Standstill Agreement - Aviall Inc., Carlyle Partners III LP and CP III Coinvestment LP
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, dated as of December 21, 2001 (this
"AGREEMENT"), is entered into by and among Aviall, Inc., a Delaware corporation
(the "COMPANY"), Carlyle Partners III, L.P., a Delaware limited partnership
("CPIII"), and CP III Coinvestment L.P., a Delaware limited partnership ("CPIII
CO." together with CPIII, the "CARLYLE FUNDS"). CPIII and CPIII Co. are
sometimes referred to herein individually as an "INVESTOR" and collectively, as
the "INVESTORS".
WHEREAS, the Investors and the Company have entered into a Securities
Purchase Agreement, dated December 17, 2001 (the "PURCHASE AGREEMENT");
WHEREAS, an affiliate of the Investors and the Company and other
purchasers named therein have entered into a Note Purchase Agreement, dated
December 17, 2001 (the "NOTE PURCHASE AGREEMENT");
WHEREAS, as a condition to the consummation of the Purchase Agreement,
the Company desires that the Investors make certain representations, warranties,
covenants and agreements as set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Purchase Agreement and in the Note Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. Capitalized terms used herein but not otherwise defined
herein shall have the meaning ascribed thereto in the Purchase Agreement.
2. Representations and Warranties of Each Investor. To induce the
Company to enter into this Agreement, the Purchase Agreement and the Note
Purchase Agreement and to consummate the transactions contemplated hereby and
thereby, each Investor represents and warrants to the Company as follows:
2.1 Binding Agreement. The execution, delivery and performance
of this Agreement by such Investor and the consummation by such
Investor of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate or partnership action on
the part of such Investor. This Agreement has been duly executed and
delivered by such Investor, and, assuming the valid authorization,
execution and delivery hereof by the Company, is a valid and binding
obligation of such Investor, enforceable against such Investor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other similar
laws affecting or relating to the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
2.2 Execution; No Violations. The execution and delivery of
this Agreement by such Investor does not, and the consummation by such
Investor of the transactions contemplated hereby will not: (a) violate
or conflict with the organizational documents of such Investor or any
agreement, order, injunction, decree, or judgment to which such
Investor is a party or by which such Investor or any of its respective
properties is bound; or (b) violate any law, rule or regulation
applicable to such Investor .
2.3 Governmental and Other Consents. No consent, approval or
authorization of, or designation, registration, declaration or filing
with, any governmental entity or third Person is required
<PAGE>
on the part of such Investor in connection with the execution or
delivery of this Agreement or the consummation by it of the
transactions contemplated hereby.
2.4 Share Ownership. Such Investor does not own any voting
securities of the Company, or any securities convertible into or
exchangeable or exercisable for any voting securities of the Company,
or which, upon redemption thereof could result in such Investor or any
of its Affiliates receiving any voting securities of the Company, or
options, warrants, contractual rights or other rights of any kind to
acquire or vote any voting securities of the Company (collectively, the
"VOTING SECURITIES"), except those securities acquired pursuant to the
Purchase Agreement, the Note Purchase Agreement or issuable upon
conversion of the securities acquired pursuant to the Purchase
Agreement (the "COMPANY SHARES").
3. Standstill Arrangements.
3.1 Acquisition of Additional Voting Securities. Each Investor
hereby covenants and agrees that prior to the Termination Date (as
hereinafter defined), neither such Investor nor any of its controlled
Affiliates will, without the prior approval of the Board of Directors
of the Company, directly or indirectly, purchase or otherwise acquire
(other than pursuant to a stock split or stock dividend) or make any
proposal, other than a confidential proposal to the Board of Directors
of the Company, to or agree to acquire, or become or agree to become
the beneficial owner of, more than 5% of the outstanding Voting
Securities, other than (i) the Company Shares; (ii) any Voting
Securities acquired through the exercise, conversion or exchange of the
Company Shares (the "CONVERSION SHARES"), (iii) any Voting Securities
acquired through the exercise, conversion or exchange of the Conversion
Shares (together with the Company Shares and the Conversion Shares, the
"INVESTOR SHARES") or (iv) any voting securities issued as dividends on
or otherwise issued in exchange or in consideration of or with respect
to the Investor Shares (the "DIVIDEND SHARES") or shares issued as
dividends on the Dividend Shares or in exchange for or in respect of
the Dividend Shares.
