UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 30, 1998
-------------------
THE BLACK & DECKER CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-1553 52-0248090
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
Towson, Maryland 21286
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 410-716-3900
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 30, 1998, the Corporation announced that it had completed the
recapitalization of its recreational products business, True Temper Sports, with
an affiliate of Cornerstone Equity Investors, LLC. In connection with the
transaction, the Corporation received $177.7 million in cash and a senior
increasing rate discount note in an initial accreted amount of $25.0 million.
The note received by the Corporation bears interest at a variable rate. In
addition, the Corporation retained approximately 6% of the preferred and common
stock of the recapitalized company, now known as True Temper Corporation, valued
at approximately $4.0 million.
On September 22, 1998, the Corporation announced that it had closed on the
sale of its glass container-making and inspection equipment business, Emhart
Glass, to Bucher Holding A.G. of Switzerland. In connection with the sale, the
Corporation received cash of $178.7 million.
On June 26, 1998, the Corporation closed on the sale to Windmere-Durable
Holdings, Inc. of its household products business (other than certain assets
associated with the Corporation's cleaning and lighting products, such as the
Dustbuster, SnakeLight, ScumBuster, and FloorBuster products) in the United
States, Canada, Mexico, Central America, the Caribbean and South America
(excluding Brazil) for $315.0 million. The Corporation received gross proceeds
of $288.0 million at closing and $27.0 million were held in escrow pending
transfer of assets associated with the household products business in Mexico.
The $27.0 million held in escrow were received by the Corporation in July 1998
in connection with the transfer of these Mexican assets. During the six months
ended June 28, 1998, the Corporation also completed the sale of its household
products business in Australia, the proceeds from which were immaterial.
The recapitalization of True Temper Sports, together with the sales of
Emhart Glass and the household products business (other than certain assets
associated with the Corporation's cleaning and lighting products) in North
America, Central America, the Caribbean, and South America (excluding Brazil),
are collectively referred to herein as the "Divested Businesses". The
Corporation estimates that taxes and other selling expenses, together with
payments on certain retained liabilities, will reduce the gross proceeds,
yielding aggregate net cash proceeds from the sales of the Divested Businesses
of approximately $525 million.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The pro forma financial information required by Item 7(b) of Form 8-K is
included herein.
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THE BLACK & DECKER CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma consolidated balance sheet as of June
28, 1998, and unaudited pro forma consolidated statement of earnings for the
year ended December 31, 1997, and the six months ended June 28, 1998, have been
prepared by the Corporation to give effect to the sales of the Divested
Businesses.
The unaudited pro forma consolidated statement of earnings for the year
ended December 31, 1997, was prepared using the Corporation's audited statement
of earnings for the year ended December 31, 1997, and assumes that the sales of
the Divested Businesses took place on January 1, 1997. The unaudited pro forma
consolidated statement of earnings for the six months ended June 28, 1998, was
prepared using the Corporation's unaudited statement of earnings for the six
months ended June 28, 1998, and assumes that the sales of the Divested
Businesses took place on January 1, 1997. The unaudited pro forma consolidated
balance sheet as of June 28, 1998, was prepared from the unaudited consolidated
balance sheet of the Corporation as of June 28, 1998, and assumes that the sales
of the Divested Businesses took place as of June 28, 1998.
These pro forma financial statements have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
or the financial condition which would actually have resulted had the sales of
the Divested Businesses been made on the dates or for the periods indicated or
which may result in the future. Further, these pro forma financial statements
have been prepared using information available as of the date of this filing. As
a result, certain amounts included herein are preliminary in nature and,
therefore, will be subject to adjustment in the future.
The actual financial statements of the Corporation will reflect the sales
of the Divested Businesses only from the respective actual sales dates forward.
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4
<TABLE>
Pro Forma Consolidated Statement of Earnings (Unaudited)
The Black & Decker Corporation
Year ended December 31, 1997
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Less:
Divested Pro Forma Pro Forma
As Reported Businesses Adjustments As Adjusted
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sales $ 4,940.5 $ 725.8 $ 4,214.7
Cost of goods sold 3,169.2 503.3 2,665.9
Selling, general and administrative expenses 1,282.0 166.1 1,115.9
--------------- --------------- ---------------
Operating Income 489.3 56.4 432.9
Interest expense (net of interest income) 124.6 $ (35.4)(a) 89.2
Other expense 15.2 1.2 14.0
--------------- --------------- --------------- ---------------
Earnings Before Income Taxes 349.5 55.2 35.4 329.7
Income taxes 122.3 22.9 12.4 (c) 111.8
--------------- --------------- --------------- ---------------
Net Earnings $ 227.2 $ 32.3 $ 23.0 $ 217.9
=============== =============== =============== ===============
Net Earnings Per Common
Share--Basic $ 2.40 $ 2.30
=============== ===============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 94.6 94.6
=============== ===============
Net Earnings Per Common
Share--Assuming Dilution $ 2.35 $ 2.26
=============== ===============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 96.5 96.5
=============== ===============
<FN>
See notes to unaudited pro forma consolidated financial statements.
</FN>
</TABLE>
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5
<TABLE>
Pro Forma Consolidated Statement of Earnings (Unaudited)
The Black & Decker Corporation and Subsidiaries
Six Months Ended June 28, 1998
(Dollars in Millions Except Per Share Amounts)
<CAPTION>
Less:
Divested Pro Forma Pro Forma
As Reported Businesses Adjustments As Adjusted
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales $ 2,178.0 $ 265.2 $ 1,912.8
Cost of goods sold 1,430.2 187.8 1,242.4
Selling, general and administrative expenses 565.4 63.3 502.1
Write-off of goodwill 900.0 40.0 860.0
Restructuring and exit costs 140.0 17.1 122.9
Gain (loss) on sale of businesses 36.5 49.2 (12.7)
-------------- -------------- --------------
Operating Income (Loss) (821.1) 6.2 (827.3)
Interest expense (net of interest income) 58.2 0.2 $ (16.4)(b) 41.6
Other expense 2.4 0.9 1.5
-------------- -------------- -------------- --------------
Earnings (Loss) Before Income Taxes (881.7) 5.1 16.4 (870.4)
Income taxes 31.3 34.8 5.8 (c) 2.3
-------------- -------------- -------------- --------------
Net Earnings (Loss) $ (913.0) $ (29.7) $ 10.6 $ (872.7)
============== ============== ============== ==============
Net Earnings (Loss) Per Common
Share--Basic $ (9.65) $ (9.23)
============== ==============
Shares Used in Computing Basic
Earnings Per Share (in Millions) 94.6 94.6
============== ==============
Net Earnings (Loss) Per Common
Share--Assuming Dilution $ (9.65) $ (9.23)(d)
============== ==============
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 94.6 94.6
============== ==============
<FN>
See notes to unaudited pro forma consolidated financial statements.
</FN>
</TABLE>
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6
Notes to Unaudited Pro Forma Consolidated Statement of Earnings
Less: Divested Businesses
To eliminate the results of Divested Businesses--True Temper Sports, Emhart
Glass, and the household products business (excluding certain assets associated
with the Corporation's cleaning and lighting products) in North America, Central
America, the Caribbean, and South America (excluding Brazil). The results of the
Divested Businesses eliminated do not reflect charges for certain Corporate
overhead expenses historically allocated by the Corporation to these businesses.
For the year ended December 31, 1997, and the six months ended June 28, 1998,
such charges were approximately $11.7 million and $4.5 million, respectively.
While the Corporation is taking action to realign its Corporate overhead
structure in light of the sale of the Divested Businesses, such actions are
prospective in nature and projected savings resulting from these actions are not
reflected in the pro forma consolidated results.
The results of the household products business (excluding certain assets
associated with the Corporation's cleaning and lighting products) in North
America, Central America, the Caribbean, and South America (excluding Brazil)
included in the results of the Divested Businesses eliminated from the
Corporation's historical results to arrive at the pro forma consolidated results
are based upon certain assumptions and allocations. The household products
businesses sold were jointly operated with the cleaning and lighting products
businesses retained by the Corporation. Further, the Corporation's divested
household products businesses in Central America, the Caribbean, and Latin
America (excluding Brazil) were operated jointly with the Corporation's power
tools and accessories businesses. Accordingly, the results of the household
products businesses, included in the results of the Divested Businesses, were
determined using certain assumptions and allocations that the Corporation
believes are reasonable under the circumstances.
Pro Forma Adjustments
For purposes of the pro forma statement of earnings, it was assumed that the net
cash proceeds from the Divestitures of $525 million were used to reduce
indebtedness. The effect of a 1/8% change in the Corporation's weighted average
borrowing rate would impact the pro forma reduction of net interest expense by
$.7 million and $.4 million for the year ended December 31, 1997, and the six
months ended June 28, 1998, respectively.
For pro forma purposes, no interest income was assumed recognized on the note
received by the Corporation in connection with the recapitalization of True
Temper Sports. Such note, however, is interest bearing, with interest being
added to the accreted amount of the note and not paid in cash.
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(a) To reflect a pro forma reduction in net interest expense of $35.4 million
based upon the Corporation's weighted average borrowing rate for the year
ended December 31, 1997, of 6.74%.
(b) To reflect a pro forma reduction in net interest expense of $16.4 million
based upon the Corporation's weighted average borrowing rate for the
six-month period ended June 28, 1998, of 6.42%.
(c) To reflect income taxes on entries (a) and (b) at the federal statutory
rate.
(d) Excluding the after-tax effect of the restructuring charge, the goodwill
write-off, and the impairment loss on sale of businesses, pro forma net
earnings for the six months ended June 28, 1998, would have been $85.1
million. Because the Corporation had a net loss on a pro forma basis for
the six months ended June 28, 1998, the calculation of pro forma earnings
per share on a diluted basis excludes the impact of stock options since
their inclusion would be anti-dilutive--that is, decrease the per-share pro
forma loss. For comparative purposes, the Corporation believes that the
dilutive effect of stock options should be considered when evaluating the
Corporation's pro forma performance, if the effects of the restructuring
charge, goodwill write-off and impairment loss on sale of businesses were
excluded. If the dilutive effect of stock options were considered, pro
forma net earnings, excluding the after-tax effect of the restructuring
charge, the goodwill write-off, and the impairment loss on sale of
businesses, would have been $.88 per share on this diluted basis.
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8
<TABLE>
Pro Forma Consolidated Balance Sheet (Unaudited)
The Black & Decker Corporation and Subsidiaries
June 28, 1998
(Millions of Dollars)
<CAPTION>
Less:
Divested Pro Forma Pro Forma
As Reported Businesses Adjustments As Adjusted
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 204.1 $ 3.7 $ 200.4
Trade receivables 815.7 43.9 771.8
Inventories 765.0 59.5 705.5
Other current assets 205.1 7.2 $ (27.0) 170.9
---------------- ---------------- ---------------- ----------------
Total Current Assets 1,989.9 114.3 (27.0) 1,848.6
---------------- ---------------- ---------------- ----------------
Property, Plant, and Equipment 781.3 49.4 731.9
Goodwill 935.7 160.7 775.0
Other Assets 510.7 5.4 29.0 534.3
---------------- ---------------- ---------------- ----------------
$ 4,217.6 $ 329.8 $ 2.0 $ 3,889.8
================ ================ ================ ================
Liabilities and Stockholders' Equity
Short-term borrowings $ 89.1 $ 0.7 $ (88.4) $ -
Current maturities of long-term debt 60.6 0.2 (60.4) -
Trade accounts payable 355.3 19.8 335.5
Other accrued liabilities 822.3 66.4 755.9
---------------- ---------------- ---------------- ----------------
Total Current Liabilities 1,327.3 87.1 (148.8) 1,091.4
---------------- ---------------- ---------------- ----------------
Long-Term Debt 1,658.1 0.1 (111.5) 1,546.5
Deferred Income Taxes 55.6 - 55.6
Postretirement Benefits 283.0 8.8 274.2
Other Long-Term Liabilities 192.3 1.0 191.3
Stockholders' Equity
Common stock 46.5 46.5
Other stockholders' equity 654.8 232.8 262.3 684.3
---------------- ---------------- ---------------- ----------------
Total Stockholders' Equity 701.3 232.8 262.3 730.8
---------------- ---------------- ---------------- ----------------
$ 4,217.6 $ 329.8 $ 2.0 $ 3,889.8
================ ================ ================ ================
<FN>
See notes to unaudited pro forma consolidated financial statements.
</FN>
</TABLE>
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Notes to Unaudited Pro Forma Consolidated Balance Sheet
The Corporation's historical consolidated balance sheet as of June 28, 1998,
reflects the sale of the household products business (excluding certain assets
associated with cleaning and lighting products) in North America, Central
America, the Caribbean, and Latin America (excluding Brazil), the receipt of
$288.0 million in cash proceeds through that date, and a reduction of
indebtedness with those cash proceeds after deducting selling expenses.
Less: Divested Businesses
To eliminate the assets sold and liabilities assumed of those Divested
Businesses included in the Corporation's historical consolidated balance sheet
at June 28, 1998--that is, Emhart Glass and True Temper Sports.
Pro Forma Adjustments
For purposes of the unaudited pro forma consolidated balance sheet, it was
assumed that: (i) the gross proceeds from the sales of the Divested Businesses
were reduced by taxes and other selling expenses and the payment of certain
liabilities retained by the Corporation; and (ii) that these net proceeds were
first used to reduce short-term indebtedness and then used to reduce long-term
indebtedness at June 28, 1998.
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10
Exhibit No. Description
2(a) Amendment No. 2 dated as of September 30, 1998, to the
Reorganization, Recapitalization and Stock Purchase
Agreement dated as of June 29, 1998, by and between The
Black & Decker Corporation, True Temper Corporation, and
True Temper Sports, LLC.
2(b) Amendment No. 1 dated as of September 21, 1998, to the
Transaction Agreement date as of July 12, 1998, by and
between The Black & Decker Corporation and Bucher
Holding A.G.
2(c) Amendment No. 3 dated as of September 23, 1998, to the
Transaction Agreement dated as of May 10, 1998, by and
between The Black & Decker Corporation and
Windmere-Durable Holdings, Inc.
2(d) Letter Agreement dated as of July 29, 1998, between The
Black & Decker Corporation and Windmere-Durable
Holdings, Inc.
99(a) Securities Purchase Agreement dated as of September 30,
1998, among True Temper Corporation and Emhart Inc.
99(b) Warrant Agreement among True Temper Corporation and
Emhart Inc. dated as of September 30, 1998.
99(c) Debt Registration Rights Agreement among True Temper
Corporation and Emhart Inc. dated as of September 30,
1998.
99(d) Equity Registration Rights Agreement among True Temper
Corporation and Emhart Inc. dated as of September 30,
1998.
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11
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE BLACK & DECKER CORPORATION
By /s/ STEPHEN F.REEVES
Stephen F. Reeves
Vice President and Controller
AMENDMENT NO. 2
Dated as of September 30, 1998
to
REORGANIZATION,
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of June 29, 1998
By and Between
THE BLACK & DECKER CORPORATION,
TRUE TEMPER CORPORATION
(FORMERLY TRUE TEMPER SPORTS, INC.)
AND
TRUE TEMPER SPORTS, LLC
(FORMERLY TTSI LLC)
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AMENDMENT NO. 2 to
REORGANIZATION, RECAPITALIZATION AND
STOCK PURCHASE AGREEMENT
This Amendment No. 2 (this "Amendment") to Reorganization,
Recapitalization and Stock Purchase Agreement (together with the Exhibits,
Schedules and Attachments thereto, as amended by Amendment No. 1 thereto dated
as of August 1, 1998, the "Agreement") is made as of the 30th day of September
1998, by and among The Black & Decker Corporation, a Maryland corporation
("Parent"), True Temper Corporation, a Delaware corporation ("TTSI", formerly
known as True Temper Sports, Inc.), and True Temper Sports, LLC, a Delaware
limited liability company ("Buyer", formerly known as TTSI LLC).
W I T N E S E T H:
WHEREAS, Parent, TTSI and Buyer entered into the Reorganization,
Recapitalization and Stock Purchase Agreement as of June 29, 1998, and Amendment
No. 1 thereto as of August 1, 1998; and
WHEREAS, Parent, TTSI and Buyer desire to amend and clarify certain
terms contained in the Agreement, all as more fully set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1 Definitions. Capitalized terms used in but not defined in
this Amendment shall have the meanings specified in the Agreement.
Section 2. Amendment to Section 2.01.
(a) Section 2.01(c) is amended by deleting the number "368.75"
and inserting in lieu thereof "3,687,500".
(b) Section 2.01(e) is amended by deleting Section 2.01(e) in
its entirety and inserting in its place and stead the following:
(c) In exchange for the transfer of the Transferred
Intellectual Property contemplated by Section 2.01(d), TTSI will issue to Emhart
4,709.82 shares of TTSI Common Stock, 8,812,500 shares of TTSI Preferred Stock,
which shares of TTSI Common Stock and TTSI Preferred Stock shall upon such
issuance be duly authorized, fully paid and non-assessable shares of capital
Stock of TTSI, and $25,000,000 aggregate initial principal amount of senior
increasing rate notes of TTSI pursuant to a Securities Purchase Agreement in the
form attached hereto as Exhibit A, which senior increasing
<PAGE>
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rate notes shall include warrants to purchase shares of TTSI Common Stock under
certain circumstances;
Section 3. Amendment to Section 2.03.
(a) Section 2.03(a)(i) is amended by deleting the number
"5,818.60" and inserting in lieu thereof "4,528.42", and is further amended by
deleting the amount "$112,747,535.88" and inserting in lieu thereof
"$87,747,535.88".
(b) Section 2.03(b)(i) is amended by deleting the number
"293.75" and inserting in lieu thereof "2,937,500", and is further amended by
deleting the number "881.25" and inserting in lieu thereof "8,812,500".
(c) The last unnumbered clause of Section 2.03(b) is amended
by deleting the number "75" and inserting in lieu thereof "750,000", and is
further amended by deleting the number "1175" and inserting in lieu thereof
"11,175,000".
Section 4. Stock Split. At the request of the Buyer, TTSI has effected
a 10,000 to 1 split of the TTSI Common Stock by means of a stock dividend (the
"Stock Split") immediately upon the completion of the redemption described in
Section 2.03(a) of the Agreement. The parties agree that the numbers of shares
of TTSI Common Stock set forth in the Agreement are before giving effect to the
Stock Split and, with respect to all transactions occurring after the Stock
Split, all such numbers of shares of TTSI Common Stock shall be adjusted to
reflect the Stock Split
Section 5. Amendment to Section D.07(d). Section D.07(d) is hereby
amended by deleting the phrase "an interest rate of 5.75%" at the end of the
second sentence and inserting in its place and stead "the actuarial assumptions
used by the PBGC pursuant to Section 1.414(l)-1(b)(5)(ii) of the U.S. Department
of Labor Regulations, provided that to the extent that the total of the Transfer
Amount under this Section D.07(d) plus the Transfer Amount under Section D.08(d)
is more than $40,000 less than the amount of the total of such Transfer Amounts
had they been determined using an interest rate of 5.75%, an amount equal to
such deficit in excess of $40,000 shall be added to the Transfer Amount under
this Section D.07(d)".
Section 6. Amendment to Section D.08(d). Section D.08(d) is hereby
amended by deleting the phrase "an interest rate of 5.75%" at the end of the
second sentence and inserting in its place and stead "the actuarial assumptions
used by the PBGC pursuant to Section 1.414(l)-1(b)(5)(ii) of the U.S.
Department of Labor Regulations".
Section 7. Amendment to Article III of Exhibit D. Article III of the
Exhibit D of the Agreement is amended by deleting Sections D.13 and D.14 and
substituting therefore the following:
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D.13. Parent agrees, subject to Applicable Law, to cause its
appropriate Affiliate to continue to employ the Non U.S. Transferred
Employees for a temporary period (the "Transition Period") ending on
the earlier of (i) the date Buyer or TTSI elects to employ the Non
U.S. Transferred Employees, or (ii) the close of business on September
30, 1999. Although the Non U.S. Transferred Employees will remain
employed by Parent or its Affiliate during the Transition Period, such
persons will be working on the business of the Buyer or TTSI, and will
report to and be subject to the control and supervision of Buyer and
TTSI. Parent agrees that neither Parent nor any of its Affiliates
will, without a consent of Buyer or TTSI (which consent will not be
unreasonably withheld) alter any terms and conditions of or terminate
the employment of any Non U.S. Transferred Employee during the
Transition Period. Buyer and/or TTSI shall reimburse Parent or its
designated Affiliate within seven days of receipt of an invoice for
any fees, costs, taxes or expenses reasonably and properly incurred by
Parent or its Affiliate, as a result of employing and of providing and
administering benefits to the Non U.S. Transferred Employees and their
dependants and beneficiaries during the Transition Period.
D. 14. Notwithstanding any contrary provision of the Transaction
Documents, effective upon the close of the Transition Period, the
employment of all Non U.S. Transferred Employees shall be transferred
to Buyer or TTSI such that the employment of such person shall be
considered continuous employment under Applicable Law. Buyer and TTSI
shall ensure that such employment shall be on the same terms and
conditions as those under which such persons are employed immediately
prior to the close of the Transition Period. Buyer and TTSI shall
assume any obligations under any agreement or Applicable Law relating
to the terms and conditions of employment of any Non U.S. Transferred
Employees, and Buyer and TTSI shall be responsible for any liability
or obligations arising out of or pertaining to the termination
employment of, hiring of or failure or refusal to hire any Non U.S.
Transferred Employees on or after the close of the Transition Period.
In addition to the indemnification provisions otherwise provided in
the Transaction Documents, Buyer and TTSI agree to indemnify Parent
and its Affiliates and their respective directors, officers, employees
and agents against, and agree to hold them harmless from, any and all
Damages arising out of or pertaining to the employment of the Non U.S.
Transferred Employees during the Transition Period or by Buyer or TTSI
thereafter, any actions or omission taken or made by any Non U.S.
Transferred Employee during the Transition Period and thereafter, and
the termination of employment of, hiring of or failure to or refusal
to hire, any
<PAGE>
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Non U. S. Transferred Employee on or after the close of the Transition
Period.
Section 8. Limited Amendment. Except as amended by this Amendment and
as the context may otherwise require to give effect to the intent and purposes
of this Amendment, the Agreement shall remain in full force and effect without
any other amendments or modifications.
Section 9. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to Parent (or TTSI prior to Closing):
c/o The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (410) 716-3318
with a copy to:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
General Counsel
Telecopy: (410) 716-2660
and
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn C. Campbell
David A. Gibbons
Telecopy: (410) 385-3700
if to Buyer (or TTSI after Closing):
TTSI LLC
c/o Cornerstone Equity Investors, LLC
717 5th Avenue
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Suite 1100
New York, New York 10022
Attention: Mr. Mark Rossi
Telecopy: (212) 826-6798
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esquire
Telecopy: (212) 446-4900
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify by notice to the other parties. Each such notice,
request or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section 7
and evidence of receipt is received or (ii) if given by any other means, upon
delivery or refusal of delivery at the address specified in this Section 7.
