Exhibit 2.2
AMENDMENT NUMBER ONE
Amendment Number One, dated as of November 9, 1998, to the Agreement
and Plan of Merger (the "Merger Agreement"), dated as of August 3, 1998, between
Phase II Acquisition Corp. ("Buyer") and TransDigm Holding Company (the
"Company"). Any capitalized term used herein without definition shall have the
meaning assigned thereto in the Merger Agreement.
Buyer and the Company hereby agree to amend the Merger Agreement as
follows:
1. Amendment to Section 1.2. Section 1.2 is hereby amended to delete
the phrase "will take place as promptly as practicable (and in any event within
two business days) after satisfaction or waiver of the condition set forth in
7.2.1" and to replace such phrase with "will take place on December 3, 1998."
2. Amendment to Section 3.1(c). Section 3.1(c) is hereby amended by
deleting Section 3.1(c) in its entirety and substituting the following:
"(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time, other than those to which Section 3.1(b) or
Section 3.1(d) applies and other than any shares held by stockholders
referred to in Section 3.1(g), shall be converted into and represent the
right to receive an amount in cash (such amount in cash being referred to
herein as the "Per Share Merger Consideration") equal to the quotient of
(a) the Merger Consideration plus the Aggregate Exercise Proceeds plus the
Option Rollover Amount, plus the Kelso Rollover Amount, minus the
Transaction Costs divided by (b) the total number of Outstanding Shares.
The following terms used in the definition of Per Share Merger
Consideration shall have the following meanings:
"Merger Consideration" means $330 million minus the Kelso Rollover
Amount minus the Option Rollover Amount.
"Aggregate Exercise Proceeds" means the aggregate exercise price
payable upon exercise of the Options (as defined below in Section 3.1(e))
which are to be canceled pursuant to Section 3.1(e) hereof and all of the
Warrants (as defined below in Section 3.1(f)).
"Option Rollover Amount" means the gross value of the Options listed
on Schedule 3.1(e).
"Kelso Rollover Amount" means (a) the quotient of the Odyssey Equity
Investment Amount divided by .925 minus (b) the Odyssey Equity Investment
Amount plus $5 million.
"Transaction Costs" means the fees and expenses listed on Schedule
3.1(c).
"Outstanding Shares" means 303,294.4 (the number of shares of common
stock of the Company on a fully-diluted basis).
"Odyssey Equity Investment Amount" shall equal $100.2 million.
3. Amendment to Section 3.1(d). Section 3.1(d) is hereby amended by
deleting Section 3.1(d) in its entirety and substituting the following:
"(d) (i) A number of shares of Common Stock held by Kelso Investment
Associates IV, L.P. ("KIA IV") and Kelso Equity Partners II, L.P. ("KEP
II") equal to the quotient of the Kelso Rollover Amount divided by the Per
Share Merger Consideration shall remain outstanding as shares of the
Surviving Corporation (the "Rollover Shares") and shall not be entitled to
receive any Per Share Merger Consideration. KIA IV (or an affiliate
thereof) and KEP II will own 94.39% and 5.61%, respectively, of such
Rollover Shares. All Rollover Shares shall be subject to the stockholders
agreement referred to in Sections 7.3.5 and 7.4.10.
(ii) A number of shares of KIA IV and KEP II equal to the quotient of
$20.0 million divided by the Per Share Merger Consideration (the "Exchange
Shares") shall be converted into and become senior pay-in-kind notes of
the Surviving Corporation with the terms set forth in Exhibit A hereto
plus a number of shares of Surviving Corporation Common Stock equal to 2%
of the outstanding shares of the Surviving Corporation Common Stock as of
the Effective Time, (calculated by taking into account only (a)
outstanding shares of Surviving Corporation Common Stock as of the
Effective Time, including those shares issued pursuant to this Section
3.1(d)(ii) (but excluding any shares or warrants of Surviving Corporation
Common Stock that may be outstanding as of the Effective Time as a result
of Section 6.12) and (b) the number of shares of Surviving Corporation
Common Stock underlying the Options listed on Schedule 3.1(e)) and shall
not be entitled to any Per Share Merger Consideration. KIA IV (or an
affiliate thereof) and KEP II will own 94.39% and 5.61%, respectively, of
such consideration. Such shares of Surviving Corporation Common Stock will
be subject to the stockholders agreement referred to in Section 7.3.5 and
7.4.10."
