form set
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forth in Exhibit E attached hereto (the “ Tranche B Notes ” and, together with the Tranche A Notes, the “ Notes ”).(ii) Subject to the terms and conditions of this Agreement, at the Closing, the Company shall issue and sell to each Purchaser and each Purchaser shall purchase from the Company: (i) a Tranche A Note in the principal amount set forth opposite such Purchaser’s name on Annex 1 attached hereto under the heading “ Tranche A Notes ” and (ii) a Tranche B Note in the principal amount set forth opposite such Purchaser’s name on Annex 1 attached hereto under the heading “ Tranche B Notes ”.2B. The Closing . The closing of the issuance, sale and purchase of the Notes (the “ Closing ”) under this Agreement shall take place at the offices of Kirkland & Ellis LLP, located at Citigroup Center, 153 East 53 rd Street, New York, New York 10022 commencing at 9:00 a.m. local time on November 22, 2005 or on such other date as the parties hereto may mutually determine in writing (the “ Closing Date ”). At the Closing, the Company shall deliver to each Purchaser the Notes to be purchased by such Purchaser, dated the date of the Closing and registered in such Purchaser’s or its nominee’s name, in each case against payment by such Purchaser to the Company by wire transfer of immediately available funds of the aggregate principal amount of such Notes.
Section 3. Conditions of Each Purchaser’s Obligations at the Closing . The obligation of each Purchaser to purchase and pay for the Notes to be sold to such Purchaser at the Closing shall be subject to the fulfillment at or prior to the Closing of each of the following conditions, any and all of which may be waived in whole or in part in writing by such Purchaser to the extent permitted by applicable Law:
3A. Representations and Warranties . The representations and warranties contained in Section 6 (i) that are not qualified as to materiality shall be true and correct in all material respects and (ii) that are qualified as to materiality shall be true and correct in all respects, in each case at and as of the Closing as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and warranties (except to the extent that such representations and warranties expressly relate to an earlier date).
3B. Compliance with Covenants . Each member of the Company Group shall have duly performed or complied with, in all material respects, all of the covenants, obligations and conditions required to be performed or complied with by it under the terms of the Transaction Agreements on, prior to, or at the Closing and shall be in compliance with, in all material respects, all of the covenants, obligations and conditions to be complied with under the terms thereof at the Closing.
3C. Consents and Approvals . Each member of the Company Group shall have made all filings and shall have obtained and delivered to each Purchaser all permits, authorizations, consents and approvals of any Governmental Entity and/or third party required to be obtained by such member of the Company Group to consummate the transactions contemplated to be consummated at the Closing by this Agreement and the other Transaction Agreements.
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3E. Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by each party thereto and shall be in full force and effect.
3F. Parent Guaranty and Subsidiary Guaranty . The (i) Parent Guaranty, dated as of the Closing Date, by and among the Parent and the Purchasers and containing the terms and conditions and in substantially the form set forth in Exhibit G-1 attached hereto (the “ Parent Guaranty ”) and (ii) Subsidiary Guaranty, dated as of the Closing Date, by and among the Purchasers and each Subsidiary party thereto and containing the terms and conditions and in substantially the form set forth in Exhibit G-2 attached hereto (the “ Subsidiary Guaranty ”) shall have been executed and delivered by each party thereto and shall be in full force and effect.
3G. Sale of Notes and Warrants to Each Other Purchaser . Contemporaneously with the Closing, (i) the Company shall issue and sell to each other Purchaser the Notes to be purchased by such other Purchaser under this Agreement and (ii) the Parent shall issue to each Purchaser the Warrants to be issued to such Purchaser under the Warrant Agreement.
3H. Consummation of EAG Acquisition . The conditions set forth in the Acquisition Agreement shall have been satisfied (without giving effect to any waiver thereof that has not been consented to by the Purchasers), and Navtech (Sweden) A.B. shall have consummated (or shall consummate simultaneously with the Closing) the acquisition of the shares of capital stock of EAG on the terms set forth in the Acquisition Agreement.