Section 10. Amendments; Waivers. Subject to the provisions of Section
9.04 of the Agreement, any provision of this Amendment may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Parent and Buyer, or in the
case of a waiver, by the party against whom the waiver is to be effective.
Section 11. Successors and Assigns. The provisions of this Amendment
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party, provided the Buyer may assign its or
TTSI's rights hereunder to an agent for the financing sources in connection with
the Contemplated Transactions, as collateral security for TTSI's obligations,
and Buyer may assign its rights to purchase Acquired Shares to Permitted
Assignees.
Section 12. Entire Agreement. The Transaction Documents and any other
agreements contemplated thereby (including, to the extent contemplated herein,
the Confidentiality Agreement) as amended by this Amendment constitute the
entire agreement among the parties with respect to the subject matter of such
documents and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the subject matter
thereof.
Section 13. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Amendment
<PAGE>
-6-
or the Contemplated Transactions shall be brought in the United States District
Court for the District of Delaware (or, if subject matter jurisdiction is
unavailable, any of the state courts of the State of Delaware), and each of the
parties hereby consents to the exclusive jurisdiction of such court (and of the
appropriate appellate court) in any such suit, action or proceeding and waives
any objection to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of Delaware. Without limiting the foregoing, Parent, TTSI and
Buyer agree that service of process upon such party at the address referred to
in Section 4 together with written notice of such service to such party, shall
be deemed effective service of process upon such party.
Section 14. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of the this Amendment or affecting the
validity or enforceability of such provision in any other jurisdiction. To the
extent any provision of this Amendment is determined to be prohibited or
unenforceable in any jurisdiction Parent and Buyer agree to use reasonable
commercial efforts, and agree to cause the other Seller Companies and TTSI, as
the case may be, to use reasonable commercial efforts, to substitute one or more
valid, legal and enforceable provisions that, insofar as practicable implement
the purposes and intent of the prohibited or unenforceable provision.
Section 15. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By:/s/CHARLES E. FENTON
Name: Charles E. Fenton
Title: Senior Vice President and General
Counsel
TRUE TEMPER CORPORATION
By:/s/CHARLES E. FENTON
Name: Charles E. Fenton
Title: Vice President
<PAGE>
-7-
TRUE TEMPER SPORTS, LLC
By:/s/TYLER J. WOLFRAM
Name: Tyler J. Wolfram
Title: Managing Director
AMENDMENT NO. 1
Dated as of September 21, 1998
to
TRANSACTION AGREEMENT
Dated as of July 12, 1998
By and Between
THE BLACK & DECKER CORPORATION
and
BUCHER HOLDING AG
<PAGE>
AMENDMENT NO. 1 TO TRANSACTION AGREEMENT
This Amendment No. 1 to Transaction Agreement (the "Amendment") is made
as of the 21st day of September, 1998, by and between among The Black & Decker
Corporation, a Maryland corporation ("Black & Decker"), and Bucher Holding AG, a
Swiss corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Black & Decker, through certain of its direct and indirect
Subsidiaries, is engaged in the Glass Machinery Business;
WHEREAS, Black & Decker and Buyer entered into a Transaction Agreement
dated as of July 12, 1998 (the "Agreement") pursuant to which Black & Decker
agreed to sell and Buyer agreed to purchase the Glass Machinery Business upon
the terms and subject to the conditions set forth therein;
WHEREAS, Black & Decker and Buyer desire to amend the Agreement in
accordance with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Definitions. Capitalized terms used but not defined herein
have the meanings given to them in the Agreement.
Section 2. Amendments. The Transaction Agreement is hereby amended as
follows.
2.01. Employment Matters. The following amendments relate to
the provisions of the Transaction Agreement that relate to employment matters.
(a) U.S. Benefit Arrangements. Certain welfare
benefits described on Schedule B.20 (medical, dental, life and disability
benefits) will continue to be provided to the US Transferred Employees by Black
& Decker on an interim basis pursuant to a Benefit Continuation Agreement
between Black & Decker and the Buyer to be executed at the Closing.
(b) Pension Asset Transfers. The fund to fund asset
transfers from Seller's U.S. Salaried Pension Plan and Seller's U.S. Hourly
Pension Plan, as contemplated in Sections D.08 and D.09, will be made in the
amounts required under Section 414(l) of the Internal Revenue Code as determined
by the PBGC. The fund to fund asset transfer from Seller's U.K. Pension Plan, as
contemplated in Section D.15(b), will be made in the amount determined by the
Trustees of the Seller's U.K. Pension Plan subject to the consent of each Non-US
Transferred Employee that participates in such plan. Such fund to fund transfers
will be included as pension assets in the Proposed Final Net Tangible Asset
Amount and the Final Net Tangible Asset Amount pursuant to Section 2.04(b) and
Attachment XVIII; provided that the pension assets so included in the Proposed
Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount shall
not exceed the sum of (i) the pension liabilities included in the Proposed Final
Net Tangible Asset Amount and the Final Net Tangible Asset Amount (determined in
accordance with Attachment XVIII), plus (ii) $400,000. An example of the
application of this section using hypothetical amounts is attached as Exhibit A.
(c) Swedish Pension Liability. In accordance with
Section D.19(a), Black & Decker has made payment to the Swedish pension
authorities in the amount specified by the Swedish pension authorities to
eliminate the unfunded Swedish pension liability. The amount so paid may be
subject to some adjustment to be specified by the Swedish pension authorities
based on updated census data. According to the Swedish pension authorities such
adjustment will not be calculated until after January 1, 1999. B&D will be
responsible for any additional payment required by the adjustment and will be
entitled to any refund if the adjustment results in an overpayment having been
made by B&D and any additional payment requirement shall be an Excluded
Liability or an Excluded Asset, respectively.
(d) Individual Employee Severance Agreements. Prior
to the Closing one of the Employees listed on Schedule B.20 as having an
individual employee severance agreement has been terminated and the severance
benefits described in such agreement have been paid in full prior to the
Closing. Another of the Employees listed on Schedule B.20 as having an
individual employee severance agreement will be terminated after the Closing.
Black & Decker will be responsible for paying the severance benefits described
in such agreement to the Employee who will be terminated after the Closing Date
and such obligation shall be an Excluded Liability.
(e) Black & Decker Stock Option Plan. The Buyer shall
assume no liability of Black & Decker to Employees under the Black & Decker
Stock Option Plan and such liabilities shall be Excluded Liabilities. The U.S.
Employees who participate in the Black & Decker Stock Option Plan have been
notified by Black & Decker of their continuing rights under such plan.
2.02. Kishinev Matter. Since the date of execution of the
Transaction Agreement, a claim has been made against Emhart Deutschland GmbH by
Hermes relating to the Kishinev Matter (as defined in the Supplemental Asset
Sale Agreement between Emhart Deutschland GmbH, Emhart Glass S.A. (formerly, New
Emhart Glass S.A.), Emhart Glass GmbH and Emhart Glass Manufacturing GmbH (the
"German Supplemental Agreement")). The Kishinev Matter shall be deemed to have
been disclosed as a threatened claim under Schedule B.11. Black & Decker has
retained responsibility for the claim being made by Hermes by treating such
claim as an Excluded Liability under the German Supplemental Agreement and has
retained certain rights against third parties by treating such rights as
Excluded Assets under the German Supplemental Agreement.
2.03. Anchor Bankruptcy Matter. Emhart Glass Machinery (U.S.),
Inc. has unsecured creditor claims against the Anchor bankruptcy estate and
preference claims have been asserted against Emhart Glass Machinery (U.S.), Inc
by the trustee in the bankruptcy proceeding described in Schedule B.11. Emhart
Glass Machinery (U.S.), Inc. will attempt to finally settle the claims by the
date that the statement of the Proposed Final Net Tangible Asset Amount is due.
If such unsecured creditor claims and preference claims are so finally settled,
such claims by and against Emhart Glass Machinery (U.S.), Inc. will be included
in the statement of the Proposed Final Net Tangible Asset Amount and in the
Final Net Tangible Asset Amount. If such unsecured creditor claims and
preference claims are not so finally settled by such date, any assets,
liabilities and reserves relating to such claims will not be included in the
statement of the Proposed Final Net Tangible Asset Amount and in the Final Net
Tangible Asset Amount and shall be treated as Excluded Assets and Excluded
Liabilities, respectively.
2.04. Cash. The parties have agreed to transfer to the Buyer
Companies certain bank accounts used by the Glass Machinery Units. Therefore,
clause (i) of the definition of Excluded Assets is hereby amended to add to the
end of such clause (i): "or cash or cash equivalents that are otherwise
transferred to a Buyer Company on the Closing Date."
2.05 Intellectual Property. The following amendments relate to
the provisions of the Transaction Agreement that relate to Intellectual Property
matters.
(a) Registered Patents and Trademarks. The parties
have agreed that beneficial title to the registered patents and trademarks of a
Glass Machinery Share Company would be transferred to one of the Sellers of
Transferred Assets prior to the Closing and that beneficial title to all such
registered patents and trademarks will be transferred to Emhart Glass S.A.
(formerly, "New Emhart Glass S.A.") by assignment at the Closing.
(b) Trademark License Agreement. The parties have
agreed that a Trademark License Agreement will be executed at the Closing.
2.06 Emhart (U.K.) Ltd.. The following amendments relate to
the provisions of the Transaction Agreement that relate to the sale of the
shares of Emhart (U.K.) Ltd.
(a) Capital Stock. Since the date of the Transaction
Agreement, Emhart (U.K.) Ltd. has issued an additional 500 shares of capital
stock to Emhart International Ltd. The relevant disclosures on Schedule B.03 are
hereby amended to reflect that the number of authorized and issued shares of
capital stock of Emhart (U.K.) Ltd. is 38,000, all of which are held by Emhart
International Ltd. and are being transferred to Bucher Holding A.G. pursuant to
the Supplemental Share Sale Agreement between Emhart International Ltd. and
Bucher Holding A.G.
(b) Midland Bank. Emhart (U.K.) Ltd. is a party to a
guaranty of Black & Decker credit facilities with Midland Bank. Black & Decker
will have Emhart (U.K.) Ltd. released from such guaranty and will indemnify
Buyer against any claims made against Emhart (U.K.) Ltd. under such guaranty.
2.07 Allocation. With respect to the allocation of the
Exchange Consideration pursuant to Section 2.02(b), Net Asset Values of the
Glass Machinery Units listed on Attachment IV shall be determined using the same
accounting methods as are used in the determination of the Final Net Tangible
Asset Amount.
2.08 Madrid and Moscow Offices.
(a) Madrid Office. There is an existing, written
agreement between Sistemas de Fijacion Tucker and Emhart Srl. regarding the
provision of Madrid office space and the administration of Ms. Rentero's payroll
for Emhart Srl. that will remain in effect after the Closing.
(b) Moscow Office. Alexander Simonian, is on the
payroll of Black & Decker GmbH and Black & Decker GmbH provides office space and
office support to Mr. Simonian pursuant to a written agreement between Black &
Decker GmbH and Emhart Deutschland GmbH that is being assigned to one of the
Buyers pursuant German Supplemental Agreement. Since Mr. Simonian will,
therefor, not be a Transferred Employee, his name is hereby removed from
Attachment XVI.
2.09 Emhart Sweden A.B.. The Buyer agrees that it will cause
Emhart Sweden A.B. not to declare and pay dividends prior to January 1, 1999.
2.10 Environmental Matters. The environmental matters
described below were ascertained by Buyer as the result of the investigations
that Buyer had conducted by Zurich Insurance Company pursuant to Section 6.02.
Each such matter shall be deemed to have been disclosed in Schedule B.15. The
parties agree to the following amendments to the Transaction Agreement with
respect to such matters.
(a) Indemnification Limitation. One hundred percent
shall be substituted for the 75% and 50% limitations contained in Section
10.04(b)(ii) with respect to Black & Decker's indemnification obligations under
clauses (iii)(a) and (iii)(b) of Section 10.02(b) arising out of the following
conditions described in the reports prepared by Zurich Insurance Company for
Buyer it being agreed that any Remedial Action conducted with respect to such
conditions shall be conducted in accordance with Section 10.03(b) of the
Transaction Agreement:
(i) Orebro Facility. (A) Diesel contaminated
soil; (B) Lack of spill prevention management; and (C) Oil residue in catch
basin and drainage pipe.
(ii) Sundsvall Facility. (A) Secondary
Containment Upgrade; (B) Asbestos wrapping around piping; and (C) Testing for
PCBs in window insulation.
(iii) Laclede Facility. Failure to have
obtained regulatory approval of disposal of NORM in solid waste landfill.
(b) Contacts with Governmental Authorities.
(i) Elmira Facility. Black & Decker agrees
that Buyer's contacting the relevant Governmental Authorities to confirm that
the municipal incinerator ash used as fill at the facility does not contain
levels of heavy metals that are below regulatory reporting thresholds will not
affect Buyer's rights to indemnification for such condition.
(ii) Sundsvall Facility. Black & Decker
agrees that Buyer's contacting the relevant Governmental Authorities to confirm
that the window insulation does not contain PCBs will not affect Buyer's rights
to indemnification for such condition.
2.11 Canceled Orders. The parties agree that the Transferred
Assets affected as the result of the cancellation of the orders for machines
prior to the Closing (such as the cancellation by Rosalko) shall be included in
the determination of the Proposed Final Net Tangible Asset Amount and the Final
Net Tangible Asset Amount after taking into account the cancellation.
<PAGE>
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By:__________________________________
Name:
Title:
BUCHER HOLDING AG
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT A
EXAMPLE OF THE APPLICATION OF SECTION 2.01(b)
Pension Liabilities (in 000s) to be determined pursuant to Attachment XVII.
Total PBO Liability Included on
Statements of Proposed Final Net
Tangible Asset Amount and Final
Net Tangible Asset Amount
Pension Plan PBO Liability Transferred
U.S. Hourly 3,500
U.S. Salaried 7,900
U.K. 1,500
Swiss 2,000
German 2,700
Total 17,600 17,600
Pension Assets (in 000s) to be determined pursuant to Attachment XVII.
Total Pension Assets Included on
Statements of Proposed Final Net
Tangible Asset Amount and Final
Net Tangible Asset Amount
Pension Plan Pension Assets Transferred
U.S. Hourly 4,400
U.S. Salaried 10,000
U.K. 2,300
Swiss 3,000
German 0
Total 19,700 18,000*
* Total Pension Assets Included on Statements of Proposed Final Net Tangible
Asset Amount and Final Net Tangible Asset Amount not to exceed Total PBO
Liability plus $400.
Post Retirement Benefits Other Than Pensions (FASB No. 106) and Post Employment
Benefits (FASB No. 112) to be included on Statements of Proposed Final Net
Tangible Asset Amount and Final Net Tangible Asset Amount in the amounts
determined pursuant to Attachment XVII.
AMENDMENT NO. 3
Dated as of September 23, 1998
to
TRANSACTION AGREEMENT
Dated as of May 10, 1998
By and Between
THE BLACK & DECKER CORPORATION
and
WINDMERE-DURABLE HOLDINGS, INC.
<PAGE>
AMENDMENT NO. 3 TO TRANSACTION AGREEMENT
This Amendment No. 3 to Transaction Agreement (this "Amendment") is
made as of the 23rd day of September 1998, by and between The Black & Decker
Corporation, a Maryland corporation ("Seller"), and Windmere-Durable Holdings,
Inc., a Florida corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer have entered into a Transaction Agreement
dated as of May 10, 1998, as amended by Amendment No. 1 to Transaction Agreement
dated as of June 26, 1998 and by a letter agreement dated as of July 23, 1998
(as amended, the "Agreement"), pursuant to which Seller transferred and caused
the Affiliated Transferors to transfer substantially all of the assets held,
owned by or used to conduct the HPG Business, and assigned certain liabilities
associated with the HPG Business, to Buyer or Buyer Companies designated by
Buyer, and Buyer received and caused such designated Buyer Companies to receive
such assets and assume such liabilities upon the terms and subject to the
conditions set forth in the Agreement; and
WHEREAS, Seller and Buyer desire to further amend the Agreement in
accordance with the terms of this Amendment to correct a typographical error in
the Agreement to ensure that the language in the Agreement properly reflects the
intentions of Seller and Buyer;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Agreement.
Section 2. Section 5.06(e) of the Agreement is deleted in its entirety
and the following is inserted in its place and stead:
(e) From and after the date of this Agreement until the first
anniversary of the Closing Date, Seller Companies shall not, without
prior written approval of Buyer employ any exempt (within the meaning
of the Fair Labor Standards Act) Transferred Employee. In addition,
from and after the date of this Agreement until the fifth anniversary
of the Closing Date, no Seller Company shall, without the prior written
approval of Buyer, directly or indirectly solicit any individual who
was an exempt (within the meaning of the Fair Labor Standards Act)
Transferred Employee to terminate his or her employment relationship
with Buyer or Buyer Companies; provided, however, that the foregoing
shall not apply to individuals hired as a result of the use of an
independent employment agency (so long as the agency was not directed
to solicit a particular individual or a class of individuals that could
only be satisfied by employees of Buyer Companies) or as a result of
the use of a general solicitation (such as an advertisement) not
specifically directed to employees of Buyer Companies. From and after
the date of this Agreement until the fifth anniversary of the Closing
Date, no Seller Company will induce or seek to induce any contractor,
supplier, client or customer of Buyer or Buyer Companies to terminate
their relationship with Buyer or Buyer Companies in respect of the HPG
Business.
Section 3. Section 6.06 of the Agreement is deleted in its entirety and
the following is inserted in its place and stead:
Section 6.06 Nonsolicitation of Employees, etc. From and after
the date of this Agreement until the fifth anniversary of the Closing
Date, neither Buyer nor any Buyer Companies shall, without the prior
written approval of Seller, directly or indirectly solicit any
individual who is an exempt (within the meaning of the Fair Labor
Standards Act) employee of a Seller Company to terminate his or her
employment relationship with Seller Companies; provided, however, that
the foregoing shall not apply to individuals hired as a result of the
use of an independent employment agency (so long as the agency was not
directed to solicit a particular individual or a class of individuals
that could only be satisfied by employees of Seller Companies) or as a
result of the use of a general solicitation (such as an advertisement)
not specifically directed to employees of Seller Companies. Buyer
recognizes and agrees that a breach by Buyer or Buyer Companies of any
of the covenants and agreements in this Section 6.06 could cause
irreparable harm to Seller, that Seller's remedies at law in the event
of such breach would be inadequate, and that, accordingly, in the event
of such breach a restraining order or injunction or both may be issued
against Buyer or Buyer Companies, in addition to any other rights and
remedies that may be available to Seller under Applicable Law. If this
Section 6.06 is more restrictive than permitted by Applicable Laws of
the jurisdiction in which Seller seeks enforcement hereof, this Section
6.06 shall be limited to the extent required to permit enforcement
under such Applicable Laws.
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By: /s/
WINDMERE-DURABLE HOLDINGS, INC.
By: /s/
THE BLACK & DECKER CORPORATION
701 East Joppa Road
Towson, Maryland 21286
410-716-3900
Telex 87-930
July 23, 1998
Windmere-Durable Holdings Inc.
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-2467
Gentlemen:
Reference is made to the Transaction Agreement dated as of May 10,
1998, by and between The Black & Decker Corporation ("Seller") and
Windmere-Durable Holdings, Inc. ("Buyer"), as amended by Amendment No. 1 to
Transaction Agreement dated as of June 26, 1998, pursuant to which, among other
things, Seller agreed to sell and cause its subsidiaries to sell, and Buyer
agreed to buy, the HPG Business on the terms and conditions set forth therein.
Capitalized terms used herein but not defined shall have the meaning given to
them in the Transaction Agreement.
The Mexican Federal Competition Commission (the "Commission") has
reviewed the transactions contemplated by the Transaction Agreement, and
pursuant to its Communique dated July 6, 1998, has not objected to said
transactions. The Commission has, however, conditioned the performance of the
transactions in Mexico upon the modification of the term of the non-competition
clause contained in Section 5.06 of the Transaction Agreement.
This letter, therefore, confirms our agreement to modify the
non-competition clause in accordance with the Commission's Communique, and to
add the following at the end of Section 5.06(a) of the Transaction Agreement:
Notwithstanding anything contained in this Section 5.06(a) to the
contrary, with respect to both Additional Products and Designated
Products, for a period commencing on the Closing Date and ending on the
fifth anniversary thereof (the "Mexican Non-compete Term"), no Seller
Company (for so long but only for so long as it remains a Seller
Company) will, directly or indirectly, carry on or participate in the
ownership, management or control of any Mexican Competing Business (as
hereafter defined). "Mexican Competing Business" shall mean any
business enterprise that sells in Mexico any Additional Products or
Designated Products as of the date of the Transaction Agreement.
Notwithstanding any provision of the Trademark License Agreement, the
Mexican Non-compete Term shall not be subject to any extensions.
<PAGE>
Windmere-Durable Holdings, Inc.
July 23, 1998
Page 2
If you agree to the foregoing, please sign and return the enclosed copy
of this letter agreement.
Very truly yours,
THE BLACK & DECKER CORPORATION
By /s/ Charles E. Fenton
Charles E. Fenton
Senior Vice President and
General Counsel
Accepted and agreed
as of July 29, 1998
WINDMERE-DURABLE HOLDINGS INC.