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4. Amendment to Section 3.2(b). Section 3.2(b) is hereby amended by
deleting Section 3.2(b) in its entirety and substituting the following:
"(b) Promptly after the Effective Time, Buyer shall cause the
Disbursing Agent to send a notice and a letter of transmittal to each
holder of certificates formerly evidencing (i) shares of Common Stock
(other than certificates representing Rollover Shares, Exchange Shares, or
shares of Common Stock to be canceled pursuant to Section 3.1(b) and
certificates held by stockholders referred to in Section 3.1(g) (the
"Dissenting Shares"), (ii) Options to be canceled pursuant to Section
3.1(e) and (iii) Warrants (collectively, the "Certificates") advising
holders of such Certificates of the effectiveness of the Merger and the
procedure for surrendering to the Disbursing Agent such Certificates for
exchange into the Per Share Merger Consideration, the Option Cancellation
Payment or the Warrant Cancellation Payment, as the case may be, plus, if
applicable, each such holder's pro rata portion of the equity securities
or interests referred to in Section 6.12, and that delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery
to the Disbursing Agent of the Certificates and a duly executed letter of
transmittal and any other required documents of transfer. Each holder of
the Certificates, upon surrender thereof to the Disbursing Agent together
with such letter of transmittal (duly executed) and any other required
documents of transfer, shall be entitled to receive in exchange therefor
the Per Share Merger Consideration, the Option Cancellation Payment or the
Warrant Cancellation Payment, as the case may be, plus, if applicable,
such holder's pro rata portion of the equity securities or interests
referred to in Section 6.12. Upon such surrender, the Disbursing Agent
shall promptly deliver the merger consideration due hereunder (less any
applicable withholding tax) in accordance with the instructions set forth
in the related letter of transmittal, and the Certificates so surrendered
shall promptly be canceled. Until surrendered, the Certificates (other
than those evidencing Dissenting Shares) shall be deemed for all purposes
to evidence only the right to receive the merger consideration due
hereunder, or, in the case of Dissenting Shares, the fair value of such
Dissenting Shares. No interest shall accrue or be paid on any cash payable
upon the surrender of the Certificates (other than Dissenting Shares to
the extent required by the DGCL)."
5. Amendment to Section 5.4. Section 5.4 is hereby amended by
deleting Section 5.4 in its entirety and substituting the following:
"5.4 Financial Ability to Perform. Buyer has delivered to the
Company complete and correct executed copies of letters, dated November 9,
1998, from BT Alex. Brown Incorporated and Credit Suisse First Boston
Corporation (together, the
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"Underwriters"), from Bankers Trust Company and from Odyssey Investment
Partners Fund L.P. (the "Financing Letters") issued in connection with the
financing of the transactions contemplated hereby (the "Financing").
Assuming satisfaction of all applicable conditions set forth in the
Financing Letters and full funding thereunder, Buyer at the Closing Date
shall be capitalized with an equity contribution in an amount equal to
$100.2 million and such funds, together with the proceeds from the debt
Financing, will provide sufficient funds to consummate the transactions
contemplated hereby."
6. Amendment to Section 6.2(b). Section 6.2(b) is hereby amended to
delete the second sentence thereof in its entirety and to replace such sentence
with the following:
"The Buyer agrees that the 144A offering contemplated by the Financing
Letters must be consummated prior to December 3, 1998 and that if any such
offering is not consummated prior to such date, then the Buyer will be
obligated on December 3, 1998 to exercise its rights under the Financing
Letters with respect to the Underwriters' obligations to purchase the
senior subordinated notes of TransDigm Inc. pursuant to the Financing
Letters in substitution therefor pursuant to the terms thereof, subject to
the conditions for such purchase set forth in the Financing Letters."