3I. Equity Investment . The Persons set forth on the attached Schedule 3I shall have purchased (or shall purchase simultaneously with the Closing) the Cambridge Information Group Preferred Stock in the amounts set forth on the attached Schedule 3I for an aggregate purchase price of not less than $3.5 million on terms and pursuant to documentation in form and substance reasonably satisfactory to the Purchasers, and the proceeds of such shares shall be used by the Company in connection with the acquisition of EAG.
3J. No Material Adverse Effect . No fact, event, circumstance, change, development or occurrence shall have occurred which has had or could reasonably be expected to have a Material Adverse Effect.
3K. Closing Documents . The Company shall have delivered to each Purchaser all of the following documents:
(i) an Officer’s Certificate of the Company, dated the Closing Date, stating that each of the conditions specified above in Section 3A through Section 3C , Section 3H , Section 3I , and Section 3J is satisfied in all respects;(ii) copies of all filings, permits, authorizations, consents and approvals of any Governmental Entity and/or third party (if any) required in connection with the consummation at the Closing of the transactions contemplated by this Agreement and the other Transaction Agreements;
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(iii) a certificate of each of the Parent’s and the Company’s secretary or assistant secretary, dated the Closing Date, certifying as to the constating documents, by-laws and resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Transaction Agreements; and(iv) such other documents relating to the transactions contemplated by this Agreement or the other Transaction Agreements as any Purchaser or its special counsel may reasonably request.3L. Proceedings . All corporate and other proceedings taken or required to be taken by any member of the Company Group in connection with the transactions contemplated hereby and by the other Transaction Agreements to be consummated at or prior to the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to each Purchaser and its special counsel.
3M. Company Counsel Opinions . Each Purchaser shall have received an executed copy of an opinion of Choate, Hall & Stewart LLP and of Cassels Brock & Blackwell LLP, each dated the Closing Date.
3N. Commitment Fees; Closing Expenses . The Company shall have paid the Commitment Fee Amount payable at the Closing and reimbursed each Purchaser for the reasonable fees and expenses incurred by such Purchaser as of the Closing Date, in each case as provided in Section 10A .
Section 4. Covenants . Except as otherwise set forth herein, the covenants set forth in this Section 4 shall remain in full force so long as any Note remains outstanding.
4B. Restrictive Covenants . The Company will not, and will not permit its Subsidiaries to, take any of the following actions without the prior authorization and approval of the Majority Noteholders:
(i) sell, lease or otherwise dispose of, (a) more than five percent of the consolidated assets of the Company Group in the aggregate during any Fiscal Year or (b) more than ten percent of the consolidated assets of the Company Group in the aggregate (in each case computed on the basis of book value, determined in accordance with GAAP consistently applied, or fair value, as reasonably determined in good faith by the Board of Directors), unless the net proceeds of such sale, lease or disposition are used to repay Senior Debt or, subject to applicable Subordination Agreements, to redeem Notes pursuant to Section 7A or 7B ; provided , that the Company Group may sell, lease or otherwise dispose of (A) obsolete or worn out property or assets, whether now owned or hereafter acquired, in the Ordinary Course of Business, (B) inventory in the Ordinary Course of Business, (C) property of any member of the Company Group to any other member of the Company Group which is a Wholly Owned Subsidiary, (D) property of the Company or any Subsidiary to the extent permitted by Sections 4B(ii) and 4B(iv) , (E) non-exclusive licenses of Intellectual Property Rights in the Ordinary Course of Business
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and (F) property of the Company Group to holders of Senior Debt to the extent required under the Senior Debt Documents;(ii) directly or indirectly declare or pay any dividends or interest or make any distributions upon, or redeem, repurchase or otherwise acquire, any Junior Securities of any member of the Company Group, except for: (1) deferred purchase price payments to SAS in accordance with the Acquisition Agreement, (2) distributions or redemptions paid by a Wholly-Owned Subsidiary of the Company to the Company or another Wholly-Owned Subsidiary of the Company, (3) redemptions of the Notes, Warrants or Underlying Common Stock in accordance with the Transaction Agreements, (4) dividends paid by the Parent