By /s/ Arnold Thaler
Name: Arnold Thaler
Title: Senior Vice President
SECURITIES PURCHASE AGREEMENT
dated as of
September 30, 1998
among
TRUE TEMPER CORPORATION
and
THE PURCHASER PARTY HERETO
<PAGE>
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE 1.Definitions..........................................................1
Section 1.01. Definitions.........................................1
Section 1.02. Accounting Terms and Determinations................11
ARTICLE 2.Purchase and Sale of Securities; Terms of Securities................11
Section 2.01. Commitment to Purchase.............................11
Section 2.02. Takedown Procedures................................12
Section 2.03. Fees...............................................12
Section 2.04. Mandatory Termination of Commitments...............12
Section 2.05. Interest...........................................12
Section 2.06. Maturity of Notes; Prepayment of Notes.............13
Section 2.07. Taxes..............................................14
ARTICLE 3.Representations and Warranties......................................16
Section 3.01. Corporate Existence and Power......................16
Section 3.02. Authorization, Execution and Enforceability........16
Section 3.03. Governmental Authorization.........................17
Section 3.04. Contravention......................................17
Section 3.05. Financial Information..............................17
Section 3.06. Litigation.........................................18
Section 3.07. Environmental Matters..............................18
Section 3.08. Taxes..............................................19
Section 3.09. Subsidiaries.......................................19
Section 3.10. Governmental Regulations...........................19
Section 3.11. Full Disclosure....................................20
Section 3.12. Capitalization.....................................20
Section 3.13. Solicitation.......................................20
Section 3.14. Non-fungibility....................................20
Section 3.15. Permits............................................21
Section 3.16. Representations in Other Financing Documents
and in Material Recapitalization Documents.........21
Section 3.17. No Undisclosed Liabilities.........................21
Section 3.18. ERISA Matters......................................21
ARTICLE 4.Representations and Warranties of Purchaser.........................22
Section 4.01. Purchase for Investment; Authority; Binding
Agreement..........................................22
ARTICLE 5.Conditions Precedent to Purchase....................................22
Section 5.01. Conditions to Purchaser's Obligation at Takedown...22
ARTICLE 6.Covenants...........................................................24
Section 6.01. Information........................................24
Section 6.02. Payment of Obligations.............................25
Section 6.03. Insurance..........................................25
Section 6.04. Conduct of Business and Maintenance of Existence...26
Section 6.05. Compliance with Laws...............................26
Section 6.06. Inspection of Property, Books and Records..........26
Section 6.07. Investment Company Act.............................26
Section 6.08. Limitation on Debt.................................27
Section 6.09. Restricted Payments; Voluntary Prepayments.........27
Section 6.10. Investments........................................28
Section 6.11. Negative Pledge....................................28
Section 6.12. Transactions with Affiliates.......................28
Section 6.13. Consolidations, Mergers and Sales of Assets;
Ownership of Subsidiaries..........................29
Section 6.14. Use of Proceeds....................................29
Section 6.15. Restrictions on Certain Amendments.................29
Section 6.16. Limitation on Sales of Assets and Subsidiary
Stock..............................................29
Section 6.17. Sale and Leaseback Transactions....................30
Section 6.18. Assumed Debt.......................................30
Section 6.19. Business Activities................................30
ARTICLE 7.Events of Default...................................................30
Section 7.01. Events of Default Defined; Acceleration of
Maturity; Waiver of Default........................30
ARTICLE 8.Limitation on Transfers.............................................32
Section 8.01. Restrictions on Transfer...........................32
Section 8.02. Restrictive Legends................................32
Section 8.03. Notice of Proposed Transfers.......................33
ARTICLE 9.Miscellaneous.......................................................34
Section 9.01. Notices............................................34
Section 9.02. No Waivers; Amendments.............................34
Section 9.03. Indemnification....................................35
Section 9.04. Expenses...........................................37
Section 9.05. Payment............................................37
Section 9.06. Confidentiality....................................37
Section 9.07. Successors and Assigns.............................37
Section 9.08. Brokers............................................38
Section 9.09. New York Law; Submission to Jurisdiction; Waiver
of Jury Trial......................................38
Section 9.10. Severability.......................................38
Section 9.11. Counterparts.......................................38
<PAGE>
SCHEDULES
Schedule 3.04 Contravention
Schedule 3.07 Environmental Matters
Schedule 3.09 Subsidiaries
Schedule 3.12 Capitalization of the Company
Schedule 6.08 Debt
Schedule 6.10 Investments
Schedule 6.11 Liens
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Note
Exhibit C Form of Debt Registration Rights Agreement
Exhibit D Form of Warrant Agreement
Exhibit E Form of Equity Registration Rights Agreement
<PAGE>
SECURITIES PURCHASE AGREEMENT
AGREEMENT dated as of September 30, 1998 among True Temper
Corporation and the Purchaser.
The parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Accreted Value" means, for each $1,000 face amount of Notes
as of any date of determination prior to the Maturity Date, the sum of (i) the
initial offering price of each Note and (ii) that portion of the excess of the
principal amount of each Note over such initial offering price which shall have
been accreted thereon through such date, such amount to be so accreted on a
daily basis and compounded quarterly on each March 31, June 30, September 30 and
December 31 at the rate of 10.5% per annum (subject to adjustment pursuant to
Section 2.05) from the date of issuance of the Notes through the date of
determination.
"Administrative Agent" means The First National Bank of
Chicago, in its capacity as administrative agent under the Senior Credit
Facilities, and any successor thereto.
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Agreement, as amended from time to time
in accordance with its terms.
"Applicable Premium" means, with respect to any Note on any
date of redemption with respect thereto, the excess of (A) the present value at
such date of redemption of (1) the principal amount of such Note at the Maturity
Date plus (2) all required interest payments due on such Note through the
Maturity Date (excluding accrued but unpaid interest), computed using a discount
rate equal to the Treasury Rate on such date of redemption plus .50% over (B)
the Accreted Value of such Note.
"Asset Sale" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Company or any of its Subsidiaries of any asset, including without
limitation any sale and leaseback transaction, but excluding (i) dispositions in
the ordinary course of business, (ii) dispositions to the Company or a
wholly-owned Subsidiary of the Company; (iii) the licensing of intellectual
property in the ordinary course of business, and (iv) cash payments otherwise
permitted under this Agreement; provided, that any disposition not excluded
pursuant to clauses (i) through (iv) shall constitute an Asset Sale only if, and
solely to the extent that, the Net Cash Proceeds therefrom, together with the
Net Cash Proceeds from all other such dispositions effected by the Company and
its Subsidiaries after the date hereof, exceed $1,000,000.
"Base Financial Statements" has the meaning set forth in
Section 3.05(a).
"Black & Decker" means The Black & Decker Corporation, a
Maryland corporation, and its successors.
"Business Acquisition" means (i) an Investment by the Company
or any of its Subsidiaries in any other Person pursuant to which such Person
shall become a Subsidiary or shall be merged into or consolidated with the
Company or any of its Subsidiaries or (ii) an acquisition by the Company or any
of its Subsidiaries of the property and assets of any Person (other than the
Company or any of its Subsidiaries) that constitute a substantial part of the
assets of such Person or of any division or other business unit of such Person.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York or London are
authorized or required by law to close.
"Cash Equivalents" means (i) United States dollars, (ii)
Government Securities having maturities of not more than six months from the
date of acquisition, (iii) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Senior Credit Facilities or
with any domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the rating of "P-2" (or higher) from Moody's
Investors Service, Inc. or "A-3" (or higher) from Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) any fund investing exclusively in investments of the type described in
clauses (i) through (v) above.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of any association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) in the nature of corporate stock, (iii) in the case of a partnership
or limited liability company, any and all partnership or membership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with U.S. GAAP.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related Parties
(as defined below), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Principals and their
Related Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the Voting Stock of the Company (measured by voting power rather
than number of shares), or (iv) the first day on which a majority of the members
of the Board of Directors of the Company are not Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulation promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to the Purchaser, the amount
set forth opposite its name on the signature pages hereto.
"Common Stock" means the authorized common stock, par value
$.01 per share, of the Company.
"Company" means True Temper Corporation, a Delaware
corporation.
"Company Corporate Documents" means the certificate of
incorporation and by-laws of the Company.
"Consolidated Subsidiary" means, at any date with respect to
any Person, any Subsidiary or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Continuing Directors" means as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of hereof, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was nominated by the Principals (or any entity
controlled by the Principals) pursuant to the Stockholders Agreement.
"Debt" of any Person means, with respect to any Person, any
indebtedness of such Person, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or bankers' acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with U.S. GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Debt Incurrence" means any incurrence by the Company or any
of its Subsidiaries of any Debt, other than Debt permitted under Section 6.08.
"Debt Registration Rights Agreement" means the Debt
Registration Rights Agreement, dated as of September 30, 1998, between the
Company and the Purchaser, in the form attached as Exhibit C to this Agreement,
as amended, supplemented or otherwise modified from time to time.
"Default" means any Event of Default or any event or condition
which, with the giving of notice or lapse of time or both, would, unless cured
or waived, become an Event of Default.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities
Corporation, a Delaware corporation, and its successors.
"dollars" or "$" mean lawful currency of the United States of
America.
"Environmental Laws" means any and all statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees,
codes, injunctions, permits, governmental grants, licenses and governmental
restrictions relating to the effect of the environment or Hazardous Materials on
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Materials or wastes into the environment,
including ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous Materials
or wastes or the clean-up or other remediation thereof.
"Environmental Report" means the Environmental Due Diligence
Audit in respect of the Company and its Subsidiaries prepared by Strata
Environmental in September 1998.
"Equity Investors" means True Temper Sports, LLC, a Delaware
limited liability company organized at the direction of Cornerstone Equity
Investors IV, L.P., GS Private Equity Partners, L.P., GS Private Equity Partners
Offshore, L.P., Randolph Street Partners 1998 DIF, LLC, Randolph Street Partners
and certain current members of management of the Company and certain of its
Subsidiaries.
"Equity Issuance" means the issuance of any equity securities
by the Company or any of its Subsidiaries (including without limitation any
equity securities issued pursuant to the exercise of stock options or warrants
or the Permanent Financing), but excluding (i) any subscription agreement
incentive plan or similar arrangement with any officer, employee or director of
the Company or any of its Subsidiaries, or (ii) the issuance of any Capital
Stock of the Company or any of its Subsidiaries to any officer, director or
employee of the Company or any of its Subsidiaries.
"Equity Registration Rights Agreement" means the Equity
Registration Rights Agreement, dated as of September 30, 1998, among the Company
and the Purchaser, in the form attached as Exhibit E to this Agreement, as
amended, supplemented or otherwise modified from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company or any Subsidiary of the Company
is treated as a single employer under Title IV of ERISA or, solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code. ERISA Affiliate shall not include Black
& Decker or any other entity that would be an ERISA Affiliate solely as a result
of Black & Decker's classification as an ERISA Affiliate.
"Escrow Agent" means Snoga Inc., a Delaware corporation.
"Escrow Agreement" means the escrow agreement, dated as of
September 30, 1998, among the Company, the Purchaser and the Escrow Agent, in
the form attached as Exhibit A to this Agreement, as amended, supplemented or
otherwise modified from time to time.
"Event of Default" has the meaning set forth in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" has the meaning set forth in Section 2.01.
"Extension Fee" means that certain cash duration fee, to be
paid to the Purchaser on the first anniversary of the Issuance Date, in an
amount equal to 3.00% of the Accreted Value of Notes outstanding on such date.
"Financing Documents" means this Agreement, the Notes, the
Debt Registration Rights Agreement, the Equity Registration Rights Agreement,
the Warrant Agreement, the Warrants and the Escrow Agreement.
"Grafalloy Transaction" means the acquisition by Cornerstone
Equity Investors IV, L.P., or its assignee (including the Company) of all of the
outstanding capital stock of Grafalloy Corporation.
"Guarantee Obligation" means as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined in good faith by the
Person to whom such Guarantee Obligation is payable.
"Hazardous Materials" means (i) asbestos; (ii) polychlorinated
biphenyls; (iii) petroleum, its hazardous derivatives, by-products and other
hydrocarbons; and (iv) any other toxic, radioactive, caustic or otherwise
hazardous substance regulated under Environmental Laws.
"Hazardous Materials Contamination" means contamination of the
buildings, facilities, soil or groundwater on or of the property of the Company
by Hazardous Materials, or any derivatives thereof, or on or of any other
property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the property of
the Company.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, currency exchange rates or commodities prices.
"Holder" means any holder of any Note.
"Intellectual Property Rights" means any patent, trade mark,
service mark, registered design, trade name or copyright required to carry on
the business of the Company and such other business as may be permitted by the
terms of this Agreement and which is carried on at the relevant time.
"Interest Payment Date" means each March 31, June 30,
September 30 and December 31 (or, if any such date is not a Business Day, the
next succeeding Business Day).
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit, Guarantee
Obligation or otherwise.
"Issuance Date" means the date the Notes are issued by the
Company and purchased by the Purchaser.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Majority Holders" means (i) at any time prior to the issuance
of the Notes, the holders of a majority of the Commitments and (ii) at any time
thereafter, the holders of voting rights with respect to waivers, amendments and
other actions permitted or required to be taken by Holders under the terms of
the Notes constituting a majority of such voting rights attributable to the
aggregate outstanding amount of Notes at such time.
"Material Adverse Effect" means a material adverse affect on
the properties, condition (financial or otherwise) operations, performances,
projections, prospects or business of the Company and its Subsidiaries, taken as
a whole.
"Material Recapitalization Documents" means the
Recapitalization Agreement, as amended from time to time in accordance with
Section 6.15, and such other agreements entered into in connection therewith.
"Maturity Date" means the eleventh anniversary of the Issuance
Date.
"Multiemployer Plan" means any Plan that is a multiemployer
plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any transaction, an
amount equal to the cash proceeds received by the Company or any of its
Subsidiaries from or in respect of such transaction (including any non-cash
proceeds of such transaction to the extent sold for cash within 30 days of such
transaction), less (i) any expenses (including commissions) reasonably incurred
by the Company or such Subsidiary in respect of such transaction, (ii) the
amount of any Debt secured by a Lien on a related asset and discharged from the
proceeds of such transaction and (iii) any taxes paid or payable by the Company
or such Subsidiary with respect to such transaction (as reasonably estimated by
the Company's chief financial officer in good faith).
"Notes" means the Company's Senior Increasing Rate Discount
Notes substantially in the form set forth as Exhibit B hereto.
"Other Taxes" has the meaning set forth in Section 2.07(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
"Permanent Financing" means any Debt Incurrence or Equity
Issuance following the date hereof for the purpose of refinancing the Notes.
"Permits" means all domestic and foreign licenses, permits and
approvals required for the full operation of the Company and its Subsidiaries,
including provincial, state, federal, city and county permits and approvals.
"Permitted Business" means any business in which the Company
and its Subsidiaries are engaged on the Issuance Date or any business reasonably
related, incidental or ancillary thereto.
"Permitted Liens" means Liens expressly permitted to exist by
the terms of Section 6.11 hereof.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.
"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA to which the Company, any Subsidiary or any ERISA Affiliate has,
or, within the six years preceding the date of this Agreement, had, any
liability or in respect of which the Company or any Subsidiary of the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means, for any day, a rate per annum equal to the
rate of interest publicly announced by The Bank of New York (or its successor)
from time to time in The City of New York as its prime, reference or base rate,
it being understood that such rate is one of such bank's base rates and serves
as a basis upon which effective rates of interest are calculated for those loans
making reference thereto and may not be the lowest of such bank's base rates.
"Principals" means Cornerstone Equity Investors IV, L.P. and
its Affiliates, GS Private Equity Partners, L.P., GS Private Equity Partners
Offshore, L.P., Randolph Street Partners 1998 DIF, LLC and Randolph Street
Partners.
"Purchaser" means Emhart, Inc., a Delaware corporation, and
its successors.
"Qualified Plan" means a Plan (other than a Multiemployer
Plan) which is "a pension plan" (as defined in Section 3(2) of ERISA) intended
to be tax-qualified under Section 401(a) of the Code.
"Recapitalization" means the reorganization, recapitalization
and sale of stock of the Company pursuant to the terms of the Recapitalization
Agreement.
"Recapitalization Agreement" means the Reorganization,
Recapitalization and Stock Purchase Agreement, dated as of June 29, 1998, among
Black & Decker, the Company and TTSI LLC, as amended by Amendment No. 1 thereto,
dated as of August 1, 1998 and Amendment No. 2 thereto, dated as of September
30, 1998, and as further amended from time to time in accordance with Section
6.15.
"Related Party" with respect to any Principal means (A) any
controlling stockholder or partner, 50% (or more) owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Principal or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding (directly or
through one or more Subsidiaries) a 50.1% or more controlling interest of which
consist of the Principals and/or such other Persons referred to in the
immediately preceding clause (A).
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the capital stock of the Company (except dividends
payable solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of the
capital stock of the Company or (b) any option, warrant or other right to
acquire shares of the capital stock of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means a $57,500,000 senior secured
financing consisting of a six year $20,000,000 non-amortizing revolving credit
facility and term loans in aggregate principal amount of $37,500,000 consisting
of a $10,000,000 Term A Loan due 2004 and a $27,500,000 Term B Loan due 2005, in
each case, under that certain Credit Agreement, dated as of September 30, 1998,
among TTSI, the Subsidiaries of TTSI party thereto, the lenders party thereto,
DLJ Capital Funding, Inc., as syndication agent, Donaldson, Lufkin & Jenrette
Securities Corporation, as lead arranger and The First National Bank of Chicago,
as administrative agent for the lenders, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, provided that the principal amount
thereof does not exceed $57,500,000, plus the amount of reasonable expenses
incurred in connection therewith (other than as a result of currency
fluctuations) less (a) the amount of all scheduled principal repayments actually
made from time to time hereafter of term Debt thereunder and (b) the amount of
all principal repayments actually made from time to time hereafter of revolving
Debt thereunder to the extent made with the net cash proceeds of Asset Sales to
the extent applied to permanently reduce the revolving commitments thereunder.
"Shelf Registration" means a "shelf" registration statement on
any appropriate form pursuant to Rule 415 (or similar rule that may be adopted
by the Commission) under the Securities Act.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Registration S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Sponsors" means Cornerstone Equity Investors IV, L.P..
"Stockholders' Agreement" means the Stockholders' Agreement,
dated as of September 30, 1998, among the Equity Investors, the Company and
Emhart Industries, Inc., a wholly-owned subsidiary of Black & Decker, as
amended, supplemented or otherwise modified from time to time.
"Subordinated Notes" means TTSI's 10 1/2% Senior Subordinated
Increasing Rate Notes or the refinancing thereof.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"Taxes" has the meaning set forth in Section 2.07(a).
"Transfer" means any disposition of Notes that would
constitute a sale thereof under the Securities Act.
"Treasury Rate" means, as of any date, the yield to maturity
as of such date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two Business Days
prior to such date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
remaining term to maturity of the Notes; provided, however, that if such term to
maturity is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"TTSI" means True Temper Sports, Inc., a Delaware corporation,
and a wholly-owned subsidiary of the Company.
"U.S. GAAP" means generally accepted accounting principles as
in effect from time to time in the United States of America.
"Voting Stock" means, in respect of any Person, any class or
classes of Capital Stock of such Person pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not, at the time, stock of any other class or
classes shall have, or might have, voting power by reason of the happening of
any contingency).
"Warrants" means the warrants to purchase common stock of the
Company to be issued pursuant to the Warrant Agreement.
"Warrant Agreement" means the warrant agreement, dated as of
September 30, 1998, between the Company and the Purchaser in the form attached
as Exhibit D to this Agreement, as amended, supplemented or otherwise modified
from time to time.
"Warrant Shares" has the meaning set forth in Section 5.01(o).
Section 1.2. Accounting Terms and Determinations1.2.
Accounting Terms and DeterminaAccounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with U.S. GAAP applied on a consistent basis (except for changes
concurred in by the Company's independent public accountants).
ARTICLE 2.
PURCHASE AND SALE OF SECURITIES; TERMS OF SECURITIES
Section 2.1. Commitment to Purchase
(a) Subject to the terms and conditions set forth herein and
in reliance on the representations and warranties of the Company contained
herein and in the other Financing Documents, the Company may at its option issue
and sell to the Purchaser on the Issuance Date, and the Purchaser agrees to
purchase on the Issuance Date, Notes with an initial Accreted Value equaling the
Purchaser's Commitment. The purchase price for the Notes shall be 100% of the
initial Accreted Value thereof.
(b) Each Commitment will terminate (the "Expiration Date") on
the earliest of (i) the termination of the Recapitalization Agreement in
accordance with the terms thereof prior to the consummation of the
Recapitalization, (ii) the consummation of the Recapitalization without the
issuance of the Notes (if such date occurs prior to the Issuance Date), (iii)
the date on which the Company, any of its Subsidiaries or the Sponsors commences
the marketing of any proposed Permanent Financing with respect to which DLJSC or
any of its Affiliates is not the sole manager, sole agent, sole initial
purchaser or sole underwriter (if such date occurs prior to the Issuance Date)
and (iv) 5:00 P.M. (New York City time) on October 15, 1998 (if such date occurs
prior to the Issuance Date); provided, that if at any time on or after the date
hereof an Event of Default shall have occurred and be continuing, the Purchaser
may at its option terminate its Commitment by notice to the Company, such
termination to be effective upon the giving of such notice; and provided further
that each Commitment shall automatically terminate, without notice to the
Company or any other action on the part of the Purchaser, upon the occurrence of
any of the events specified in Sections 7.01(e) and 7.01(f) with respect to the
Company.
(c) No Commitment is revolving in nature, and principal
amounts of Notes prepaid in accordance with Section 2.06 may not be resold to
the Purchaser hereunder.
Section 2.2. Takedown Procedures.
As partial consideration for the sale of stock and other
transactions contemplated by the Reorganization, Recapitalization and Stock
Purchase Agreement, dated as of June 29, 1998, among Black & Decker, TTSI and
TTSI LLC, the Company shall deliver to the Purchaser a single Note representing
the aggregate principal amount at the Maturity Date of Notes to be purchased by
the Purchaser registered in the name of the Purchaser, or, if requested by the
Purchaser, separate Notes in such other denominations and registered in such
name or names as shall be designated by the Purchaser by notice to the Company
at least one Business Day prior to the Issuance Date.
Section 2.3. Fees.
(a) The Company shall pay the Purchaser a fee of $625,000.
(b) On the first anniversary of the Issuance Date, the Company
shall pay the Purchaser the Extension Fee.
Section 2.4. Mandatory Termination of Commitments. Each
Commitment shall terminate on the Expiration Date.
Section 2.5. Interest
(a) Each Note will accrete at the rate in effect under clause
(b), (c) or (e) of this Section, compounded quarterly to the Maturity Date, on
each Interest Payment Date of each year in which such Note remains outstanding
commencing with the first Interest Payment Date after the date of issuance
thereof. No cash interest will be payable on the Notes prior to the Maturity
Date. Interest on each Note shall be calculated at the rates per annum set forth
below, and shall accrue from and including the most recent Interest Payment Date
to which interest has been paid on such Note (or if no interest has accrued on
such Note, from the date of issuance thereof) to but excluding the date on which
payment in full of the principal sum of such Note has been made.
(b) The interest rate applicable to each Note shall be a
floating rate per annum equal to the sum of (i) the Prime Rate in effect from
time to time plus (ii) 2.00% plus (iii) an additional percentage amount equal to
1.00% from and including the Interest Payment Date falling on March 31, 1999 and
increasing by 0.50% effective on each Interest Payment Date thereafter until the
earlier of (x) the date the principal amount of, and accrued and unpaid interest
on, if any, such Note is paid in full and (y) the first anniversary of the
Issuance Date or, in any case, if less, the maximum rate permitted by applicable
law. Interest on each Note will be calculated on the basis of a 365-day year and
paid for the actual number of days elapsed.