3.2 Prohibited Actions. Each Investor hereby agrees that prior
to the Termination Date, neither such Investor nor any of its
Affiliates will, without the prior approval of the board of Directors
of the Company, directly or indirectly, solicit, request, advise,
assist or encourage others to, take any of the following actions:
(a) form, join in or in any other way participate in
a "partnership, limited partnership, syndicate or other group"
within the meaning of Section 13(d)(3) of the Exchange Act
with respect to Voting Securities or deposit any Voting
Securities in a voting trust or similar arrangement or subject
any Voting Securities to any voting agreement or pooling
arrangement, other than with one or more Affiliates of such
Investor with respect to the Company Shares or with one or
more beneficial owners of the Company Shares that does not own
any Voting Securities other than the Company Shares;
(b) solicit proxies or written consents of
stockholders with respect to Voting Securities (other than the
Investor Shares) under any circumstances, or make, or in any
way participate in, any "solicitation" of any "proxy" to vote
any Voting Securities (other than conducted by the Company),
or become a "participant" in any election contest with respect
to the Company (as such terms are defined or used in Rules
14a-1 and 14a-11 under the Exchange Act) other than an
election contest related to election of members of the Board
of Directors elected solely by the holders of the Investor
Shares;
-2-
<PAGE>
(c) seek to call, or request the call of, a special
meeting of the stockholders of the Company (other than as
contemplated by the Purchase Agreement) or seek to make, or
make, a stockholder proposal at any meeting of the
stockholders of the Company that has not first been presented
to the Board of Directors;
(d) commence, or announce any intention to commence,
any tender offer for any Voting Securities;
(e) make, announce any intention or desire to make,
or facilitate the making of, any proposal (other than a
confidential proposal to the Company) or bid with respect to
(i) the acquisition of any substantial portion of the assets
of the Company or of the assets or stock of any of its
subsidiaries or of all or any portion of the outstanding
Voting Securities, or (ii) any merger, consolidation, other
business combination, restructuring, recapitalization or
liquidation involving the Company or any of its subsidiaries;
(f) knowingly arrange, or in any way knowingly
participate in, any financing for any transaction referred to
in clauses 3(a) through 3(e) above; or
(g) make any request, or otherwise seek (in any
fashion that would require public disclosure by the Company,
such Investor or their respective Affiliates) to obtain any
waiver or amendment of any provision of this Agreement or take
any action restricted hereby.
4. Termination. This Agreement shall terminate with respect to a
particular Investor on the date that such Investor and its Affiliates no longer
own Voting Securities representing at least 15% of the outstanding Voting
Securities of the Company (the "TERMINATION DATE").
5. Remedies. Each party hereto hereby acknowledges and agrees that
irreparable harm would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to specific performance hereunder, including, without limitation, an injunction
or injunctions to prevent and enjoin breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
state or federal court in the State of New York, in addition to any other remedy
to which they may be entitled at law or in equity. Any requirements for the
securing or posting of any bond with such remedy are waived. All rights and
remedies under this Agreement are cumulative, not exclusive, and shall be in
addition to all rights and remedies available to either party at law or in
equity.
6. Jurisdiction; Venue. The parties hereto hereby irrevocably and
unconditionally consent to and submit to the jurisdiction of the courts of the
State of New York and of the United States of America located in the State of
New York for any actions, suits or proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby, and further agree that
service of any process, summons, notice or document by U.S. certified mail to
the respective addresses set forth in Section 11 hereof shall be effective
service of process for any such action, suit or proceeding brought against any
party in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement, or the transactions contemplated hereby, in the courts of the
States of New York or the United States of America located in the State of New
York, and hereby further irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in any inconvenient forum.
-3-
<PAGE>
8. Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and may be amended only
by an agreement in writing executed by the parties hereto.
9. Headings. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
10. Number; Gender. Whenever the singular number is used herein, the
same shall include the plural where appropriate, and words of any gender shall
include each other gender where appropriate.
11. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and sent by U.S.
certified mail, return receipt requested:
if to the Company: Aviall, Inc.
2750 Regent Boulevard
DFW Airport, Texas 75261
Attention: Jeffrey J. Murphy
with a copy to: Haynes and Boone, LLP
901 Main Street
Suite 3100
Dallas, Texas 75202
Attention: Janice V. Sharry, Esq.
if to CPIII or CPIII Co: The Carlyle Group
1001 Pennsylvania Avenue, NW
Washington, DC 20004
Attention: Allan M. Holt
Peter J. Clare
with a copy to: Latham & Watkins
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
Attention: Daniel Lennon
12. Enforceability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby the stipulated and
declared to be the intention of the parties that the parties would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable. In
addition, the parties agree to use their best efforts to agree upon and
substitute a valid and enforceable term, provision, covenant or restriction for
any of such that is held invalid, void or unenforceable by a court of competent
jurisdiction.
13. Law Governing. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
regard to any conflict of laws provisions thereof.
-4-
<PAGE>
14. Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto. Nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. Neither party
to this Agreement may assign its rights or delegate its obligations hereunder
(whether voluntarily, involuntarily, or by operation of law) without the prior
written consent of the other party. Any such attempted assignment shall be null
and void.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Section Headings. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written hereinabove.
AVIALL, INC.
By: /s/ Jeffrey J. Murphy
-------------------------------------
Name: Jeffrey J. Murphy
Title: Senior Vice President,
Law and Human Resources,
Secretary and General Counsel
CARLYLE PARTNERS III, L.P.
By: TC GROUP III, L.P.,
its general partner
By: TC GROUP III, L.L.C.,
its general partner
By: TC Group, L.L.C.,
its sole member
By: TCG Holdings, L.L.C.
its managing member
By: /s/ Peter J. Clare
----------------------------
Name: Peter J. Clare
Title: Managing Director
CP III COINVESTMENTS, L.P.,
By: TC GROUP III, L.P.,
its general partner
By: TC GROUP III, L.L.C.,
its general partner
By: TC Group, L.L.C.,
its sole member
By: TCG Holdings, L.L.C.
its managing member
By: /s/ Peter J. Clare
----------------------------
Name: Peter J. Clare
Title: Managing Director
-6-