7. Addition of Section 6.12. Section 6.12 is hereby added after
Section 6.11 to read as follows:
"6.12 Agreement as to Warrants. In connection with the 144A offering
of senior subordinated notes of TransDigm Inc. contemplated by the
Financing Letters, the Company may issue warrants to purchase up to 6% of
the Surviving Corporation Common Stock, (calculated to include only (a)
outstanding shares of Surviving Corporation Common Stock as of the
Effective Time, including the shares of Surviving Corporation Common Stock
issued pursuant to Section 3.1(d)(ii) and the shares (or the shares
underlying the warrants) issued pursuant to this Section 6.12, and (b) the
number of shares of Surviving Corporation Common Stock underlying the
Options listed on Schedule 3.1(e)). To the extent that the Underwriters
are able to sell such notes pursuant to such 144A offering without issuing
such warrants, then the Company agrees that the balance (up to such 6%) of
such warrants (or, at Odyssey's election, the Surviving Corporation Common
Stock underlying such warrants) shall be issued 50% to Odyssey and 50% to
the existing equity holders of the Company as additional merger
consideration. The warrants (or shares of Surviving Corporation Common
Stock) that are issued to the existing equity holders of the Company as
additional merger consideration pursuant to the preceding sentence shall
be issued to a single entity or pursuant to a comparable arrangement which
vests voting control in one person or entity and in no event shall such
warrants
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or shares be distributed to such equity holders at any time without the
prior written consent of the Company and Odyssey. The economic interest of
each existing equity holder of the Company in such warrants or shares
shall be based on the number of shares of common stock held by each
stockholder and the number of shares of common stock into which each
option would be converted or for which each warrant would be exercised, in
each case on a cashless basis, calculated immediately prior to the
Effective Time. The warrants (or shares of Surviving Corporation Common
Stock) issued pursuant to this Section 6.12 shall be subject to the
stockholders agreement referred to in Sections 7.3.5 and 7.4.10."
8. Amendment to Section 7.4.6. Section 7.4.6 is hereby amended by
deleting Section 7.4.6 in its entirety and substituting the following:
"7.4.6 Financing. The debt funding contemplated by the
Financing Letters shall have been obtained; it being understood that as of
December 3, 1998 this condition shall only apply to the credit agreement
financing and the obligation of the Underwriters to purchase the senior
subordinated notes pursuant to the Financing Letters.
9. Amendment to Section 8.3(c). Section 8.3(c) is hereby amended to
insert after the phrase "compel specific performance under this Merger
Agreement" the words "while this Merger Agreement remains in full force and
effect and such party is not in willful breach of this Merger Agreement."
10. Amendment to Schedule 3.1(e). Schedule 3.1(e) to the Merger
Agreement is hereby amended to read as set forth on Exhibit B.
11. Amendment to Schedule 4.3. Schedule 4.3 is hereby amended to
delete the reference to "Salked & Co. 15,183.60" and replace such reference with
"Salked & Co. 15,183.80."
12. Amendment to Schedule 4.13. Schedule 4.13 to the Merger
Agreement is hereby amended to add the following at the end thereof:
"5. In September 1998, an action was brought against TransDigm by
Metapoint Partners Fund-II L.P. ("Metapoint") in Massachusetts
Superior Court. Metapoint alleges that TransDigm breached its August
8, 1997 Stock Purchase Agreement with Metapoint by failing to
adequately investigate the presence of contamination at the Marathon
Power Technologies Company facility in Waco, Texas. Metapoint seeks
the release of $2 million held in escrow that is to fund remediation
costs. In October 1998, TransDigm filed counterclaims against
Metapoint and cross claims against the escrow agent
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State Street Bank and Trust Company ("State Street"). An October 5,
1998 Court Order compelled Metapoint to return to State Street funds
that were wrongfully released from State Street's escrow account.
The October 5, 1998 Court Order also compelled State Street to seek
the return of wrongfully released escrow funds."
13. Full Force and Effect. Except as provided in this Amendment
Number One, the Merger Agreement shall continue in full force and effect in
accordance with the provisions thereof.
14. Governing Law. This Amendment Number One shall be construed,
performed and enforced in accordance with the laws of the State of New York,
without regard to the conflicts of law principles of such state.
15. Counterparts. This Amendment Number One may be executed in two
or more counterparts, each such counterpart being deemed to constitute one and
the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment
Number One as of the date first above written.
PHASE II ACQUISITION CORP.
By: /s/ Muzzi Mirza
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Name: Muzzi Mirza
Title: Chairman of the Board, President
and Treasurer
TRANSDIGM HOLDING COMPANY
By: /s/ Douglas W. Peacock
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Name: Douglas W. Peacock
Title: Chairman and Chief Executive Officer