(c) The interest rate applicable to each Note commencing on
the first anniversary of the Issuance Date shall be a floating rate per annum
equal to greatest of (i) the sum of (A) the Prime Rate in effect from time to
time plus (B) 4.00%, (ii) the sum of (A) the Treasury Rate plus (B) 7.00%, (iii)
the sum of (A) the DLJ High Yield Composite Index plus (B) 3.00%, and (iv) the
sum of (A) the interest rate applicable to such Note on the day immediately
preceding the first anniversary of the Issuance Date plus (B) .50%, in each
case, increasing by .50% on each Interest Payment Date thereafter until the date
the principal amount of, and accrued and unpaid interest on, if any, such Note
is paid in full.
(d) In addition to any adjustments to the Interest Rate set
forth in subsections (b) and (c) of this Section 2.05, if, pursuant to the terms
of the Debt Registration Rights Agreement, a Shelf Registration with respect to
the Notes either (i) has not been filed with the Commission on or prior to the
90th day following the first anniversary of the Issuance Date or (ii) has not
been declared effective by the Commission on or prior to the 180th day following
the first anniversary of the Issuance Date, then the Company shall pay
liquidated damages thereafter of $.192 per week per $1,000 principal amount of
Notes outstanding until the date on which the Shelf Registration is declared
effective by the Commission. Following the effectiveness of the Shelf
Registration, the Company shall also pay such liquidated damages beginning on
the first date on which such Shelf Registration ceases to remain effective and
shall continue at such increased interest rate until such Shelf Registration is
again declared effective by the Commission.
(e) The Purchaser may, on the first anniversary of the
Issuance Date, fix the interest rate on the Notes at a rate to be determined by
the Purchaser in its sole discretion provided that such rate shall not exceed
seventeen percent (17.00%).
(f) Notwithstanding anything to the contrary set forth above,
at no time shall the per annum interest rate on the Notes exceed seventeen
percent (17.00%), nor shall the per annum interest rate on the Notes be lower
than ten percent (10.00%).
Section 2.6. Maturity of Notes; Prepayment of Notes.
(a) The Notes shall mature on the Maturity Date.
(b) The Company at its option may, upon ten days' written
notice to the Holders, at any time, prepay all or any part of the Notes at a
redemption price equal to 100.00% of the Accreted Value or the principal amount
of the Notes, as the case may be, so prepaid together with any accrued interest
to the date of prepayment, plus the Applicable Premium as of the date of
prepayment if the interest rate has been fixed in accordance with Section
2.05(e).
(c) The Company shall, within five days of receipt by the
Company or any of its Subsidiaries of the Net Cash Proceeds of any Permanent
Financing and within thirty days of receipt by the Company or any of its
Subsidiaries of the Net Cash Proceeds of any Asset Sale, in each case, to the
extent not required to be used to repay the Subordinated Notes or Debt under the
Senior Credit Facilities and not subject to any period during which the Company
or any of its Subsidiaries may reinvest such proceeds prior to a requirement to
repay Debt under the Senior Credit Facilities, redeem an amount of the Notes
equal to the amount of such Net Cash Proceeds (less any amounts not required to
be paid as a result of the requirement in subsection (d) of this Section 2.06),
at a redemption price equal to 100.00% of the Accreted Value or the principal
amount of the Notes, as the case may be, so prepaid together with accrued
interest to the date of prepayment, plus the Applicable Premium as of the date
of prepayment if the interest rate has been fixed in accordance with Section
2.05(e).
(d) Any prepayment of the Notes pursuant to Section 2.06(b)
shall be in a minimum amount of at least $1,000,000 of Accreted Value, unless
less than $1,000,000 of Accreted Value of the Notes remain outstanding, in which
case all of the Notes must be prepaid. Any prepayment of the Notes pursuant to
Section 2.06(c) shall be in a minimum amount which is a multiple of $1,000 times
the number of Holders at the time of such prepayment.
(e) Any partial prepayment shall be made so that the Notes
then held by each Holder shall be prepaid in an amount which shall bear the same
ratio, as nearly as may be, to the total amount being prepaid as the Accreted
Value principal amount of such Notes, as the case may be, held by such Holder
shall bear to the aggregate Accreted Value or principal amount of all Notes, as
the case may be, then outstanding. In the event of a partial prepayment, upon
presentation of any Note the Company shall execute and deliver to or on the
order of the Holder, at the expense of the Company, a new Note in principal
amount at the Maturity Date equal to the remaining outstanding portion of such
Note.
Section 2.7. Taxes.
(a) For the purposes of this Section, the following terms have
the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any payment
by the Company pursuant to this Agreement or under any Note or any other
Financing Document, and all liabilities with respect thereto, excluding, in the
case of the Purchaser or any other Holder, taxes imposed on the net income of
the Purchaser or such Holder and franchise or similar taxes imposed on the net
income of the Purchaser or such Holder, by a jurisdiction under the laws of
which the Purchaser or such Holder is organized or in which its principal
executive office or the office holding any Notes or any Financing Document is
located.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or any other Financing Document or from the execution, delivery, registration,
recordation or enforcement of, or otherwise with respect to, this Agreement or
any Note or any other Financing Document.
(b) All payments by the Company to or for the account of the
Purchaser or any other Holder under any Financing Document shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Company shall be
required by law to deduct any Taxes or Other Taxes from any such payment, the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Purchaser or such Holder (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
the Company shall make such deductions, the Company shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and the Company shall promptly furnish to the Purchaser or
such Holder (as the case may be) the original or a certified copy of a receipt
or other documentation available to the Company evidencing payment thereof.
(c) The Company agrees to indemnify the Purchaser and each
other Holder for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted (whether or not
correctly) by any jurisdiction on amounts payable under this Section) paid by
the Purchaser or such Holder (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto;
provided, however, that the Company shall not be obligated to make any payment
pursuant to this Section 2.07(c) in respect of penalties or interest
attributable to any Taxes or Other Taxes, if written demand therefor has not
been made by the Purchaser or such Holder (as the case may be) within 60 days
from the date on which the Purchaser or Holder received written notice of the
imposition of Taxes or Other Taxes by the relevant taxing authority, or for any
additional imposition which may arise from the failure of the Purchaser or the
Holder (as the case may be) to apply payments in accordance with the applicable
tax law after the Company has made the payments required hereunder. After the
Purchaser or a Holder (as the case may be) receives written notice of the
imposition of Taxes, the Purchaser or Holder will act in good faith to notify
the Company of its obligations thereunder as soon as reasonably possible.
(d) The Company shall have no obligation for Taxes under
Section 2.07(b) or Section 2.07(c) for or on account of:
(i) any Taxes (other than Other Taxes) that would not
have been so imposed but for the existence of any present or former
connection between the Purchaser or Holder or the beneficial owner (or
between a fiduciary, settlor, beneficiary, member, or shareholder of,
or possessor of a power over, the Purchaser, Holder or beneficial
owner, if the Purchaser, Holder or beneficial owner is an estate, a
trust, a partnership or corporation) and the jurisdiction imposing the
Tax other than merely holding such Note or any Financing Document, or
the receipt of payments in respect thereof, including, without
limitation, the Purchaser, Holder or beneficial owner (or such
fiduciary, settlor, beneficiary, member, shareholder, or possessor)
being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business or having a permanent establishment
or other fixed base therein, or making or having made an election the
effect of which is to subject the Purchaser, Holder or beneficial owner
(or such fiduciary, settlor, beneficiary, member, shareholder, or
possessor) to such Tax;
(ii) any Taxes in the nature of estate, inheritance
or gift taxes;
(iii) any Tax that is imposed or withheld by reason
of the failure of the Holder or beneficial owner of a Note to comply
with a written request by the Company, addressed to such Holder or
beneficial owner, to provide information concerning the nationality,
residence or identity of such Holder or beneficial owner, if providing
such information under a statute, treaty, regulation or administrative
practice of the jurisdiction imposing such Tax would result in a
complete exemption from such Tax;
(iv) any Taxes imposed on any payment on a Note to a
Holder that is a fiduciary or partnership or other than sole beneficial
owner of such payment to the extent a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the payment of taxes
had such beneficiary, settlor, member or beneficial owner directly
received its beneficial or distributive share of such payment; and
(v) any combination of items (i) through (iv) above.
(e) If the Company determines in good faith that a reasonable
basis exists for contesting the imposition of a Tax or Other Tax with respect to
the Purchaser or a Holder, the Purchaser or Holder shall cooperate with the
Company in challenging such Tax or Other Tax at the Company's expense
(including, without limitation, any additional costs, expenses or Taxes incurred
by the Purchasers or Holders, as the case may be, as a result of such contesting
of such Taxes) if requested by the Company; provided, however, that nothing in
this Section 2.07(e) shall require the Purchaser or Holder to submit to the
Company any tax returns or any part thereof, or to prepare or file any tax
returns other than as the Purchaser or Holder in it sole discretion shall
determine.
(f) The Purchaser and each Holder agrees, to the extent
reasonable and without material cost to it, to cooperate with the Company to
minimize any amounts payable by the Company under this Section 2.07.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchaser (both
before and after giving effect to the Recapitalization) as set forth below:
Section 3.1. Corporate Existence and Power.
The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and as proposed to be conducted after the
Recapitalization.
Section 3.2. Authorization, Execution and
Enforceability.
(a) The execution, delivery and performance by the Company of
the Financing Documents and the issuance of the Notes by the Company have been
duly and validly authorized and are within its corporate powers. Each of the
Financing Documents (other than the Notes) and the Material Recapitalization
Documents to which it is a party has been duly authorized, executed and
delivered by the Company and constitutes its valid and binding agreement
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and
equitable principles of general applicability. When executed and delivered by
the Company against payment therefor in accordance with the terms hereof, the
Notes will constitute valid and binding obligations of the Company, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and equitable
principles of general applicability.
(b) The Warrants have been duly authorized by the Company and,
when executed and authenticated pursuant to the terms of the Warrant Agreement
and delivered to the Escrow Agent pursuant to the provisions of this Agreement,
will be valid and binding obligations of the Company, enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and equitable
principles of general applicability.
(c) The Warrant Shares to be issued upon exercise of the
Warrants have been duly authorized and reserved for issuance by the Company and
will be issued at the times and in the manner required by the Warrant Agreement
and, upon due exercise of a Warrant, the Warrant Shares issued will be validly
issued, fully paid and nonassessable.
Section 3.3. Governmental Authorization.
The execution and delivery by the Company of each of the
Financing Documents and the Material Recapitalization Documents to which it is a
party did not and will not, the issuance and sale of the Notes and the Warrants
and Warrant Shares by the Company will not, and the consummation of the
transactions contemplated hereby and thereby will not, require any action by or
in respect of, or filing with, any governmental body, agency or governmental
official except such actions and filings which (i) have been taken or made and
remain in full force and effect, or (ii) if not taken or made, will not have a
material adverse effect on the validity or enforceability of the Financing
Documents and the Material Recapitalization Documents.
Section 3.4. Contravention.
Except as set forth on Schedule 3.04, the execution and
delivery by the Company of the Financing Documents and the Material
Recapitalization Documents to which it is a party did not and will not, the
issuance and sale of the Notes and the Warrants and Warrant Shares by the
Company will not, and the consummation of the transactions contemplated hereby
and thereby will not, (A) contravene or constitute a default under or violation
of any provision of (i) applicable law or regulation, (ii) the Company Corporate
Documents or (iii) any agreement, judgment, injunction, order, decree or other
instrument binding upon it or any of its assets, except, in the case of clauses
(i) and (iii), for such contraventions, defaults or violations that would not
reasonably be expected to result in a Material Adverse Effect, or (B) result in
the creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries other than Liens created or imposed pursuant to the Senior Credit
Facilities.
Section 3.5. Financial Information.
(a) (i) The combined balance sheets of the Company and its
Subsidiaries as of December 31, 1995, December 31, 1996 and December 31, 1997
and the related combined statements of profit and loss and cash flows for the
fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997
(collectively, the "Base Financial Statements"), audited by Ernst & Young (ii)
the unaudited combined balance sheets of the Company and its Subsidiaries as of
December 31, 1993 and December 31, 1994 and the related unaudited combined
statements of profit and loss and cash flows for the fiscal years ended December
31, 1993 and December 31, 1994, and (iii) the unaudited interim combined balance
sheets of the Company and its Subsidiaries as of June 30, 1997 and June 30, 1998
and the related combined interim statements of profit and loss and cash flows
for the six moths ended June 30, 1997 and June 30, 1998, in the case of each of
clauses (i), (ii) and (iii), have been prepared in conformity with U.S. GAAP,
fairly present the combined financial position of such entities as of each such
date and their combined results of operations, changes in stockholders' equity
and cash flows for each such period.
(b) The pro forma combined balance sheets as of December 31,
1997 and June 30, 1998 and the related pro forma combined statements of profit
and loss for the fiscal year ended December 31, 1997 and the six months ended
June 30, 1998 have been prepared on a basis consistent with the Base Financial
Statements of the Company and its Subsidiaries and give effect to assumptions
used in the preparation thereof on a reasonable basis and in good faith and
present fairly the historical and proposed transactions contemplated by the
Recapitalization; and such pro forma financial statements comply as to form in
all material respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-1 under the Securities
Act.
(c) There has occurred no material adverse change in the
business, assets or financial condition of the Company and its Subsidiaries,
taken as a whole, since December 31, 1997.
Section 3.6. Litigation. There is no action, suit or
proceeding pending or, to the knowledge of the Company, threatened against the
Company, any of its Subsidiaries, any Plan or any fiduciary of any Plan before
any court or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which could have a
material adverse effect on the Financing Documents or the Recapitalization.
Section 3.7. Environmental Matters. Except as provided on
Schedule 3.07 and except to the extent that the following would not reasonably
be expected to result in a Material Adverse Effect:
(a) No property owned, leased or operated by the Company or
any of its Subsidiaries is affected by any Hazardous Materials Contamination.
(b) No asbestos or asbestos-containing materials are present
on any of the properties now or previously owned, leased or operated by the
Company or any of its Subsidiaries.
(c) No polychlorinated biphenyls in regulated concentrations
are located on or in any properties now or previously owned, leased or operated
by the Company or any of its Subsidiaries, in the form of electrical
transformers, fluorescent light fixtures with ballasts, cooling oils or any
other device.
(d) No underground storage tanks are located on any properties
now or previously owned, leased or operated by the Company or any of its
Subsidiaries, or were located on any such property and subsequently removed or
filled.
(e) No written notice, notification, demand, CERCLA-related
request for information, complaint, citation, summons, investigation,
administrative order, consent order or consent agreement, litigation or
settlement with respect to Hazardous Materials or Hazardous Materials
Contamination has been issued to the Company or is pending, as the case may be,
or, to the Company's knowledge, proposed, threatened or anticipated, in each
case, with respect to or in connection with the operation of any properties now
or previously owned, leased or operated by the Company or any of its
Subsidiaries. Except to the extent the following would not result in a Material
Adverse Effect, all such properties and their existing and prior uses by the
Company, and, to the Company's knowledge, the uses of the properties prior to
the Company's ownership, lease or operation comply and at all times have
complied with any applicable governmental requirements relating to environmental
matters or Hazardous Materials and there is no condition on any of such
properties which is in violation of any applicable governmental requirements
relating to Hazardous Materials, and neither the Company nor any of its
Subsidiaries has received any communication from or on behalf of any
governmental authority that any such condition exists.
(f) For purposes of this Section 3.07, the terms "Company" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Company or any
Subsidiary to the extent the Company would be liable for the liabilities of such
predecessor under any applicable Environmental Laws.
Section 3.8. Taxes.
(a) All income tax returns and all other tax returns which are
required to be filed by or on behalf of the Company and its Subsidiaries have
been filed and all taxes shown as due on such returns have been paid or adequate
reserves have been established on the books of the Company, except to the extent
that the failure to file any such returns or pay any such taxes would not
reasonably be expected to result in a Material Adverse Effect and except for any
such taxes that are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established in accordance with U.S.
GAAP. The charges, accruals and reserves on the books of the Company in respect
of taxes or other governmental charges have been established in accordance with
U.S. GAAP.
(b) There is no tax, levy, impost, deduction, charge or
withholding imposed by any governmental instrumentality either (i) on or by
virtue of the execution, delivery, performance, enforcement or admissibility
into evidence of any Financing Document or (ii) on any payment to be made by the
Company pursuant to any Financing Document. The Company is permitted under
applicable laws to pay any additional amounts payable by it under Section 2.07.
Section 3.9. Subsidiaries. Other than those listed on Schedule
3.09, the Company has no Subsidiaries.
Section 3.10. Governmental Regulations. None of the Company or
any of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act or to any other
statute, rule or regulation limiting its ability to incur Indebtedness for
borrowed money.
Section 3.11. Full Disclosure. The information heretofore
furnished by the Sponsors or the Company to the Purchaser in writing for
purposes of or in connection with the Financing Documents or any transaction
contemplated hereby does not, and all such information hereafter furnished by
the Sponsors or the Company to the Purchaser will not (in each case as amended
or supplemented and taken together and on the date as of which such information
is furnished), contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they are made, not misleading. The
Company has disclosed to the Purchaser any and all facts which materially and
adversely affect or may affect (to the extent the Company can now reasonably
foresee), the business, assets or financial position of the Company or the
ability of the Company to perform its obligations under the Financing Documents
or to complete the Permanent Financing.
Section 3.12. Capitalization.
At the Issuance Date, after giving effect to the
Recapitalization, the capitalization of the Company will be as set forth on
Schedule 3.12. All of the issued and outstanding shares of Common Stock are,
and, as of the time of the closing of the Recapitalization, will be, validly
issued, fully paid and nonassessable and free and clear of any Lien or other
right or claim (other than Liens created under the Senior Credit Facilities) and
except as contemplated in the Stockholders' Agreement, the holders thereof are
not entitled to any preemptive or other similar rights. Except for the Material
Recapitalization Documents or as set forth on Schedule 3.12, there are no
subscriptions, options, warrants, rights, convertible securities, exchangeable
securities or other agreements or commitments of any character pursuant to which
the Company is required to issue any shares of its capital stock.
Section 3.13. Solicitation. No form of general solicitation or
general advertising was used by the Company or, to the best of its knowledge,
any other Person acting on behalf of the Company, in connection with the offer
and sale of the Notes. Neither the Company nor any Person acting on behalf of
the Company has, either directly or indirectly, sold or offered for sale to any
Person any of the Notes or any other similar security of the Company except as
contemplated by this Agreement, and the Company represents that neither the
Company nor any person acting on its behalf other than the Purchaser and its
Affiliates will sell or offer for sale to any Person any such security to, or
solicit any offers to buy any such security from, or otherwise approach or
negotiate in respect thereof with, any Person or Persons so as thereby to bring
the issuance or sale of any of the Notes within the provisions of Section 5 of
the Securities Act.
Section 3.14. Non-fungibility. When the Notes are issued and
delivered pursuant to this Agreement, the Notes will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as securities which
are (i) listed on a national securities exchange registered under Section 6 of
the Exchange Act or (ii) quoted in a U.S. automated inter-dealer quotation
system.
Section 3.15. Permits. Except to the extent any of the
following would not result in a Material Adverse Effect: (a) the Company and its
Subsidiaries have all Permits as are necessary for the conduct of their
respective businesses as it has been carried on; (b) all such Permits are in
full force and effect, and each of the Company and its Subsidiaries has
fulfilled and performed all obligations with respect to such Permits; (c) no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination by the issuer thereof or which results in any other
impairment of the rights of the holder of any such Permit; and (d) each of the
Company and its Subsidiaries has no reason to believe that any governmental body
or agency is considering limiting, suspending or revoking any such Permit.
Section 3.16. Representations in Other Financing Documents and
in Material Recapitalization Documents.
(a) Each of the representations and warranties of the Company
set forth in any of the other Financing Documents is true and correct in all
material respects.
(b) Each of the representations and warranties of the Company
set forth in any of the Material Recapitalization Documents is true and correct
in all material respects.
Section 3.17. No Undisclosed Liabilities. Neither the Company
nor any of its Subsidiaries has any material liability (absolute or contingent)
except (A) those shown on the financial statements described in Sections 6.01(a)
and (b) and (B) those incurred under the Financing Documents.
Section 3.18. ERISA Matters.
During the twelve consecutive months ending on the date of the
execution and delivery of this Agreement, no steps have been taken to terminate
any Qualified Plan, and no contribution failure has occurred with respect to any
Qualified Plan sufficient to give rise to a Lien under section 302(f) of ERISA,
which, in the aggregate, is reasonably expected to lead to liability on the part
of the Company or any ERISA Affiliate in excess of $1,000,000. No condition
exists or event or transaction has occurred with respect to any Qualified Plan
which could reasonably be expected to result in the incurrence by the Company of
any material liability, fine or penalty other than as could not reasonably be
expected to have a Material Adverse Effect. Since the date of the last period
covered by the Base Financial Statements, none of the Company, any Subsidiary or
any ERISA Affiliate has taken any action that could be expected to increase (i)
any contingent liability with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation coverage described in part 6
of Subtitle B of Title I of ERISA or (ii) any contingent liability with respect
to any Qualified Plan or Multiemployer Plan, except as would not have a Material
Adverse Effect.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1. Purchase for Investment; Authority; Binding
Agreement. The Purchaser represents and warrants to the Company that:
(a) the Purchaser is an Accredited Investor within the meaning
of Rule 501(a) under the Securities Act and the Notes to be acquired by it
pursuant to this Agreement are being acquired for its own account without a view
toward distribution and the Purchaser will not offer, sell, transfer, pledge,
hypothecate or otherwise dispose of the Notes unless pursuant to a transaction
either registered under, or exempt from registration under, the Securities Act;
(b) the execution, delivery and performance of this Agreement
and the purchase of the Notes pursuant hereto are within the Purchaser's
corporate powers and have been duly and validly authorized by all requisite
corporate action;
(c) this Agreement has been duly executed and delivered by the
Purchaser;
(d) this Agreement constitutes a valid and binding agreement
of the Purchaser enforceable in accordance with its terms; and
(e) the Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Notes and the Purchaser is capable of bearing the
economic risks of such investment.
ARTICLE 5.
CONDITIONS PRECEDENT TO PURCHASE
Section 5.1. Conditions to Purchaser's Obligation at Takedown.
The obligation of the Purchaser to purchase the Notes to be issued and sold by
the Company on the Issuance Date is subject to the satisfaction of the following
conditions contemporaneously with such purchase:
(a) (i) Each of the conditions to the parties' obligations
under the Material Recapitalization Documents shall have been satisfied or, with
the prior written consent of the Purchaser, waived and (ii) the Recapitalization
shall have been completed on the terms set forth in the Material
Recapitalization Documents (as such terms may have been amended or waived with
the consent of the Purchaser).
(b) The Purchaser shall have received executed copies of each
of the Material Recapitalization Documents, the Financing Documents and the
Stockholders' Agreement, each of which shall be in full force and effect and no
term or condition thereof shall have been amended, waived or otherwise modified
without the prior written consent of the Purchaser.