to holders of series A preferred stock of the Parent at a rate not to exceed 5% per annum, (5) distributions by the Company to the Parent to enable the Parent to pay the dividends referred to in clause (4) of this paragraph and miscellaneous expenses in an aggregate amount that, together with the aggregate amount of all payments described in clause (4), does not exceed $250,000 during any Fiscal Year, (6) dividends with respect to the capital stock of any member of the Company Group payable solely in additional shares of capital stock of the same type and (7) redemptions or repurchases of Equity Securities of Parent which do not require any member of the Company Group to transfer any consideration (whether cash or otherwise) other than nominal consideration in connection with such redemption or repurchase, or which are effected through a cashless exercise, in each case made pursuant to and in accordance with stock option plans or other benefit plans approved by the Board of Directors for management or employees of the Company Group upon the termination of employment of a director, officer or employee of the Company Group, so long as, in each case described in clause (4) and (5) above, both before and after giving effect to such payment, no Event of Default or Potential Event of Default is in existence; provided that, with respect to redemptions or repurchases of Equity Securities of the Company made pursuant to clause (7) above, any amounts paid by any member of the Company Group in connection with such redemptions or repurchases shall be deemed to have been paid from the proceeds of Indebtedness Incurred by the Company in order to finance such redemptions or repurchases for purposes of Section 4F(i) ;(iii) make any Guarantee for the benefit of, or Investment in, any Person (including any Guarantee by the Company or any if its Subsidiaries of any Indebtedness of Parent), except for (1) reasonable advances by members of the Company Group to employees of the Company Group in the Ordinary Course of Business, (2) Permitted Investments, (3) Investments in any Wholly-Owned Subsidiary of the Company, (4) any Guarantee of the Notes or any Indebtedness of another member of the Company Group (other than the Parent) incurred in compliance with Section 4F(i) ; (5) operating deposit accounts in institutions described in clause (c) of the definition of Permitted Investment, (6) hedging agreements entered into in the Ordinary Course of Business with respect to the Company’s or any Subsidiary’s financial planning and not for speculative purposes, (7) Investments consisting of security deposits with utilities and other like Persons made in the Ordinary Course of Business, (8) Investments consummated to finance an acquisition permitted under Section 4B(vii) and (9) additional Investments up to but not exceeding $100,000 in the aggregate in any Fiscal Year;
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(iv) merge, amalgamate or consolidate with any Person (other than (1) to the extent permitted under Section 4B(vii), so long as the rights, obligations and responsibilities of the Company or applicable Subsidiary continue in the newly-formed entity, (2) in a merger, amalgamation or consolidation involving only Wholly-Owned Subsidiaries of the Company or (3) in a merger, amalgamation or consolidation in which the rights, obligations and responsibilities of the Company or applicable Subsidiary continue in the newly-formed entity);(v) except to the extent expressly permitted under this Section 4B, establish or acquire any Subsidiary, other than a Wholly-Owned Subsidiary of the Company, or cause or permit any Subsidiary to cease to be a Wholly-Owned Subsidiary of the Company;(vi) enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with any of such Person’s Affiliates (other than the Company or another Subsidiary), except (1) in the Ordinary Course of Business and on arms-length terms with persons other than Robert Snyder and his Affiliates and (2) arrangements solely between or among members of the Company Group;(vii) acquire or enter into an agreement to acquire, or permit any Subsidiary to acquire or enter into an agreement to acquire, any interest in any company or business (whether by a purchase of assets, purchase of stock, merger, amalgamation, consolidation or otherwise) or enter into any joint venture, in each case involving an aggregate consideration (including the assumption of Liabilities) exceeding $4.0 million in the aggregate during any Fiscal Year (including in the calculation of the amount of any acquisitions for the purpose of this Section 4B(vii) , the amount of any acquisitions made by Parent in accordance with Section 3 . 