(c) There shall exist no action, suit, investigation,
litigation or proceeding pending or to the Company's knowledge threatened in any
court or before any arbitrator or any governmental instrumentality that could
reasonably be expected to (A) have a material adverse effect on any Financing
Document, the Material Recapitalization Document, the Notes or the
Recapitalization or any of the other transactions contemplated thereby or hereby
or (B) result in a Material Adverse Effect.
(d) The Purchaser shall have received evidence satisfactory to
them of the substantially simultaneous repayment in full of all existing Debt of
the Company and its Subsidiaries (other than Debt permitted under Sections 6.08)
and the termination of each existing Lien on any asset securing any such Debt.
(e) The Purchaser shall have received opinions, dated on or
prior to the Issuance Date, of Kirkland & Ellis, special counsel for the
Company, in the form and substance satisfactory to the Purchaser.
(f) All fees and expenses payable to the Purchaser hereunder
shall have been paid in full.
(g) The representations and warranties of the Company
contained in the Financing Documents shall be true and correct in all material
respects on and as of the Issuance Date as if made on and as of such date and
the Company shall have performed and complied with all covenants and agreements
required by the Financing Documents to be performed by it or complied with by it
at or prior to the Issuance Date.
(h) There shall not exist any Default.
(i) The Purchaser shall have received the Notes to be issued
on the Issuance Date, duly executed by the Company in the denominations and
registered in the names specified in or pursuant to Section 2.02.
(j) The capitalization, tax and corporate and ownership
structure (including the articles of incorporation and by-laws) of the Company
and its Subsidiaries before and after the consummation of the Recapitalization
shall be consistent with that set forth in documents provided to the Purchaser
prior to the date hereof or shall otherwise be satisfactory to the Purchaser in
all material respects.
(k) The Purchaser shall have received a certificate of the
Secretary or Assistant Secretary of the Company, dated as of a date reasonably
satisfactory to the Purchaser, certifying (A) (i) that attached thereto is a
true, complete and correct copy of resolutions duly adopted by the Board of
Directors of the Company, authorizing (1) the execution, delivery and
performance of the Financing Documents to which it is a party, and (2) the
transactions contemplated hereby, and (ii) that such resolutions have not been
amended, modified, revoked or rescinded, (B) as to the incumbency and specimen
signature of each officer executing any Financing Documents on its behalf, and
(C) true and complete copies of its constituent documents, and such certificates
and the resolutions attached thereto shall be in form and substance satisfactory
to the Purchaser.
(l) Pursuant to the terms of the Escrow Agreement, the Company
shall have executed and delivered to the Escrow Agent fully authenticated
Warrants, unregistered or registered in blank, representing the right to
purchase at any time up to an aggregate of 2.1% of the fully-diluted common
stock of the Company, calculated after giving effect to the transactions
occurring on or prior to the Issuance Date (the "Warrant Shares"), exercisable
for a period of seven years at a price equal to $.01 per share.
(m) All matters relating to the transactions contemplated by
this Agreement, the Financing Documents, the Purchase Agreement, the Senior
Credit Facilities, the Stockholders' Agreement and the transactions contemplated
hereby and thereby shall be satisfactory to the Purchaser in its discretion, and
the Purchaser shall have received such additional certificates, legal and other
opinions and documentation as they shall reasonably request.
ARTICLE 6.
COVENANTS6.COVENANTS.COVENANTS
The Company agrees that, from and after the Issuance Date and
so long as any Notes remain outstanding and unpaid, and for the benefit of the
Purchaser and the Holders:
Section 6.1. Information. The Company will deliver to the
Purchaser:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and cash flows) for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on in a manner acceptable to the Commission by independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Company,
a consolidated balance sheet of the Company and its Subsidiaries as of the end
of such quarter and the related consolidated statement of income for such
quarter and for the portion of the Company's fiscal year ended at the end of
such quarter and the related consolidated statement of cash flow for the portion
of the Company's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and the
corresponding portion of the Company's previous fiscal year, all certified
(subject to footnote presentation and normal year-end adjustments) as to
fairness of presentation and consistency by the chief financial officer or the
chief accounting officer of the Company and, if required, with footnote
reconciliation to U.S. GAAP;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 6.08 through 6.11,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Company is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any executive officer of the
Company obtains knowledge of a Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting officer of
the Company setting forth the details thereof and the action which the Company
is taking or proposes to take with respect thereto;
(f promptly upon the filing thereof, copies of all
applications, registration statements or reports which the Company or any of its
Subsidiaries shall have filed with the Commission or any other national or
international stock exchange;
(g promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding to which the
Company or any of its Subsidiaries is a party in which the amount involved is
$1,000,000 or more;
(h promptly following the occurrence thereof, notice and a
description in reasonable detail of any material adverse change in the business,
assets or financial position of the Company and its Subsidiaries taken as a
whole;
(i promptly following the occurrence thereof, notice and a
copy of any amendment entered into with respect to the Senior Credit Facilities;
and.
(j from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as the
Purchaser may reasonably request.
Section 6.2. Payment of Obligations. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, material
obligations and liabilities, including, without limitation, tax liabilities, at
or before such obligations and liabilities become due, except where the same may
be contested in good faith by appropriate proceedings, and will maintain, and
will cause each Subsidiary to maintain, in accordance with U.S. GAAP,
appropriate reserves for the accrual of any of the same.
Section 6.3. Insurance. The Company shall, and shall cause
each of its Subsidiaries to, keep its insurable properties adequately insured at
all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including (i)
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about in connection with the use of any
properties owned, occupied or controlled by it and (ii) business interruption
insurance; and maintain such other insurance as may be required by law.
Section 6.4. Conduct of Business and Maintenance of Existence.
The Company will continue, and will cause each Subsidiary to continue, to engage
in business of the same general type as now conducted by the Company and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business, except that
(i) the Company may discontinue any immaterial line of business of the Company
and its Subsidiaries if the Board of Directors of the Company determines that
such discontinuation is in the best interests of the Company and not
disadvantageous to the holder of any Note and (ii) nothing in this Section 6.04
shall prohibit the merger or consolidation of any wholly-owned Subsidiary of the
Company with or into any other wholly-owned Subsidiary of the Company.
Section 6.5. Compliance with Laws.
(a The Company will comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder where noncompliance could reasonably be expected to have a Material
Adverse Effect).
(b The Company will take all actions to ensure that (i) the
obligations of the Company under the Financing Documents are at all times valid,
binding and enforceable against the Company in accordance with their terms under
all applicable laws, and (ii) the Financing Documents may be admitted into
evidence in any relevant jurisdiction.
Section 6.6. Inspection of Property, Books and Records. The
Company will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of the
Purchaser at reasonable times and intervals, and upon reasonable notice, but,
unless an Event of Default shall have occurred and be continuing, not more
frequently than once in each fiscal year, to visit its corporate offices, to
discuss its financial matters with its officers and, only in the presence of a
representative of the Company (whose attendance at such discussion cannot be
unreasonably refused), its independent public accountants (and the Company
hereby authorizes such independent public accountants to discuss the Company's
financial matters with the Purchaser or its representatives, so long as a
representative of the Company is present) and to examine any of its books or
other financial records.
Section 6.7. Investment Company Act. The Company will not be
or become an open-end investment trust, unit investment trust or face-amount
certificate company that is or is required to be registered under the Investment
Company Act of 1940, as amended.
Section 6.8. Limitation on Debt. Neither the Company nor any
Subsidiary will create, incur, assume or suffer to exist any Debt, except:
(a Debt outstanding on the date of this Agreement (other than
Debt incurred under the Senior Credit Facilities and the Subordinated Notes) and
identified in Schedule 6.08 and refinancings and replacements thereof in a
principal amount not exceeding the principal amount of the Debt so refinanced or
replaced on terms no less favorable to the Holders of the Notes than those in
place on the date of this Agreement and with an average life to maturity of not
less than the then average life to maturity of the Debt so refinanced or
replaced;
(b Debt of the Company evidenced by the Notes and Debt of TTSI
evidenced by the Subordinated Notes;
(c Debt under the Senior Credit Facilities, in a principal
amount not to exceed $50,000,000 (in addition to Debt incurred under clause (f)
below);
(d Debt owing to the Company or a Subsidiary;
(e Debt incurred by the Company or any of its Subsidiaries
that is represented by Capital Lease Obligations, mortgage financings or
purchase money obligations; provided, that the amount of such Debt does not
exceed 90% of the fair market value of the asset so financed and that the
maximum aggregate amount of all Debt permitted under this clause (e) shall not
at any time exceed $1,000,000;
(f Debt incurred by the Company or any of its Subsidiaries in
connection with the Grafalloy Transaction in an amount not to exceed $7,500,000
(which may be borrowed pursuant to the Senior Credit Facilities);
(g other unsecured Debt of the Company and its Subsidiaries in
an aggregate amount at any time outstanding not to exceed $1,000,000;
(h other Debt the Net Cash Proceeds of which are applied in
accordance with Section 2.06 to prepay all amounts owing under the Notes; and
(i) the incurrence by the Company or any of its Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or hedging:
(i) interest rate risk with respect to any floating rate Debt that is permitted
by the terms of this Agreement to be outstanding; (ii) exchange rate risk with
respect to any agreement or Indebtedness of such Person payable in a currency
other than U.S. dollars; or (iii) commodities risk relating to commodities
agreements, entered into in the ordinary course of business, for the purchase of
raw material used by the Company and its Subsidiaries.
Section 6.9. Restricted Payments; Voluntary Prepayments.
(a The Company will not declare or make any Restricted Payment
other than Restricted Payments contemplated in connection with the
Recapitalization; provided, however, the foregoing will not prohibit the
purchase, redemption, retirement or acquisition of any equity securities of the
Company or any of its Subsidiaries from any officer, director or employee
(whether current or former) of the Company or any of its Subsidiaries pursuant
to any subscription agreement, incentive plan, employment agreement,
stockholders agreement or similar agreement; provided, however, the aggregate
amount paid shall not exceed (i) $1,000,000 in any fiscal year (with unused
amounts in any fiscal year being carried over to succeeding fiscal years subject
to a maximum (without giving effect to clause (ii)) of $2,000,000 in any fiscal
year, plus (ii) the aggregate cash proceeds received by the Company from any
issuance or reissuance of any equity securities of the Company or any of its
Subsidiaries to any officer, director or employee of the Company or any of its
Subsidiaries.
(b The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, optionally redeem, retire, purchase,
acquire, defease or otherwise make any payment, other than required interest
payments, in respect of any Debt which is subordinated to or pari passu with the
Notes, other than payments in respect of Debt owing to the Company or a
Subsidiary.
Section 6.10. Investments. The Company will not, and will not
permit any of its Subsidiaries to, make or acquire any Investment in any Person
other than (i) Investments in existence on the date hereof and identified on
Schedule 6.10; (ii) Investments in Cash Equivalents; (iii) Investments made
after the date hereof in Persons which are direct or indirect Subsidiaries
immediately after such Investment is made; (iv) Investments in the form of loans
to officers, directors and employees of the Company and its Subsidiaries for the
sole purpose of purchasing common stock of the Company (or purchases of such
loans made by others) in an aggregate amount at any time outstanding not to
exceed $1,000,000; (v) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 6.18 hereof; (vi) any acquisition of assets solely in
exchange for the issuance of Common Stock of the Company and (vii) the Grafalloy
Transaction, provided, such Investment does not exceed an aggregate fair market
value of $7,500,000. Without limiting the generality of the foregoing, the
Company will not make, or permit any of its Subsidiaries to make, any Business
Acquisition other than (i) the Grafalloy Transaction and (ii) any Business
Acquisition with respect to which the consideration paid by the Company consists
solely of Common Stock.
Section 6.11. Negative Pledge. The Company will not create,
assume or suffer to exist any Lien on any asset now owned or hereafter acquired
by it, except:
(a the Liens identified on Schedule 6.11;
(b other Liens approved by the Majority Holders securing
Debt permitted by Section 6.08;
(c Liens securing the Senior Credit Facilities;
(d Liens securing Debt permitted by Sections 6.08(e) and
6.08(i); and
(e Liens arising in the ordinary course of its business
which (i) do not secure Debt, (ii) do not secure any obligation in an amount
exceeding $1,000,000 and (iii) do not in the aggregate materially detract from
the value of the assets of the Company and its Subsidiaries, taken as a whole,
or materially impair the use thereof in the operation of its business.
Section 6.12. Transactions with Affiliates. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate, except on terms to the Company or such Subsidiary no less favorable
than terms that could be obtained by the Company or such Subsidiary from a
Person that is not an Affiliate, as determined, in the case of any transaction
with a value of $1,000,000 or more, in good faith by the Board of Directors of
the Company; provided, that no determination of the Board of Directors shall be
required with respect to any of the following: (i) transactions entered into in
the ordinary course of business; (ii) transactions entered into in connection
with the execution or performance of the Company's obligations under the
Management Services Agreement; (iii) any transaction among True Temper Funding,
Inc. or any of its Affiliates on the one hand and the Company on the other hand;
and (iv) the Grafalloy Transaction.
Section 6.13. Consolidations, Mergers and Sales of Assets;
Ownership of Subsidiaries.
(a Neither the Company nor any of its Subsidiaries will
consolidate or merge with or into any other Person; provided, that (i) any
wholly-owned Subsidiary of the Company may merge or consolidate with or into any
other wholly-owned Subsidiary and (ii) the Company or any Subsidiary may merge
with an Affiliate for the sole purpose of reincorporating in a new jurisdiction.
The Company will not, and will not permit its Subsidiaries to, sell, lease or
otherwise transfer, directly or indirectly, any substantial part of the assets
of the Company and its Subsidiaries, taken as a whole, to any other Person.
(b The Company will at all times continue to own, directly or
indirectly, 100% of the capital stock of each Person which is a wholly-owned
Subsidiary of the Company on the date hereof.
Section 6.14. Use of Proceeds. The proceeds from the issuance
and sale of the Notes by the Company pursuant to this Agreement shall be used to
fund the Recapitalization and to pay related fees and expenses.
Section 6.15. Restrictions on Certain Amendments. The Company
will not amend or waive, or suffer to be amended or waived, any Corporate
Document or any Material Recapitalization Document from the respective forms
thereof delivered to the Purchaser pursuant to Section 5.01 in a way which has a
material adverse effect on the Holders or the Purchaser without the prior
written consent of the Purchaser.
Section 6.16. Limitation on Sales of Assets and Subsidiary
Stock. The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any agreement with respect to or consummate any Asset Sale, unless
(a) at least 75% of the consideration received by the Company or such
Subsidiary, as the case may be, is in the form of cash or Cash Equivalents;
provided, that any securities sold for cash within 30 days of the consummation
of such Asset Sale shall be considered cash for purposes hereof and (y) the
consideration received by the Company is at least equal to the fair market value
of the assets or property sold, transferred or otherwise disposed of (as
determined in good faith by the Board of Directors of the Company) and the Net
Cash Proceeds thereof are applied in accordance with Section 2.06(c).
Section 6.17. Sale and Leaseback Transactions. The Company
shall not, and shall not permit any of its Subsidiaries to, enter into any sale
and leaseback transaction.
Section 6.18. Assumed Debt. At all times during the 45 days
following the Issuance Date, the Company shall have unused revolving commitments
available for drawing under the Senior Credit Facilities and/or letters of
credit under the Senior Credit Facilities in a principal amount equal to the
outstanding principal amount of all outstanding Debt set forth on Schedule 6.08
with respect to which any default or event of default exists on the Issuance
Date. If any such default or event of default with respect to any such
outstanding Debt is not cured or waived on or prior to the date occurring 45
days after the Issuance Date, the Company shall pay or cause to be paid the
principal amount of such Debt outstanding on such 45th day.
Section 6.19. Business Activities. The Company will not, and
will not permit any Subsidiary to, engage in any business other than a Permitted
Business, except to such extent as would not be material to the Company and its
Subsidiaries taken as a whole.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1. Events of Default Defined; Acceleration of
Maturity; Waiver of Default. In case one or more of the following (each, an
"Event of Default"), whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body, shall have occurred and
be continuing:
(a default in the payment of all or any part of the principal
or premium, if any, on any of the Notes as and when the same shall become due
and payable either at maturity, upon any redemption, by declaration or
otherwise; or
(b [Reserved]; or
(c failure on the part of the Company for 30 days after
written notice from a Holder to observe or perform any of the covenants
contained in Sections 6.07 through 6.19 of this Agreement; or
(d failure on the part of the Company to observe or perform
any other of the covenants or agreements contained in the Financing Documents,
if such failure shall continue for a period of 30 days after the date on which
written notice thereof shall have been given to the Company by a Holder; or
(e the Company or any of its Significant Subsidiaries shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing; or
(f an involuntary case or other proceeding shall be commenced
against the Company or any of its Significant Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against the Company
or any of its Significant Subsidiaries under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g there shall be a default in respect of any Debt of the
Company or any of its Significant Subsidiaries (other than such defaults
existing with respect to the Debt set forth on Schedule 3.04 during the period
ending on the date that is 45 days after the Issuance Date) in an aggregate
principal amount in excess of $1,000,000 whether such Debt now exists or shall
hereafter be created (excluding the Notes) if such default results in
acceleration of the maturity of such Debt; or the Company or any of its
Subsidiaries shall fail to pay at maturity any such Debt whether such Debt now
exists or shall hereafter be created; or
(h a final judgment for the payment of money which exceeds
$1,000,000 shall be rendered against the Company or any of its Subsidiaries by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days after such
judgment becomes final; or
(i any representation, warranty, certification or statement
made or deemed made by the Company or any of its Subsidiaries in any Financing
Document or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with any Financing
Document shall prove to have been untrue in any material respect when made or
deemed made; or
(j a Change of Control has occurred; or
(k any of the Financing Documents shall for any reason fail to
constitute the valid and binding agreement of the Company; or
(l any of the following events, to the extent that such
events, singly or in the aggregate, could reasonably be expected to give rise to
a liability of the Company, any Subsidiary or any ERISA Affiliate in excess of
$1,000,000: (i) the Company, any Subsidiary or any ERISA Affiliate shall fail to
pay when due any amount or amounts, which such entity shall have become liable
to pay under Title IV of ERISA; (ii) notice of intent to terminate a Qualified
Plan shall be filed under Title IV of ERISA by the administrator of any Plan,
the Company, any Subsidiary, any ERISA Affiliate or any combination of the
foregoing; (iii) the PBGC shall institute proceedings under Title IV of ERISA to
terminate, impose liability (other than for premiums due under Section 4007 of
ERISA and not in default) in respect of or cause a trustee to be appointed to
administer, any Plan; (iv) a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Qualified Plan (other
than the Formica Corporation Employee Retirement Plan) be terminated; or (v) the
Company, any Subsidiary or any ERISA Affiliate shall incur a partial or complete
withdrawal from a Multiemployer Plan;
then, and in each and every such case (other than under clauses (e) and (f) with
respect to the Company), unless the principal of all the Notes shall have
already become due and payable, the Majority Holders (or, if at such time the
Purchaser no longer hold at least 50% of the aggregate outstanding principal
amount of the Notes, Holders of at least 33 1/3% of the aggregate outstanding
principal amount of the Notes), by notice in writing to the Company and the
agent bank under the Senior Credit Facilities, may declare the entire principal
amount of the Notes together with accrued interest thereon to be immediately due
and payable; provided that (a) for so long as the Senior Credit Facilities are
in effect, such acceleration shall not become effective until the earlier of (i)
five Business Days after the notice of acceleration is given to the
Administrative Agent and (ii) the date on which the Debt under the Senior Credit
Facilities is accelerated; and, (b)for as long as the Subordinated Notes are
outstanding, such acceleration shall not become effective until the earlier of
(i) five Business Days after the notice of acceleration is given to the holders
of Subordinated Notes (or their representatives), and (ii) the date on which the
Debt under the Subordinated Notes is accelerated. If an Event of Default
specified in clauses (e) or (f) occurs, the principal of and accrued interest on
the Notes will be immediately due and payable without any notice, declaration or
other act on the part of the Holders. The Majority Holders may annul any such
notice of acceleration or past Defaults (other than monetary Defaults not yet
cured) by delivering a notice of annulment to the Company and the Administrative
Agent. If an Event of Default shall occur and be continuing, the Purchaser shall
have the right to appoint one (1) representative to serve as a member of the
Company's Board of Directors; provided, however, that such right shall terminate
if the Purchaser no longer holds at least 50% of the aggregate outstanding
principal amount of the Notes.
ARTICLE 8.
LIMITATION ON TRANSFERS
Section 8.1. Restrictions on Transfer. From and after the
Issuance Date, none of the Notes shall be transferable except upon the
conditions specified in Sections 8.02 and 8.03, which conditions are intended to
ensure compliance with the provisions of the Securities Act in respect of the
Transfer of any of such Notes or any interest therein. The Purchaser will cause
any proposed transferee of any Notes (or any interest therein) held by it to
agree to take and hold such Notes (or any interest therein) subject to the
provisions and upon the conditions specified in this Section 8.01 and in
Sections 8.02 and 8.03.
Section 8.2. Restrictive Legends.
(a Each Note issued to the Purchaser or to a subsequent
transferee shall (unless otherwise permitted by the provisions of Section
8.02(b) or Section 8.03) include a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE AND THEN ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1998, A COPY
OF WHICH MAY BE OBTAINED FROM THE ISSUER OF THIS SECURITY
AT ITS PRINCIPAL EXECUTIVE OFFICE.
(b Any Holders of Notes registered pursuant to the Securities
Act and qualified under applicable state securities laws may exchange such Notes
on transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 8.02.
Section 8.3. Notice of Proposed Transfers.
(a Five Business Days prior to any proposed Transfer (other
than Transfers of Notes (i) registered under the Securities Act, (ii) to an
Affiliate of DLJSC or a general partnership in which DLJSC, or any of its
Affiliates is one of the general partners or (iii) to be made in reliance on
Rule 144A under the Securities Act) of any Notes, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
Transfer, setting forth the manner and circumstances of the proposed Transfer,
and shall be accompanied by (i) an opinion of counsel reasonably satisfactory to
the Company addressed to the Company to the effect that the proposed Transfer of
such Notes may be effected without registration under the Securities Act, (ii)
such representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
holder to the Company. Each Note transferred as above provided shall bear the
legend set forth in Section 8.02(a) except that such Note shall not bear such
legend if the opinion of counsel referred to above is to the further effect that
neither such legend nor the restrictions on Transfer in Sections 8.01 through
8.03 are required in order to ensure compliance with the provisions of the
Securities Act.
(b Five Business Days prior to any proposed Transfer of any
Notes to be made in reliance on Rule 144A under the Securities Act ("Rule
144A"), the holder thereof shall give written notice to the Company of such
holder's intention to effect such Transfer, setting forth the manner and
circumstances of the proposed Transfer and certifying that such Transfer will be
made (i) in full compliance with Rule 144A and (ii) to a transferee that (A)
such holder reasonably believes to be a "qualified institutional buyer" within
the meaning of Rule 144A and (B) is aware that such Transfer will be made in
reliance on Rule 144A. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, whereupon the holder of
such Notes shall be entitled to Transfer such Notes in accordance with the terms
of the notice delivered by the holder to the Company. Each Note transferred as
above provided shall bear the legend set forth in Section 8.02(a).
ARTICLE 9.
MISCELLANEOUS
<PAGE>
Section 9.1. Notices. All notices, demands and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party at its address set forth on
the signature pages hereof, or such other address as such party may hereinafter
specify for the purpose. Each such notice, demand or other communication shall
be effective (i) if given by facsimile, when such facsimile is transmitted to
the facsimile number specified on the signature page hereof, or (ii) if given by
overnight courier, addressed as aforesaid or by any other means, when delivered
at the address specified in this Section.
Section 9.2. No Waivers; Amendments.
(a No failure or delay on the part of any party in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to any party at law or in equity or
otherwise.
(b Any provision of this Agreement may be amended,
supplemented or waived if, but only if, such amendment, supplement or waiver is
in writing and is signed by the Company and the Majority Holders; provided, that
without the consent of each Holder of any Note affected thereby, an amendment,
supplement or waiver may not (a) reduce the aggregate principal amount of Notes
whose Holders must consent to an amendment, supplement or waiver, (b) reduce the
rate or extend the time for payment of interest on any Note, (c) reduce the
principal amount of or extend the stated maturity of any Note or (d) make any
Note payable in money or property other than as stated in the Notes. In
determining whether the Holders of the requisite principal amount of Notes have
concurred in any direction, consent, or waiver as provided in this Agreement or
in the Notes, Notes which are owned by the Company or any other obligor on or
guarantor of the Notes, or, except for DLJSC and its Affiliates by any Person
controlling, controlled by, or under common control with any of the foregoing,
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination; and provided, further, that no such amendment, supplement or
waiver which affects the rights of the Purchaser and its Affiliates otherwise
than solely in their capacities as Holders of Notes shall be effective with
respect to them without their prior written consent.
Section 9.3. Indemnification.
(a The Company (the "Indemnifying Party") agrees to indemnify
and hold harmless the Purchaser, its Affiliates, and each Person, if any, who
controls the Purchaser, or any of its Affiliates, within the meaning of the
Securities Act or the Exchange Act (a "Controlling Person"), and the respective
partners, agents, employees, officers and directors of the Purchaser, its
Affiliates and any such Controlling Person (each an "Indemnified Party," and
collectively, the "Indemnified Parties"), from and against any and all losses,
claims, damages, liabilities and expenses (including, without limitation and as
incurred, reasonable costs of investigating, preparing or defending any such
claim or action, whether or not such Indemnified Party is a party thereto)
arising out of, or in connection with any activities contemplated by this
Agreement or any other services rendered in connection herewith, including, but
not limited to, losses, claims, damages, liabilities or expenses arising out of
or based upon any untrue statement or any alleged untrue statement of a material
fact or any omission or any alleged omission to state a material fact in any of
the disclosure or offering or confidential information documents (the
"Disclosure Documents") pertaining to any of the transactions or proposed
transactions contemplated herein, including any eventual refinancing or resale
of the Notes, provided, that the Indemnifying Party will not be responsible for
any claims, liabilities, losses, damages or expenses that are determined by
final judgment of a court of competent jurisdiction to result solely from such
Indemnified Party's gross negligence, willful misconduct or bad faith. The
Indemnifying Party also agrees that (i) no Purchaser shall have liability
(except for breach of provisions of this Agreement) for claims, liabilities,
damages, losses or expenses, including legal fees, incurred by the Indemnifying
Party in connection with this Agreement, unless they are determined by final
judgment of a court of competent jurisdiction to result from the Purchaser's
gross negligence, willful misconduct or bad faith and (ii) no Purchaser shall in
any event have any liability to the Company on any theory of liability for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, or in connection with, or as a result of this
Agreement.
(b If any action shall be brought against an Indemnified Party
with respect to which indemnity may be sought against the Indemnifying Party
under this Agreement, such Indemnified Party shall promptly notify the
Indemnifying Party in writing and the Indemnifying Party shall, if requested by
such Indemnified Party or if the Indemnifying Party desires to do so, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Indemnifying Party shall not affect any obligations the
Indemnifying Party may have to such Indemnified Party under this Agreement or
otherwise unless the Indemnifying Party is materially adversely affected by such
failure. Such Indemnified Party shall have the right to employ separate counsel
in such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party, unless: (i)
the Indemnifying Party has failed to assume the defense and employ counsel
reasonably satisfactory to such Indemnified Party or (ii) the named parties to
any such action (including any impleaded parties) include such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Indemnifying Party,
in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Party,
provided, however, that the Indemnifying Party shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be responsible hereunder for the reasonable fees
and expenses of more than one such firm of separate counsel, in addition to any
local counsel, which counsel shall be designated by the Purchaser. The
Indemnifying Party shall not be liable for any settlement of any such action
effected without the written consent of the Indemnifying Party (which shall not
be unreasonably withheld) and the Indemnifying Party agrees to indemnify and
hold harmless each Indemnified Party from and against any loss or liability by
reasons of settlement of any action effected with the consent of the
Indemnifying Party. In addition, the Indemnifying Party will not, without the
prior written consent of the Purchaser, settle or compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified Party is
a party thereto) unless such settlement, compromise, consent or termination
includes an express unconditional release of the Purchaser and the other
Indemnified Parties, reasonably satisfactory in form and substance to the
Purchaser, from all liability arising out of such action, claim, suit or
proceeding.
(c If for any reason the foregoing indemnity is unavailable to
an Indemnified Party or insufficient to hold an Indemnified Party harmless, then
in lieu of indemnifying the Indemnified Party, the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such claims, liabilities, losses, damages, or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and by the Purchaser on the other from the transactions
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
is not permitted under applicable law, in such proportion as is appropriate to
reflect not only the relative benefits received by the Indemnifying Party on the
one hand and the Purchaser on the other, but also the relative fault of the
Indemnifying Party and the Purchaser as well as any other relevant equitable
considerations. Notwithstanding the provisions of this Section 9.03, the
aggregate contribution of all Indemnified Parties shall not exceed the amount of
fees actually received by the Purchaser pursuant to this Agreement. It is hereby
further agreed that the relative benefits to the Indemnifying Party on the one
hand and the Purchaser on the other with respect to the transactions
contemplated hereby shall be deemed to be in the same proportion as (i) the
aggregate principal amount of Notes issued by the Company bears to (ii) the fees
actually received by the Purchaser pursuant to this Agreement. The relative
fault of the Indemnifying Party on the one hand and the Purchaser on the other
with respect to the transactions contemplated hereby shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of material fact or the omission or alleged omission to state a material fact
related to information supplied by the Indemnifying Party or by the Purchaser
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No Indemnified
Party shall have any liability to the Indemnifying Party or any other person in
connection with the services rendered pursuant to the Commitment except for the
liability for claims, liabilities, losses or damages finally determined by a
court of competent jurisdiction to have resulted from action taken or omitted to
be taken by such Indemnified Party in bad faith or to be due to such Indemnified
Party's willful misconduct, or gross negligence. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(d The indemnification, contribution and expense reimbursement
obligations set forth in this Section 9.03 (i) shall be in addition to any
liability the Indemnifying Party may have to any Indemnified Party at common law
or otherwise, (ii) shall survive the termination of this Agreement and the
payment in full of the Notes and (iii) shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Purchaser
or any other Indemnified Party.
Section 9.4. Expenses. The Company agrees to pay all
reasonable out-of-pocket costs, expenses and other payments in connection with
the purchase and sale of the Notes as contemplated by this Agreement including
without limitation (i) reasonable fees and disbursements of special counsel and
any local counsel for the Purchaser incurred in connection with the preparation
of this Agreement, (ii) all reasonable out-of-pocket expenses of the Purchaser,
including reasonable fees and disbursements of counsel, in connection with any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (iii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Purchaser and each Holder of Notes,
including reasonable fees and disbursements of a single counsel (which counsel
shall be selected by the Purchaser if the Purchaser is a Holder of Notes when
such Event of Default occurs), in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.
Section 9.5. Payment. The Company agrees that, so long as the
Purchaser shall own any Notes purchased by it from the Company hereunder, the
Company will make payments to the Purchaser of all amounts due thereon by wire
transfer by 1:00 P.M. (New York City time) on the date of payment to such
account as is specified beneath the Purchaser's name on the signature page
hereof or to such other account or in such other similar manner as the Purchaser
may designate to the Company in writing.
Section 9.6. Confidentiality. The Purchaser shall not use
confidential information obtained from the Company by virtue of the transactions
contemplated by this Agreement or their other relationships with the Company in
connection with the performance by the Purchaser of services for other
companies, and the Purchaser shall not furnish any such information to other
companies. The Purchaser has no obligation to use in connection with the
transactions contemplated by this Agreement, or to furnish to the Company,
confidential information obtained from other companies.
Section 9.7. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Company, the Purchaser, the
holders of Debt and under the Senior Credit Facilities and their respective
successors and assigns; provided that the Company may not assign or otherwise
transfer its rights or obligations under this Agreement to any other Person
without the prior written consent of the Majority Holders. All provisions
hereunder purporting to give rights to the Purchaser and its Affiliates, or to
Holders are for the express benefit of such Persons.
Section 9.8. Brokers. The Company represents and warrants
that, except for DLJSC, it has not employed any broker, finder, financial
advisor or investment banker who might be entitled to any brokerage, finder's or
other fee or commission in connection with the Recapitalization or the sale of
the Notes.
Section 9.9. New York Law; Submission to Jurisdiction; Waiver
of Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.10. Severability. 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.
Section 9.11. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers, as of the
date first above written.
TRUE TEMPER CORPORATION
By:/s/
Name:
Title:
Address for Notices:
True Temper Corporation
8275 Tournament Drive, Suite 200
Memphis, TN 38125
Attention: Chief Financial Officer
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Attention: Frederick Tanne
<PAGE>
PURCHASER:
Commitment:
$25,000,000 [Initial Accreted Value]
EMHART, INC.
By:/s/
Name:
Title:
Address for Notices:
C/O The Black & Decker Corporation
701 East Joppa Road
Towson, MD 21286
Attention: Chief Financial Officer
Telecopy: (410) 716-3318
with a copy to:
Miles & Stockbridge P.C.
10 Light Street
Baltimore, MD 21202
Attention: Glenn C. Campbell
Wiring Instructions:
ABA#
A/C#
for further credit to.
A/C#
Attention:
<PAGE>
SCHEDULE 3.04
CONTRAVENTION
NONE
<PAGE>
SCHEDULE 3.07
ENVIRONMENTAL MATTERS
All matters set forth in the reports entitled "Environmental Review, True Temper
Sports, Inc., 8706 Deerfield Drive, Olive Branch, Mississippi 38654" and
"Environmental Review, True Temper Sports, Highway 25 South, Amory, Mississippi
38821" prepared by Strata Environmental, copies of which have been provided to
Purchaser.
<PAGE>
SCHEDULE 3.09
SUBSIDIARIES
True Temper Sports, Inc., a Delaware corporation
<PAGE>
SCHEDULE 3.12
CAPITALIZATION OF HOLDINGS
SEE ATTACHED
<PAGE>
SCHEDULE 6.08
DEBT
NONE
<PAGE>
SCHEDULE 6.10
INVESTMENTS
NONE
<PAGE>
SCHEDULE 6.11
LIENS
Liens described under Section 7.2.3 to the Senior Credit
Facilities.
<PAGE>
[FORM OF NOTE]
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT, AS
SUCH TERM IS DEFINED IN SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. UPON INQUIRY MADE BY ANY HOLDER HEREOF, ADDRESSED TO TRUE
TEMPER CORPORATION, 8275 TOURNAMENT DRIVE, SUITE 200, MEMPHIS, TENNESSEE 38125,
ATTENTION: CHIEF FINANCIAL OFFICER, TRUE TEMPER CORPORATION WILL PROVIDE A
STATEMENT SETTING FORTH THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT,
THE ISSUE DATE AND THE YIELD TO MATURITY WITH RESPECT TO THE NOTE HELD BY SUCH
HOLDER.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN
ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS PRINCIPAL EXECUTIVE OFFICE
No. __ $___________
TRUE TEMPER CORPORATION
Senior Increasing Rate Discount Note
TRUE TEMPER CORPORATION, a Delaware corporation (together with
its successors, the "Company"), for value received hereby promises to pay to
Emhart, Inc. and registered assigns (the "Holder") the initial principal sum of
_______________________________ plus the amounts by which the principal has been
increased in accordance with Section 2.05 of the Securities Purchase Agreement
(as defined) by wire transfer of immediately available funds to the Holder's
account at such bank in the United States as may be specified in writing by the
Holder to the Company, on the Maturity Date in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to accrete interest on the unpaid
principal amount hereof on the dates and at the rate or rates provided for in
the Securities Purchase Agreement. Reference is made to the Securities Purchase
Agreement for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
This Note is one of a duly authorized issue of Senior
Increasing Rate Discount Notes of the Company (the "Notes") referred to in the
Securities Purchase Agreement, dated as of September 30, 1998, among the Company
and the Purchaser named therein (as the same may be amended from time to time in
accordance with its terms, the "Securities Purchase Agreement"). The Notes are
transferable and assignable to one or more purchasers (in minimum denominations
of $5,000,000 or larger multiples of $1,000,000), in accordance with the
limitations set forth in the Securities Purchase Agreement. The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.
The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the registered
holders of the Notes and particulars of the respective Notes held by them and of
all transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of the
Notes shall be proven by the Register.
This Note shall be deemed to be a contract under the laws of
the State of New York, and for all purposes shall be construed in accordance
with the laws of said State. The parties hereto, hereby waive presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically provided herein, and assent to extensions of the time of payment,
or forbearance or other indulgence without notice.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated:
TRUE TEMPER CORPORATION
By:
Name:
Title:
WARRANT AGREEMENT
among
TRUE TEMPER CORPORATION
and
EMHART, INC.
-----------------------
Dated as of September 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Warrant Certificates.......................................-1-
SECTION 2. Execution of Warrant Certificates..........................-2-
SECTION 3. Registration...............................................-2-
SECTION 4. Registration of Transfers and Exchanges....................-2-
SECTION 5. Terms of Warrants; Exercise of Warrants....................-3-
SECTION 6. Payment of Taxes...........................................-4-
SECTION 7. Mutilated or Missing Warrant Certificates..................-5-
SECTION 8. Reservation of Warrant Shares..............................-5-
SECTION 9. Obtaining Stock Exchange Listings..........................-5-
SECTION 10. Adjustment of Number of Warrant Shares Issuable............-5-
SECTION 11. No Dilution or Impairment; Capital and Ownership
Structure.................................................-14-
SECTION 12. Fractional Interests......................................-14-
SECTION 13. Notices to Warrant Holders................................-14-
SECTION 14. Tag Along and Drag-Along Rights...........................-16-
SECTION 15. Notices...................................................-16-
SECTION 16. Supplements and Amendments................................-16-
SECTION 17. Successors................................................-16-
SECTION 18. Termination...............................................-16-
SECTION 19. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial.....................................................-16-
SECTION 20. Benefits of This Agreement................................-17-
SECTION 21. Counterparts..............................................-17-
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of September 30, 1998 among TRUE TEMPER
CORPORATION, a Delaware corporation ("Holdings"), and the purchaser set forth on
the signature pages hereto (the "Purchaser"). Capitalized terms used herein and
not defined herein shall have the meanings specified in the Securities Purchase
Agreement described below.
RECITALS
WHEREAS, Holdings and the Purchaser have entered into a Securities
Purchase Agreement, dated as of September 30, 1998 (as amended, supplemented or
otherwise modified, the "Securities Purchase Agreement"), pursuant to which the
Purchaser will purchase up to $25 million in initial accreted value of the
Senior Increasing Rate Discount Notes (the "Notes") of Holdings;
WHEREAS, Holdings has agreed that if the Notes remain outstanding on
the first anniversary of the Closing Date (the "First Anniversary Date"),
holders of the Notes will be entitled to receive (on the terms and conditions,
and pursuant to the schedule, set forth in the Escrow Agreement referred to
below) warrants, as hereinafter described (the "Warrants"), to purchase up to
2.1% of the fully-diluted common stock, $.01 par value per share, of Holdings
(the Common Stock or any security substituted for the Common Stock issuable on
exercise of the Warrants being referred to herein as the "Warrant Shares"), at
an initial exercise price equal to $.01 per share (the "Exercise Price");
WHEREAS, Holdings has agreed that the holders of Notes shall be
entitled to receive, on the First Anniversary Date, and again at the end of each
of the eight subsequent periods following the First Anniversary Date set forth
in the Escrow Agreement, Warrants representing percentages set forth in the
Escrow Agreement of the total Warrants placed in escrow, such that on the 721st
day following the Closing Date 100% of all Warrants previously held in escrow
shall have been released; and
WHEREAS, Holdings has agreed to execute the Warrants and deliver the
Warrants to an escrow agent on the date hereof and such escrow agent has agreed
to deliver the Warrants to the holders of Notes in accordance with an Escrow
Agreement dated September 30, 1998 (as amended, supplemented or otherwise
modified, the "Escrow Agreement") among Holdings, the Purchaser and Snoga, Inc.,
as escrow agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
AGREEMENT
SECTION 1. Warrant Certificates. The certificates evidencing
the Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in Exhibit A attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of Holdings by its President, any
Vice-President or its Chief Financial Officer (each an "Officer"). Each such
signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future Officer and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose Holdings may adopt
and use the facsimile signature of any person who shall have been an Officer,
notwithstanding the fact that at the time the Warrant Certificates shall be
delivered or disposed of he shall have ceased to hold such office.
In case any Officer of Holdings who shall have signed any of the
Warrant Certificates shall cease to be such Officer before the Warrant
Certificates so signed shall have been delivered or disposed of by Holdings,
such Warrant Certificates nevertheless may be delivered or disposed of as though
such person had not ceased to be such Officer of Holdings.
SECTION 3. Registration. Holdings shall number and register each
Warrant Certificate in a register as such Warrant Certificate is issued.
Holdings may deem and treat the registered holder(s) of the Warrant Certificates
as the absolute owner(s) thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone), for all purposes, and shall not be
affected by any notice to the contrary.
SECTION 4. Registration of Transfers and Exchanges. Holdings shall from
time to time register the transfer of any outstanding Warrant Certificates in a
Warrant register to be maintained by Holdings upon surrender thereof accompanied
by a written instrument or instruments of transfer in form satisfactory to
Holdings, duly executed by the registered holder or holders thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee(s) and the surrendered Warrant Certificate shall be
canceled and disposed of by Holdings.
The Warrant holders agree that prior to any proposed transfer of the
Warrant or of the Warrant Shares, if such transfer is not made pursuant to an
effective Registration Statement under the Act or Holdings does not receive an
opinion of counsel, reasonably satisfactory in form and substance to Holdings,
that such transfer is exempt from registration requirements under the Securities
Act, the Warrant holder will, if requested by Holdings, deliver to Holdings:
(1) an investment covenant reasonably satisfactory to Holdings signed
by the proposed transferee;
(2) an agreement by such transferee to the placement of the restrictive
investment legend set forth below on the Warrant or the Warrant Shares;
(3) an agreement by such transferee that Holdings may place a notation
in the stock books of Holdings or a "stop transfer order" with any transfer
agent or registrar with respect to the Warrant Shares; and
(4) an agreement by such transferee to be bound by the provisions of
this Section 4 relating to the transfer of such Warrant or Warrant Shares.
The Warrant holders agree that each certificate representing Warrant
Shares will bear (i) any legend that the Stockholders Agreement may require and
(ii) the following legend:
"THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR UNLESS
HOLDINGS HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
HOLDINGS THAT SUCH REGISTRATION IS NOT REQUIRED."
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to Holdings at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by Holdings.
SECTION 5. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised commencing at the opening of business on the Exercise Date (as defined
below) and until 5:00 p.m. New York City time on the seventh anniversary of the
Exercise Date, to receive from Holdings the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrant and payment of the Exercise Price for such
Warrant Shares. For purposes hereof, "Exercise Date" means, for any Warrant, the
date upon which such Warrant was released from escrow pursuant to the terms of
the Escrow Agreement.
A Warrant may be exercised upon surrender to Holdings at its office
designated for such purpose (the address of which is set forth in Section 15
hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"), and upon payment to
Holdings of the Exercise Price. Payment of the Exercise Price shall be made (i)
in cash or by certified or official bank check payable to the order of Holdings,
(ii) through the surrender of debt of the Company (including, without
limitation, the Notes outstanding under the Securities Purchase Agreement)
having a principal amount equal to the aggregate Exercise Price to be paid (the
Company shall pay the accrued interest or dividends on such surrendered debt in
cash at the time of surrender notwithstanding the stated terms thereof), (iii)
by tendering Warrants having a fair market value equal to the Exercise Price or
(iv) with any combination of (i), (ii) or (iii). For purpose of clause (iii)
above, the fair market value of the Warrants shall be determined as follows: (A)
to the extent the Common Stock is publicly traded and listed on the Nasdaq Stock
Market, Inc. or a national securities exchange, the fair market value shall be
equal to the difference between (1) the Quoted Price of the Common Stock on the
date of exercise and (2) the Exercise Price; or (B) to the extent the Common
Stock is not publicly traded, or otherwise is not listed on a national
securities exchange, the fair market value shall be equal to the value per share
as determined in good faith by the Board of Directors of Holdings pursuant to
Section 10(n).
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, Holdings shall issue and cause to be
delivered with all reasonable dispatch, but in no event later than 5 Business
Days after such surrender and payment, to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants as provided in Section 10; provided, however, that
if any consolidation, merger or lease or sale of assets is proposed to be
effected by Holdings as described in subsection (m) of Section 10 hereof, or a
tender offer or an exchange offer for shares of Common Stock of Holdings shall
be made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, Holdings shall, as soon as possible, but in any event not later than
2 Business Days thereafter, issue and cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence as provided in Section 10. Together with the delivery
of such Warrant Shares, Holdings shall deliver a certificate of its chief
accounting or chief financial officer setting forth and certifying the
calculations made by Holdings pursuant to Section 10 hereof to determine the
number of Warrant Shares issuable upon the exercise of the surrendered Warrant
or Warrants. Such certificate or certificates representing Warrant Shares shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by Holdings.