3(v) of the Parent Guaranty during such Fiscal Year);(viii) engage to any material extent in any business other than businesses of the type conducted by the Company and the Subsidiaries on the date of this Agreement and businesses reasonably related thereto;(ix) become subject to (including by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict (1) the right of any member of the Company Group to make loans or advances or pay interest to, transfer property to, or repay any amounts owed to any other member of the Company Group or any Purchaser or (2) the ability of any member of the Company Group to perform the material provisions of this Agreement or any of the other Transaction Agreements (including provisions relating to the redemption of the Notes and repayment of the principal amount of, and interest on, the Notes); provided that the foregoing shall not apply to (A) restrictions and conditions imposed by Law, the Transaction Agreements or the Acquisition Agreement, (B) customary restrictions and conditions contained in agreements relating to the sale or disposition of a Subsidiary pending such sale or disposition, provided such restrictions and conditions apply only to the Subsidiary that is to be sold or disposed and such sale or disposition is permitted hereunder, (C) restrictions or conditions imposed by the lender(s) under any agreement
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governing any Senior Debt and (D) customary provisions in leases and other contracts restricting the assignment thereof;(x) in the case of the Company only, effect a recapitalization or reorganization in any form of transaction into a limited liability company, a partnership or any other non-corporate entity, or otherwise become, an entity that is treated as a partnership for federal income tax purposes;(xi) change its fiscal year;(xii) Incur any Senior Debt that is subordinated to other Senior Debt, other than second-lien senior Indebtedness having customary terms for Indebtedness of such type and that is subordinated only to first-lien Indebtedness that is Incurred contemporaneously with such second-lien Indebtedness or that refinances or replaces such first-lien Indebtedness; or(xiii) grant or permit any Lien on any of its assets, other than Permitted Liens.4C. Affirmative Covenants . The Company will, and will cause its Subsidiaries to, take all of the following actions, unless otherwise waived with the prior authorization and approval of the Majority Noteholders:
(i) maintain and keep their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section 4C(i) shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not reasonably be expected to have a Material Adverse Effect;(ii) apply for and maintain with financially sound and reputable insurance companies adequate insurance covering risks of such types and in such amounts as are customary for companies of similar size engaged in similar lines of business;(iii) at all times maintain and preserve the Company’s corporate existence;(iv) except to the extent permitted under Section 4B, the Company will at all times maintain and preserve the corporate or limited liability company existence of each Subsidiary and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to maintain and preserve such Subsidiary’s corporate or limited liability company existence, or such rights or franchises, could not reasonably be expected to have a Material Adverse Effect;(v) pay and discharge when payable all amounts owed by the Company to the holders of Notes and perform and comply with every covenant, term and
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condition applicable to the Notes, in each case in accordance with the terms of this Agreement and the other Transaction Agreements;(vi) pay and discharge all Taxes imposed by Governmental Entities upon its properties or upon the income or profits therefrom, to the extent such Taxes have become due and payable and before they have become delinquent, provided that neither the Company nor any Subsidiary need pay any such Taxes if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such Taxes in the aggregate could not reasonably be expected to have a Material Adverse Effect; and(vii) comply with all applicable Laws of all Governmental Entities, in each case to the extent that failure to so comply could not reasonably be expected to have a Material Adverse Effect.4D. Financial Statements and Other Information . So long as any Notes remain outstanding, the Company shall deliver, whether or not the Parent is then required to file reports with the SEC pursuant to the terms of the Exchange Act, to each holder of Notes:
(i) as soon as available but in any event within 45 days after the end of each calendar month in each Fiscal Year, unaudited consolidating and consolidated statements of income, cash flows and stockholders’ equity of the Company Group for such month and for the period from the beginning of the Fiscal Year to the end of such month, and unaudited consolidating and consolidated balance sheets of the Company Group as of the end of such month, setting forth in each case comparisons to the Company Group’s annual budget and to the corresponding period in the preceding Fiscal Year, and all such items shall (a) be prepared in accordance with GAAP, subject to the absence of footnote disclosures and to normal year-end adjustments, (b) in the case of such items delivered at any time prior to the second anniversary of the Closing Date, include separate statements for each of the Company Group and EAG and (c) be certified on the Parent’s behalf by an authorized officer of the Parent;(ii) as soon as available but in any event within 45 days after the end of each Fiscal Quarter in each Fiscal Year, unaudited consolidating and consolidated statements of income, cash flows and stockholders’ equity of the Company Group for such Fiscal Quarter and for the period from the beginning of the Fiscal Year to the end of such Fiscal Quarter, and unaudited consolidated balance sheets of the Company Group as of the end of Fiscal Quarter, setting forth in each case comparisons to the Company Group’s annual budget and to the corresponding period in the preceding Fiscal Year, and all such items shall (a) be prepared in accordance with GAAP, subject to the absence of footnote disclosures and to normal year-end adjustments, (b) in the case of such items delivered at any time prior to the second anniversary of the Closing Date, include separate statements for each of the Company Group and EAG, (c) be certified on the Parent’s behalf by an authorized officer of the Parent and (d) accompanied by a compliance certificate executed on the Parent’s behalf by an authorized officer of the
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Parent (x) certifying compliance with the provisions of Section 4F(i) as of each Incurrence of Indebtedness during such Fiscal Quarter and (y) certifying and demonstrating in reasonable detail compliance with the provisions of Section 4F(ii) as of the end of such Fiscal Quarter; provided that delivery within the time period specified hereinabove of copies of the Parent’s Quarterly Report on Form 10-QSB prepared in compliance with the requirements of such Form 10-QSB and filed with the SEC shall be deemed to satisfy the requirements of this paragraph (ii); provided further that, notwithstanding the foregoing proviso, the Company shall be required to provide to the Purchasers the certificates described in clauses (c) and (d) above.(iii) within 90 days after the end of each Fiscal Year, unaudited consolidating and audited consolidated statements of income, cash flows and stockholders’ equity of the Company Group for such Fiscal Year, and unaudited consolidating and audited consolidated balance sheets of the Company Group as of the end of such Fiscal Year, setting forth in each case comparisons to the Company’s annual budget and to the preceding Fiscal Year, and all such items shall (a) be prepared in accordance with GAAP, (b) in the case of such items delivered at any time prior to the second anniversary of the Closing Date, include separate statements for each of the Company Group and EAG and (c) be accompanied by (1) with respect to the consolidated portions of such statements, an opinion containing no material exceptions or qualifications (except for qualifications regarding specified contingent Liabilities) by Deloitte & Touche, LLP or other independent accounting firm of recognized national standing and (2) a copy of such firm’s annual management letter to the Parent; provided that delivery within the time period specified hereinabove of copies of the Parent’s Annual Report on Form 10-KSB prepared in compliance with the requirements of such Form 10-KSB and filed with the SEC shall be deemed to satisfy the requirements of this paragraph (iii); provided further that, notwithstanding the foregoing proviso, the Company shall be required to provide to the Purchasers the documents described in clause (c) above.(iv) promptly upon receipt thereof, any additional reports, management letters or other detailed information concerning significant aspects of any member of the Company Group’s operations or financial affairs given to any member of the Company Group by its independent accountants (and not otherwise contained in other materials provided hereunder);(v) at least 5 days but not more than 90 days prior to the beginning of each Fiscal Year, an annual budget prepared on a monthly basis for the Company Group for such Fiscal Year (displaying anticipated statements of income and cash flows and balance sheets), and promptly upon preparation thereof, any other significant budgets prepared by the Company Group and any revisions of such annual or other budgets, in each case in substantially the same form and containing substantially the types of information as delivered to the Purchasers prior to the Closing, and in the case of such budgets or revisions thereof delivered at any time prior to the second anniversary of the Closing Date, including separate budgets or revisions |
AGREEMENTS / CONTRACTS
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