Holdings shall keep copies of this Agreement and any notices given or
received hereunder available for inspection by the holders during normal
business hours at its office.
SECTION 6. Payment of Taxes. Holdings shall pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that Holdings shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and Holdings shall not be required
to issue or deliver such Warrant Certificates unless or until the person or
persons requesting the issuance thereof shall have paid to Holdings the amount
of such tax or shall have established to the satisfaction of Holdings that such
tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, Holdings
may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to Holdings
of such loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, also reasonably satisfactory to it. Applicants for such substitute
Warrant Certificates shall also comply with such other reasonable regulations
and pay such other reasonable charges as Holdings may prescribe.
SECTION 8. Reservation of Warrant Shares. Holdings shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
Holdings or, if appointed, the transfer agent for the Common Stock (the
"Transfer Agent") and every subsequent transfer agent for any shares of
Holdings' capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
Holdings will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of Holdings' capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. Holdings will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each holder
pursuant to Section 13 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 or 11 hereof in the Exercise Rate, Holdings will take any corporate
action which may, in the opinion of its counsel, be necessary in order that
Holdings may validly and legally issue fully paid and nonassessable Warrant
Shares at the Exercise Rate as so adjusted.
Holdings covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings. Holdings will from time
to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed.
SECTION 10. Adjustment of Number of Warrant Shares Issuable. The number
of Warrant Shares issuable upon the exercise of each Warrant (the "Exercise
Rate") is subject to adjustment from time to time upon the occurrence of the
events enumerated in this Section 10 and under the circumstances described in
Section 11. For purposes of this Section 10, "Common Stock" means shares now or
hereafter authorized of any class of common stock of Holdings and any other
stock of Holdings, however designated, that has the right (subject to any prior
rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of Holdings without limit as to per share
amount.
(a) Adjustment for Change in Capital Stock. If Holdings:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of Holdings
which he would have owned immediately following such action if such Warrant had
been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of Holdings, Holdings
shall determine in good faith the allocation of the adjusted Exercise Rate
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Rate of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue. If Holdings issues any rights, options
or warrants entitling any person to subscribe for Common Stock or securities
convertible into, or exchangeable or exercisable for, Common Stock at an
offering price (or with an initial conversion, exchange or exercise price plus
such offering price) that is less than the Current Market Price per share of
Common Stock on the record date for such issuance (all of the foregoing,
"Rights"), the Exercise Rate shall be adjusted in accordance with the formula:
O+N
E'= E*--------
N*P
O+----
M
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate.
O = the number of shares of Common Stock outstanding on
the record date (assuming the conversion, exercise or
exchange of all Rights and convertible securities
into shares of Common Stock).
N = the number of additional shares of Common Stock
issuable pursuant to the Rights offered.
P = the offering price plus initial conversion,
exchange or exercise price per share of the
additional shares of Common Stock issuable pursuant
to the Rights.
M = the Current Market Price per share of Common Stock
on the record date.
The adjustment shall be made successively whenever any such Rights are
issued and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the Rights in the case of
Rights to be issued to the holders of Common Stock. To the extent that shares of
Common Stock are not delivered after the expiration of such Rights, the Exercise
Rate shall be readjusted to the Exercise Rate which would otherwise be in effect
had the adjustment made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Exercise Rate shall again be adjusted to be the Exercise Rate which would then
be in effect if such date fixed for determination of stockholders entitled to
receive such rights or warrants had not been so fixed.
This subsection (b) does not apply to:
(1) Rights issued to persons in a bona fide public offering
pursuant to a firm commitment underwriting,
(2) Rights issued to persons who are not affiliates of
Holdings in a bona fide private placement through a placement agent
that is a member firm of the NASD (except to the extent that any
discount from the Current Market Price attributable to restrictions on
transferability of the Rights, as determined in good faith by the Board
of Directors pursuant to Section 10(n) and described in a Board
resolution, shall exceed 5%), or
(3) Rights issued to Holdings' employees under bona fide
employee benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such Rights
would otherwise be covered by this subsection (b) (but only to the
extent that the aggregate number of Rights excluded hereby and issued
after the date of this Agreement shall not exceed the right to
subscribe for more than [5]% of the Common Stock then outstanding).
(c) Adjustment for Other Distributions. If Holdings distributes to all
holders of its Common Stock any of its assets (including but not limited to
cash), debt securities, preferred stock or any rights or warrants to purchase
any such securities, the Exercise Rate shall be adjusted in accordance with the
formula:
M
E'=E*------
M-F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate.
M = the Current Market Price per share of Common Stock
on the record date.
F = the fair market value on the record date of the
assets, securities, rights or warrants applicable to
one share of Common Stock. The Board of Directors
shall determine the fair market value pursuant to
Section 10(n) based upon the trading prices of
publicly traded securities where applicable.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection does not apply to Rights referred to in subsection (b)
of this Section 10.
(d) Adjustment for Common Stock Issue. If Holdings issues shares of
Common Stock for a consideration per share less than the Current Market Price
per share on the date Holdings fixes the offering price of such additional
shares, the Exercise Rate shall be adjusted in accordance with the formula:
O+N
E'= E*--------
N*P
O+----
M
where:
E' = the adjusted Exercise Rate.
E = the then current Exercise Rate.
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional
shares (assuming the conversion, exercise or exchange
of all Rights and convertible securities into shares
of Common Stock).
N = the number of additional shares of Common Stock
issued.
P = the aggregate consideration received per share for
the issuance of such additional shares of Common
Stock.
M = the Current Market Price per share of Common Stock
on the date of issuance of such additional shares of
Common Stock.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (a), (b) and (c)
of this Section 10,
(2) the exercise of Warrants, or the conversion or exchange of other
securities convertible or exchangeable for Common Stock,
(3) Common Stock issued upon the exercise of rights or warrants issued
to the holders of Common Stock,
(4) Common Stock issued to stockholders of any person that is not
affiliated with Holdings and that merges into Holdings in proportion to their
stock holdings of such person immediately prior to such merger, upon such
merger,
(5) Common Stock issued to persons in a bona fide public offering
pursuant to a firm commitment underwriting, or
(6) Common Stock issued to persons who are not affiliates of Holdings
in a bona fide private placement through a placement agent that is a member firm
of the NASD (except to the extent that any discount from the Current Market
Price attributable to restrictions on transferability of the Common Stock, as
determined in good faith by the Board of Directors pursuant to Section 10(n) and
described in a Board resolution, shall exceed 5%).
(e) Adjustment for Convertible Securities Issue. If Holdings issues any
securities convertible into or exchangeable for Common Stock (other than
securities issued in transactions described in subsections (b) and (c) of this
Section 10) for a consideration per share of Common Stock initially deliverable
upon conversion or exchange of such securities less than the Current Market
Price per share on the date of issuance of such securities, the Exercise Rate
shall be adjusted in accordance with the formula:
O+N
E'= E*--------
N*P
O+----
M
where:
E' = the adjusted Exercise Rate.
E = the then current Exercise Rate.
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities
(assuming the conversion, exercise or exchange of all
Rights and convertible securities into shares of
Common Stock).
N = the maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange
rate.
P = the aggregate consideration received for the
issuance of each such security, plus any additional
consideration received upon the exchange or
conversion of such security.
M = the Current Market Price per share on the date of
issuance of such securities.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the Exercise Rate shall promptly be readjusted to the Exercise
Rate which would then be in effect had the adjustment upon the issuance of such
securities been made on the basis of the actual number of shares of Common Stock
issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to stockholders of any person that is
not affiliated with Holdings and that merges into Holdings, or with a subsidiary
of Holdings, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger,
(2) convertible securities issued to persons in a bona fide public
offering pursuant to a firm commitment underwriting,
(3) convertible securities issued to persons who are not affiliates of
Holdings in a bona fide private placement through a placement agent which is a
member firm of the NASD (except to the extent that any discount from the Current
Market Price attributable to restrictions on transferability of Common Stock
issuable upon conversion, as determined in good faith by the Board of Directors
pursuant to Section 10(n) and described in a Board resolution, shall exceed 5%),
or
(4) convertible securities that are otherwise provided for by
subsections (a), (b), (c) or (d) of this Section 10.
(f) Current Market Price. The current market price per share of Common
Stock (the "Current Market Price") on any date is the average of the Quoted
Prices of the Common Stock for 30 consecutive trading days commencing 45 trading
days before the date in question. The "Quoted Price" of the Common Stock is the
last reported sales price of the Common Stock as reported by Nasdaq Stock
Market, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which shall be for
consolidated trading if applicable to such exchange, or if neither so reported
or listed, the last reported bid price of the Common Stock. In the absence of
one or more such quotations, the Board of Directors of Holdings shall determine
the Current Market Price pursuant to Section 10(n) in good faith.
(g) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (d) and (e) of this Section 10,
the following shall apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts
or other expenses incurred by Holdings for any underwriting of the
issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors pursuant to Section
10(n), based upon the trading prices of publicly traded securities
where appropriate (irrespective of the accounting treatment thereof),
and described in a resolution of the Board of Directors of Holdings;
and
(3) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by Holdings
for the issuance of such securities plus the additional minimum
consideration, if any, to be received by Holdings upon the conversion
or exchange thereof (the consideration in each case to be determined in
the same manner as provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred. No adjustment in the
Exercise Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Rate. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest
1/100th of a share.
(i) When No Adjustment Required. No adjustment need be made for rights
to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
(j) Notice of Adjustment. Whenever the Exercise Rate is adjusted,
Holdings shall provide the notices required by Section 15 hereof.
(k) Voluntary Increase. Holdings from time to time may increase the
Exercise Rate by any amount for any period of time if the period is at least 20
days and if the increase is irrevocable during the period.
Whenever the Exercise Rate is increased, Holdings shall mail to Warrant
holders a notice of the increase. Holdings shall mail the notice at least 15
days before the date the increased Exercise Rate takes effect. The notice shall
state the increased Exercise Rate and the period it will be in effect.
An increase of the Exercise Rate does not change or adjust the Exercise
Rate otherwise in effect for purposes of subsections (a), (b), (c), (d) and (e)
of this Section 10.
(l) Notice of Certain Transactions. If:
(1) Holdings takes any action that would require an adjustment
in the Exercise Rate pursuant to subsections (a), (b), (c), (d) or (e)
of this Section 10;
(2) Holdings takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (m) of this
Section 10; or
(3) there is a liquidation or dissolution of Holdings,
then Holdings shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. Holdings shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(m) Reorganization of Company. If Holdings consolidates or merges with
or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than Holdings, or the person to which such
sale or conveyance shall have been made, shall enter into a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section. The successor company shall mail to Warrant holders a notice describing
the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants under
the supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and (e)
of this Section 10 do not apply.
(n) Company Determination Not Final. Any determination that Holdings or
its Board of Directors must make pursuant to this Agreement shall be made in
good faith and shall be binding on the holders of Warrants, except as set forth
herein. Holdings shall give each holder of Warrants written notice of any such
determination by Holdings or its Board of Directors. If a majority of the
holders of the Warrants do not agree with any such determination by Holdings or
its Board of Directors, such holders may request, in a notice delivered to
Holdings not later than 30 days after the date on which the holders received
notice of such determination from Holdings, that such determination be made by
an independent investment banking firm (or, if an investment banking firm is
generally not qualified to render such a determination, an independent appraisal
firm) of recognized national standing chosen by Holdings, which determination
shall be final and binding on Holdings and the holders of Warrants, absent
manifest error. All fees and expenses incurred in connection with any
determination made by an independent investment banking firm or appraisal firm,
as the case may be, shall be borne by Holdings, unless such determination is in
agreement with the determination that was made by Holdings or its Board of
Directors, in which case such fees and expenses shall be borne by the holders
that requested such determination.
(o) When Issuance or Payment May Be Deferred. In any case in which this
Section 10 shall require that an adjustment in the Exercise Rate be made
effective as of a record date for a specified event, Holdings may elect to defer
until the occurrence of such event issuing to the holder of any Warrant
exercised after such record date the Warrant Shares and other capital stock of
Holdings, if any, issuable upon such exercise over and above the Warrant Shares
and other capital stock of Holdings, if any, issuable upon such exercise on the
basis of the Exercise Rate; provided, however, that Holdings shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares and other capital stock of
Holdings upon the occurrence of the event requiring such adjustment.
(p) Form of Warrants. Irrespective of any adjustments in the Exercise
Rate or in the kind of shares purchasable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and kind of shares as are stated in the Warrants initially issuable pursuant to
this Agreement.
SECTION 11. No Dilution or Impairment; Capital and Ownership Structure.
If any event shall occur as to which the provisions of Section 10 are not
strictly applicable but the failure to make any adjustment would adversely
affect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such Section, then, in each such case,
Holdings shall appoint, at its own expense, an investment banking firm of
recognized national standing that does not have a direct or material indirect
financial interest in Holdings or any of its subsidiaries, who has not been,
and, at the time it is called upon to give independent financial advice to
Holdings, is not (and none of its directors, officers, employees, affiliates or
stockholders are) a promoter, director or officer of Holdings or any of its
subsidiaries, which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in Section
10, necessary to preserve, without dilution, the purchase rights, represented by
this Agreement and the Warrants. Upon receipt of such opinion, Holdings will
promptly mail a copy thereof to the holders of the Warrants and shall make the
adjustments described therein.
Holdings will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holders of the Warrants against dilution or other
impairment. Without limiting the generality of the foregoing, Holdings (1) will
take all such action as may be necessary or appropriate in order that Holdings
may validly and legally issue fully paid and nonassessable shares of Common
Stock on the exercise of the Warrants from time to time outstanding and (2) will
not take any action which results in any adjustment of the Exercise Rate if the
total number of Warrant Shares issuable after the action upon the exercise of
all of the Warrants would exceed the total number of shares of Common Stock then
authorized by Holdings' certificate of incorporation and available for the
purposes of issue upon such exercise. A consolidation, merger, reorganization or
transfer of assets involving Holdings covered by Section 10(m) shall not be
prohibited by or require any adjustment under this Section 11.
SECTION 12. Fractional Interests. Holdings shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrants (or specified portion thereof), the
number of Warrant Shares which shall be issued by Holdings on exercise of such
Warrants shall be rounded (i) to the last previous whole number if the fraction
is less than 0.5 of a Warrant Share or (ii) to the next higher whole number if
the fraction is greater than or equal to 0.5 of a Warrant Share.
SECTION 13. Notices to Warrant Holders. Upon any
adjustment of the Exercise Rate pursuant to Section 10, Holdings shall promptly
thereafter cause to be delivered, by first-class mail, postage prepaid, to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant register a certificate of an Officer of Holdings setting forth
the Exercise Rate after such adjustment and setting forth in reasonable detail
the method of calculation and the facts upon which such calculations are based
and setting forth the number of Warrant Shares (or portion thereof) issuable
after such adjustment in the Exercise Rate, upon exercise of a Warrant and
payment of the Exercise Price. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 13.
In case:
(a) Holdings shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants;
(b) Holdings shall authorize the distribution to all holders of shares
of Common Stock or evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in shares of Common Stock or distributions referred
to in subsection (a) of Section 10 hereof);
(c) of any consolidation or merger to which Holdings is a party and for
which approval of any stockholders of Holdings is required, or of the conveyance
or transfer of the properties and assets of Holdings substantially as an
entirety, or of any reclassification or change of Common Stock issuable upon
exercise of the Warrants (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or a tender offer or exchange offer for shares of Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of Holdings; or
(e) Holdings proposes to take any action which would require an
adjustment of the Exercise Rate pursuant to Section 10;
then Holdings shall cause to be given to each of the registered holders of the
Warrant Certificates at his address appearing on the Warrant register, at least
20 days (or 10 days in any case specified in clauses (a) or (b) above) prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail, postage prepaid,
a written notice stating (i) the date as of which any such subdivision,
combination or reclassification is to be made, or (ii) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividends, rights, options, warrants or distribution are to be determined, or
(iii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iv) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 13 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of Directors of Holdings or any other
matter, or any rights whatsoever as stockholders of Holdings.
SECTION 14. Tag Along and Drag-Along Rights. Each of the parties hereto
agrees, for the benefit of the other parties hereto and the parties to the
Stockholders Agreement dated as of September 30, 1998 among Holdings and all of
its shareholders, as amended from time to time (the "Stockholders Agreement"),
to the provisions of Sections 4(c) and 5(a) of the Stockholders Agreement.
SECTION 15. Notices. Any notice or demand authorized by this Agreement
to be given or made by the registered holder of any Warrant Certificate to or on
Holdings shall be delivered or sent by registered, certified or express mail,
postage prepaid, return receipt requested, or given or made by facsimile, in
each case, at the "Address for Notices" specified below Holdings' name on the
signature pages hereof; or at such other address as shall be designated by
Holdings in a written notice to the Warrant holders. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by facsimile or personally delivered or, in the case
of a mailed notice, upon receipt, in each case given or addressed as aforesaid.
Any notice pursuant to this Agreement to be given by Holdings to the
registered holder(s) of any Warrant Certificate shall be delivered or sent by
registered, certified or express mail, postage prepaid, return receipt
requested, or given or made by facsimile, in each case, at the address of such
holder appearing on the Warrant register of Holdings, or at such other address
as shall be designated by such holder in a written notice to Holdings. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by facsimile or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
SECTION 16. Supplements and Amendments. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions of this Agreement may not be given unless Holdings has obtained the
written consent of holders of at least 66 2/3% of the outstanding Warrant
Certificates.
SECTION 17. Successors. All the covenants and provisions of this
Agreement by or for the benefit of Holdings shall bind and inure to the benefit
of its respective successors and assigns hereunder.
SECTION 18. Termination. This Agreement shall terminate when all
Warrants have been exercised.
SECTION 19. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT AND EACH WARRANT CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS WARRANT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 20. Benefits of This Agreement. Except as expressly set forth
in Section 14 hereof, nothing in this Agreement shall be construed to give to
any person or corporation other than Holdings and the registered holders of the
Warrant Certificates any legal or equitable right, remedy or claim under this
Agreement; but, except as so set forth, this Agreement shall be for the sole and
exclusive benefit of Holdings and the registered holders of the Warrant
Certificates.
SECTION 21. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Warrant Agreement to be duly executed, as of the day and year first above
written.
TRUE TEMPER CORPORATION
By:/s/
Name:
Title:
Address for Notices:
True Temper Corporation
8275 Tournament Drive, Suite 200
Memphis, TN 38125
Attention: Vice President--Finance & Administration
<PAGE>
EMHART, INC.
By:/s/
Name:
Title:
Address for Notices:
EMHART, INC.
c/o The Black & Decker Corporation
701 East Joppa Road
Towson, MD 21286
Attention: Chief Financial Officer
Facsimile No.: (410) 716-3318
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
HAVE BEEN COMPLIED WITH OR UNLESS HOLDINGS HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO HOLDINGS THAT SUCH REGISTRATION IS NOT REQUIRED.
No. _____
Warrant Certificate
TRUE TEMPER CORPORATION
This Warrant Certificate certifies that ________________, or registered
assigns, is the registered holder of Warrants (the "Warrants") to purchase
common stock, $.01 par value per share (the "Common Stock"), of True Temper
Corporation, a Delaware corporation ("Holdings"). This Warrant entitles the
holder upon exercise to receive from Holdings, ___ fully paid and nonassessable
shares of Common Stock (each, a "Warrant Share") at an exercise price of $.01
per share (the "Exercise Price") payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office or agency of Holdings designated for such purpose, but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to on the reverse hereof. The number of Warrant Shares issuable upon exercise of
the Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City time, on the
seventh anniversary of the date upon which the such Warrant was released from
escrow (the "Exercise Date") pursuant to the terms of the Escrow Agreement,
dated September 30, 1998 (as amended, supplemented or otherwise modified, the
"Escrow Agreement"), among Holdings, Emhart, Inc. and Snoga, Inc., as escrow
agent.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPALS OF
CONFLICTS OF LAWS.
<PAGE>
IN WITNESS WHEREOF, True Temper Corporation has caused this Warrant
Certificate to be signed by an officer.
Dated: ______________
TRUE TEMPER CORPORATION
By:
Name:
Title:
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the seventh anniversary of such
Warrants' Exercise Date entitling the holder on exercise to receive shares of
common stock, $0.01 par value per share, of Holdings (the "Common Stock"), and
are issued or to be issued pursuant to a Warrant Agreement dated as of September
30, 1998 (as amended, supplemented or otherwise modified, the "Warrant
Agreement") among Holdings and Emhart, Inc., which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of Holdings and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to Holdings.
A Warrant will not be exercisable until its respective Exercise Date.
The holder of Warrants evidenced by this Warrant Certificate may exercise them
by surrendering this Warrant Certificate, with the form of election to purchase
set forth hereon properly completed and executed, together with payment of the
Exercise Price in cash at the office of Holdings designated for such purpose. In
the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrant Shares issuable upon the exercise of each Warrant
(the "Exercise Rate") may, subject to certain conditions, be adjusted. If the
Exercise Rate is adjusted, the Warrant Agreement provides that the number of
shares of Common Stock issuable upon the exercise of each Warrant shall be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant.
The holders of the Warrants are entitled to certain tag-along rights
and subject to certain drag-along rights with respect to the Common Stock
purchasable upon exercise thereof. Said tag-along rights and drag-along rights
are set forth in full in a Stockholders Agreement, dated as of September 30,
1998, among Holdings, _________________ and the principal holders of Holdings'
Common Stock. A copy of the Stockholders Agreement may be obtained by the holder
hereof upon written request to Holdings.
Warrant Certificates, when surrendered at the office of Holdings by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
<PAGE>
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of Holdings, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
Holdings may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and Holdings shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of Holdings.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive shares of Common Stock and
herewith tenders payment for such shares to the order of TRUE TEMPER CORPORATION
in the amount of $.01 per share in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of , whose address is
and that such shares be delivered to whose address is
. If said number of shares is less than all of the shares
of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of , whose address is , and that such
Warrant Certificate be delivered to , whose address is .
Signature: _________________________
Date: ____________________
Signature Guaranteed: _______________________
DEBT REGISTRATION RIGHTS AGREEMENT
among
TRUE TEMPER CORPORATION
and
EMHART, INC.
-----------------------
Dated as of September 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions...........................................................1
2. Securities Subject to this Agreement..................................2
3. Shelf Registration....................................................3
4. Piggy-Back Registration...............................................3
5. Hold-Back Agreements..................................................4
6. Registration Procedures...............................................6
7. Registration Expenses................................................11
8. Indemnification......................................................12
9. Rule 144.............................................................15
10. Miscellaneous........................................................15
<PAGE>
DEBT REGISTRATION RIGHTS AGREEMENT
This DEBT REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of September 30, 1998, among True Temper Corporation, a
Delaware corporation (the "Company" and, together with its successors and
assigns, the "Issuer"), and the purchaser listed on the signature pages hereto
(together with its successors and assigns, the "Purchaser").
RECITALS
This Agreement is made pursuant to the Securities Purchase
Agreement ("Securities Purchase Agreement"), dated as of September 30, 1998, by
and among the Company and the Purchaser. In order to induce the Purchaser to
enter into the Securities Purchase Agreement, the Company has agreed to provide
the registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the Closing under the Securities Purchase Agreement.
AGREEMENT
The parties agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Exchange Act: The Securities Exchange Act of 1934, as amended.
Indemnified Parties: See Section 8(a) hereof.
Indemnifying Party: See Section 8(c) hereof.
NASD: National Association of Securities Dealers, Inc.
Notes: The Senior Increasing Rate Discount Notes issued
pursuant to the Securities Purchase Agreement in the form of Exhibit C to the
Securities Purchase Agreement.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Piggy-Back Registration: See Section 4(a) hereof.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: All Notes; provided that a Note ceases
to be a Registrable Security when it is no longer a Transfer Restricted
Security.
Registrants: The Issuer.
Registration Expenses: See Section 7 hereof.
Registration Statement: Any registration statement of the
Registrants which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Shelf Registration: See Section 3(a) hereof.
Transfer Restricted Security: Registrable Securities upon
original issuance thereof; provided that a Registrable Security is no longer a
Transfer Restricted Security when such Registrable Security is sold to the
public pursuant to an effective Registration Statement.
"Underwritten Registration" or "Underwritten Offering": A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Securities Subject to this Agreement
(a)......Registrable Securities. The securities entitled to
the benefits of this Agreement are the Registrable Securities.
(b)......Holders of Registrable Securities. A Person is deemed
to be a holder of Registrable Securities whenever such Person owns Registrable
Securities of record or has provided evidence reasonably satisfactory to the
Company that such Person has the right to acquire such Registrable Securities,
whether or not such acquisition has actually been effected and disregarding any
legal restrictions upon the exercise of such right.
3. Shelf Registration. The Registrants shall file, and shall
use their best efforts to cause to become effective a "shelf" registration
statement on any appropriate form pursuant to Rule 415 (or similar rule that may
be adopted by the SEC) under the Securities Act (a "Shelf Registration") on or
as soon as practicable after September 30, 1999 in order to permit registered
resales of all of the Registrable Securities. Subject to the last paragraph of
Section 6, the Registrants agree to use their best efforts thereafter to keep
such Shelf Registration continuously effective, and to prevent the happening of
any event of the kind described in Section 6(c) hereof that requires the
Registrants to give notice pursuant to the last paragraph of Section 6 hereof,
until such time as all the Registrable Securities covered by the Shelf
Registration have been sold pursuant to such Shelf Registration or have been
otherwise redeemed in full by the Company.
4. Piggy-Back Registration
(a)......If the Company proposes to file a registration
statement under the Securities Act with respect to an offering (other than an
offering the proceeds of which are to be used to redeem the Notes) by the
Company of any debt securities for its own account or for the account of any of
its security holders (provided that, in the case of a registration on demand of
such security holders, the holders of a majority in aggregate principal amount
of any such debt securities consent in writing) of any class of debt security
(other than a registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the SEC) or the Shelf Registration, then the Company
shall give written notice of such proposed filing to the holders of Registrable
Securities as soon as practicable (but in no event less than 30 days before the
anticipated filing date), and such notice shall offer such holders the
opportunity to register such principal amount of Registrable Securities as each
such Holder may request (a "Piggy-Back Registration").
(b)......The Company shall use all reasonable efforts to cause
the managing underwriter or underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in the registration
statement for such offering to be included on the same terms and conditions as
any similar class of debt securities of the Company or of such other security
holders included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering deliver a written opinion to the
Company that either because of (i) the kind or combination of securities which
the holders of Registrable Securities, the Company and any other persons or
entities intend to include in such offering or (ii) the size of the offering
which such holders, the Company and such other persons intend to make, are such
that the success of the offering would be materially and adversely affected by
inclusion of the Registrable Securities requested to be included, then (a) in
the event that the size of the offering is the basis of such managing
underwriter's opinion, the amount of securities to be offered for the accounts
of such holders shall be reduced pro rata (according to the Registrable
Securities proposed for registration) to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters; provided that if
securities are being offered for the account of other persons or entities as
well as the Company, then with respect to the Registrable Securities intended to
be offered by such holders, the proportion by which the amount of such class of
securities intended to be offered by such holders is reduced shall not exceed
the proportion by which the amount of such class of securities intended to be
offered by such other persons or entities is reduced; and (b) in the event that
the kind (or combination) of securities to be offered is the basis of such
managing underwriter's opinion, (x) the Registrable Securities to be included in
such offering shall be reduced as described in clause (a) above (subject to the
proviso in clause (a)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
5. Hold-Back Agreements
(a)......Restrictions on Public Sale by Holder of Registrable
Securities. Each holder of Registrable Securities whose Registrable Securities
are covered by a Registration Statement filed pursuant to Section 3 hereof
agrees, if requested by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the Registrants
of the same class as the securities included in such Registration Statement,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration), during the 30-day period prior to, and
during the 90-day period beginning on, the closing date of each underwritten
offering made pursuant to such Registration Statement, to the extent timely
notified in writing by the Registrants or the managing underwriters; provided,
however, that each holder of Registrable Securities shall be subject to the
hold-back restrictions of this Section 5(a) only once during any 365-day period.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering any such agreement; provided, however, that any such
holder shall undertake, in its request to participate in any such underwritten
offering, not to effect any public sale or distribution of any Registrable
Securities held by such holder and covered by a Registration Statement
commencing on the date of sale of the Registrable Securities unless it has
provided 45 days prior written notice of such sale or distribution to the
underwriter or underwriters.
(b)......Restrictions on Sale of Debt Securities by the
Registrants and Others. The Registrants agree (1) not to effect any public or
private offer, sale or distribution of any of their debt securities or any class
or series of their capital stock having a preference in liquidation or with
respect to dividends, including a sale pursuant to Regulation D under the
Securities Act (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Issuer or any subsidiary of
the Issuer or the acquisition by the Issuer or a subsidiary of the Issuer of the
capital stock or substantially all the assets of any other Person or in
connection with any employee stock option or other benefit plan; provided that
in each such case the recipients of such securities agree to be bound by a
restriction on transfer comparable to that set forth in this Section 5(b)),
during the 10-day period prior to, and during the 135-day period beginning with,
the effectiveness of a Registration Statement filed under Section 3 to the
extent timely notified in writing by a holder of Registrable Securities or the
managing underwriters in an underwritten offering and (2) during the
aforementioned period, to cause each holder of each of the Registrants'
privately placed debt securities or any class or series of the Registrants'
capital stock having a preference in liquidation or with respect to dividends
purchased from the Registrants at any time on or after the date of this
Agreement to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if permitted).
6. Registration Procedures. In connection with the
Registrants' Shelf Registration obligations set forth in Section 3 hereof, each
of the Registrants will use its best efforts to effect such registration to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of distribution thereof, and pursuant thereto the Registrants
will, as expeditiously as possible:
(a)......prepare and file with the SEC, within the time period
provided in Section 3 hereof, a Registration Statement or Registration
Statements relating to the Shelf Registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof and shall include all financial statements (including, if applicable,
financial statements of any Person that shall have guaranteed any indebtedness
of the Registrants) required by the SEC to be filed therewith, cooperate and
assist in any filings required to be made with the NASD, and use its best
efforts to cause such Registration Statement to become effective; provided that
before filing a Registration Statement or any amendments or supplements thereto,
the Registrants will furnish to the holders of the Registrable Securities
covered by such Registration Statement, copies of all such documents proposed to
be filed, which documents will be subject to the review by such holders, and the
Registrants will not file any Registration Statement or any amendments or
supplements thereto to which the holders of a majority in aggregate principal
amount of such Registrable Securities shall reasonably object;
(b)......prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective until all Registrable Securities
covered by such Registration Statement have been sold; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(c)......notify the selling holders of Registrable Securities
promptly, and (if requested by any such Person) confirm such advice in writing,
(1) when the Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, (2) of any request
by the SEC for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (3) of the issuance by the SEC of any
stop order of which any Registrant or its counsel is aware suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, (4) if at any time the representations and warranties of the
Registrants contemplated by paragraph (o) below cease to be true and correct,
(5) of the receipt by the Registrants of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and (6) of the Issuer's becoming aware that the Prospectus (including any
document incorporated therein by reference), as then in effect, includes an
untrue statement of material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(d)......make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e)......if reasonably requested by a holder of Registrable
Securities being sold in connection with an underwritten offering, promptly
incorporate in a Prospectus such information as the holders of a majority in
aggregate principal amount of the Registrable Securities being sold agree should
be included therein relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation, information with respect
to the principal amount of Registrable Securities being sold, the purchase price
being paid therefor and any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus as promptly as
practicable upon being notified of the matters to be incorporated in such
Prospectus;
(f)......furnish to each selling holder of Registrable
Securities without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(g)......deliver to each selling holder of Registrable
Securities without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request; the Registrants' consents to the use of the Prospectus
by each of the selling holders of Registrable Securities, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus;
(h)......prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
selling holders of Registrable Securities, and their counsel in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any such
seller reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of such
Registrable Securities; provided that the Registrants will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or taxation in any such jurisdiction where it is not then so subject;
(i)......cooperate with the selling holders of Registrable
Securities to facilitate, to the extent commercially reasonable under the
circumstances, the timely preparation and delivery of certificates representing
such Registrable Securities to be sold and not bearing any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as such selling holders may request at least two
business days prior to any sale of such Registrable Securities;
(j)......use their best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(k)......upon the occurrence of any event contemplated by
paragraph (c)(6) above, prepare a supplement or post-effective amendment to the
related Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the holders of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances then existing;
(l)......use commercially reasonable efforts to cause all
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which similar securities issued by the Registrants are
then listed if such listing is permitted under the rules of such exchange and if
requested by the holders of a majority in aggregate principal amount of such
Registrable Securities;
(m)......cause the Registrable Securities covered by a
Registration Statement to be rated with such rating agencies as the holders of a
majority in aggregate principal amount of such Registrable Securities may
designate;
(n)......not later than the effective date of the Shelf
Registration, provide a CUSIP number for all Registrable Securities and provide
the transfer agent with printed certificates for the Registrable Securities
which are in a form eligible for deposit with The Depository Trust Company;
(o)......[This section intentionally omitted.]
(p)......make available for inspection by a representative of
the holders of a majority in principal amount of the Registrable Securities and
any attorney or accountant retained by such holders, all financial and other
records, pertinent corporate documents and properties of the Registrants as may
be reasonably necessary to enable them to exercise their due diligence
responsibilities, and provide reasonable access to appropriate officers of the
Issuer in connection with such due diligence responsibilities;
(q)......otherwise use their best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
their security holders, earnings statements for the Registrants satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after
the end of any 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Registrants' first fiscal quarter
commencing after the effective date of the Registration Statement, which
statements shall cover said 12-month periods; provided that the Issuer shall be
deemed to have complied with this Section 5(q) if it has satisfied Rule 158
under the Securities Act; and
(r)......promptly prior to the filing of any document which is
to be incorporated by reference into the Registration Statement or Prospectus
(after initial filing of the Registration Statement), provide copies of such
document to counsel to the selling holders of Registrable Securities covered by
such Registration Statement, make the Registrants' representatives available for
discussion of such document with such selling holders and make such changes in
such document prior to the filing thereof as counsel for such selling holders
may reasonably request in writing.
The Registrants may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Registrants such information regarding the distribution of such securities as
the Registrants may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acceptance of
such Registrable Securities that, upon receipt of any notice from the
Registrants of the happening of any event of the kind described in Section
6(c)(3), (5) or (6) hereof that, in the reasonable judgment of the Registrant's
Board of Directors, it is advisable to suspend use of the prospectus for a
discrete period of time due to pending corporate developments, public filings
with the SEC or similar events, such holder will forthwith discontinue
disposition of Registrable Securities until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(k) hereof,
or until it is advised in writing (the "Advice") by the Registrants that the use
of such Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in such Prospectus,
and, if so directed by the Registrants, such holder will deliver to the
Registrants (at the Registrants' expense) all copies, other than permanent file
copies then in such holder's possession, of such Prospectus covering such
Registrable Securities current at the time of receipt of such notice. The
Registrant shall use all reasonable efforts to insure that the use of the
prospectus may be resumed as soon as practicable, and in any event shall not be
entitled to required the Holder to suspend use of any prospectus for more than
thirty (30) business days in any twelve month period.
7. Registration Expenses
(a)......All reasonable expenses incident to the Registrants'
performance of or compliance with this Agreement, including without limitation
all (i) registration and filing fees, fees and expenses associated with filings
required to be made with the NASD, (ii) fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
selling holders in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the laws
of such jurisdictions as the holders of a majority in aggregate principal amount
of the Registrable Securities being sold may reasonably designate), (iii)
printing expenses (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses), (iv) fees and disbursements of counsel
for the Registrants and for the sellers of the Registrable Securities (subject
to the provisions of Section 6(b)), and customary out of pocket expenses and
fees paid by issuers to the extent provided for in any underwriting agreement
(excluding discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, transfer taxes or legal expenses of
any Person other than the Registrants and the selling holders), (v) the cost of
securities acts liability insurance if the Registrants so desire and (vi) fees
and expenses of other Persons retained by the Registrants (all such expenses
being herein called "Registration Expenses") will be borne by the Registrants,
regardless whether the Registration Statement becomes effective. Each holder of
Registrable Securities will pay any fees or disbursements of counsel to such
holder (other than as provided in Section 7(b)) and all underwriting discounts
and commissions and transfer taxes, if any, and provide other fees, costs and
expenses of such holder (other than Registration Expenses) relating to the sale
or disposition of such holder's Registrable Securities. The Issuer, in any
event, will pay the Issuer's own internal expenses (including, without
limitation, all salaries and expenses of their officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by the
Registrants are then listed, rating agency fees and the fees and expenses of any
Person, including special experts, retained by the Registrants.
(b)......In connection with the Shelf Registration hereunder,
the Registrants will reimburse the selling holders of Registrable Securities
being registered in such registration for the reasonable fees and disbursements
of not more than one counsel chosen by the selling holders of a majority in
principal amount of such Registrable Securities.
8. Indemnification
(a)......Indemnification by the Registrants. Each of the
Registrants jointly and severally agree to indemnify and hold harmless, to the
full extent permitted by law, each holder of Registrable Securities, their
officers, directors and employees and each Person who controls such holder
(within the meaning of the Securities Act) (the "Indemnified Parties") against
all losses, claims, damages, liabilities and expenses incurred by such party in
connection with any actual or threatened action arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same arise out of or are based upon any such untrue statement or omission
made in reliance on and in conformity with any information furnished in writing
to the Registrants by such holder or its counsel expressly for use therein;
provided, that no Registrant shall be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an amendment
or supplement to the Prospectus and the holder of Registrable Securities
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of the Registrable Securities to the person
asserting such loss, claim, damage, liability or expense after the Registrants
had furnished such holder with a sufficient number of copies of the same. Each
Registrant shall also indemnify underwriters, their officers and directors and
each Person who controls such Persons (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of the
Indemnified Parties, if requested.
(b)......Indemnification by Holder of Registrable Securities.
In connection with the Shelf Registration, each holder of Registrable Securities
will furnish to the Registrants in writing such information and affidavits as
the Registrants reasonably request for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, the Registrants, their directors and officers and each
Person who controls a Registrant (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of a material fact contained in any Registration Statement or
Prospectus or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission relates to a holder and is made
in reliance on and in conformity with any information or affidavit furnished in
writing by such holder to the Registrants specifically for inclusion in such
Registration Statement or Prospectus. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than the
dollar amount of the proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Registrants shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution of such Registrable Securities to the same
extent as provided above with respect to information or affidavit furnished in
writing by such Persons specifically for inclusion in any Prospectus or
Registration Statement.
(c)......Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the
applicable Registrant or holder of Registrable Securities, as the case may be
(in either case, as applicable, an "Indemnifying Party"), of any claim with
respect to which it seeks indemnification and (ii) permit such Indemnifying
Party to assume the defense of such claim with counsel reasonably satisfactory
to such Person; provided, however, that any Person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be at
the expense of such Person unless (a) the Indemnifying Party has agreed to pay
such fees or expenses, or (b) the Indemnifying Party has failed to assume the
defense of such claim or (c) in the reasonable judgment of any such Person,
based upon advice of its counsel, a conflict of interest may exist between such
Person and the Indemnifying Party with respect to such claims (in which case, if
the Person notifies the Indemnifying Party in writing that such Person elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the Indemnifying
Party, the Indemnifying Party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). No Indemnifying Party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Person entitled to
indemnification a release from all liability in respect to such claim or
litigation. Any Indemnifying Party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all Persons entitled to indemnification by such
Indemnifying Party with respect to such claim, unless in the reasonable judgment
of any such Person a conflict of interest may exist between such Person and any
other Person entitled to indemnification hereunder with respect to such claim,
in which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel or counsels, but only of one such additional
counsel for each group of similarly situated Persons in any one jurisdiction.
(d)......Contribution. If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is unavailable to a Person
entitled to indemnification or is insufficient to hold it harmless as
contemplated by the preceding clauses (a) and (b), then the Indemnifying Party
shall contribute to the amount paid or payable by such Person as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by such Person and the
Indemnifying Party, but also the relative fault of such Person and the
Indemnifying Party, as well as any other relevant equitable considerations,
provided that no holder of Registrable Securities shall be required to
contribute an amount greater than the dollar amount of the proceeds received by
such holder of Registrable Securities with respect to the sale of any
securities. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
9 .Rule 144. The Registrants covenant that they will file the
reports required to be filed by them under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if any of
them is not required to file such reports, the applicable party will, upon the
request of any holder of Registrable Securities made after September 30, 1999
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and they will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Registrants will deliver to such holder a written statement as
to whether they have complied with such information and filing requirements.
10. Miscellaneous
(a)......Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Securities Purchase Agreement or granted by law, including recovery of damages,
in connection with the breach by the Registrants of their obligations to
register the Registrable Securities will be entitled to specific performance of
its rights under this Agreement. The Registrants agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by any of them of the provisions of this Agreement and each agrees, to the
extent permitted under applicable law, to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b)......No Inconsistent Agreements. The Registrants will not
on or after the date of this Agreement enter into any agreement with respect to
their securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the holders of Registrable Securities
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Registrants' securities under any other
agreements. The Registrants have not previously entered into any inconsistent
agreement with respect to their securities granting any registration rights to
any Person.
(c)......Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions of this Agreement may not be given unless the Registrants have
obtained the written consent of holders of at least 66 2/3 % of the principal
amount of the outstanding Registrable Securities (excluding Registrable
Securities held by the Company or one of its affiliates).
(d)......Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, facsimile or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the
most current address given by such holder to the Registrants in
accordance with the provisions of this Section 10(d), which address
initially is, with respect to the Purchaser, the address set forth next
to the Purchaser's name on the signature pages of the Securities
Purchase Agreement, with copies to Miles & Stockbridge P.C., 10 Light
Street, Baltimore, Maryland 21202, Attention: Glenn C. Campbell, Esq.
and Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York
10022-4802, Attention: Philip E. Coviello, Esq.; and
(ii).....if to the Registrants, initially to it at the address
set forth in the Securities Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 10(d), with a copy to Kirkland & Ellis, 153 East 53rd St., New York, New
York 10022, Attention: Frederick Tanne, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid if mailed; when
answered back, if delivered by facsimile; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
(e)......Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties hereto, including without limitation, and without the need for an
express assignment, subsequent holders of Registrable Securities.
(f)......Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g)......Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h)......New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(i)......Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of any such provision in such jurisdiction in every
other respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(j)......Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement with respect to the subject
matter contained herein and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Registrants with respect to the
securities sold pursuant to the Securities Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Debt
Registration Rights Agreement as of the date first written above.
TRUE TEMPER CORPORATION
By:/s/
Name:
Title:
EMHART, INC.
By:/s/
Name:
Title:
EQUITY REGISTRATION RIGHTS AGREEMENT
among
TRUE TEMPER CORPORATION
and
EMHART, INC.
-----------------------
Dated as of September 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions...........................................................1
2. Securities Subject to this Agreement..................................3
3. Piggy-Back Registration...............................................4
4. Hold-Back Agreements..................................................5
5. Registration Expenses.................................................6
6. Indemnification.......................................................7
7. Rule 144..............................................................9
8. Miscellaneous.........................................................9
<PAGE>
EQUITY REGISTRATION RIGHTS AGREEMENT
This EQUITY REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made and entered into as of September 30, 1998, among TRUE TEMPER
CORPORATION, a Delaware corporation ("Holdings"), and the purchaser listed on
the signature pages hereto (together with its successors and assigns, the
"Purchaser").
RECITALS
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of September 30, 1998 (as amended, supplemented or otherwise
modified, "Securities Purchase Agreement"), by and among Holdings and the
Purchaser. In order to induce the Purchaser to enter into the Securities
Purchase Agreement, Holdings has agreed to provide the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to the
Closing under the Securities Purchase Agreement.
AGREEMENT
The parties agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Common Stock: The authorized common stock, par value $.01 per
share, of Holdings.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Indemnified Parties: See Section 6(a) hereof.
NASD: National Association of Securities Dealers, Inc.
<PAGE>
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Piggy-Back Registration: See Section 3(a) hereof.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: The Registrable Warrants and the
Registrable Warrant Shares; provided that a security ceases to be a Registrable
Security when it is no longer a Transfer Restricted Security.
Registrable Warrant Shares: All Warrant Shares issuable to the
holders of Warrants upon exercise of such Warrants.
Registrable Warrants: All Warrants originally issued pursuant
to the Warrant Agreement.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the
Holdings which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
<PAGE>
Transfer Restricted Security: Registrable Securities upon
original issuance thereof; provided that a Registrable Security is no longer a
Transfer Restricted Security when such Registrable Security is sold to the
public pursuant to an effective Registration Statement.
Underwritten Registration or Underwritten Offering: A
registration in which securities of Holdings are sold to an underwriter for
reoffering to the public.
Warrant Agreement: The Warrant Agreement dated as of September
30, 1998 among Holdings and the Purchaser, as amended, supplemented or otherwise
modified from time to time.
Warrant Shares: The shares of capital stock (including all
series of preferred and common stock and all other outstanding warrants, options
or other convertible securities) of Holdings issuable to the holders of Warrants
upon exercise of the Warrants, together with any other securities that may in
the future become issuable upon exercising the Warrants.
Warrants: Warrants to purchase capital stock (including all
series of preferred and common stock and all other outstanding warrants, options
or other convertible securities) of Holdings in accordance with the Warrant
Agreement.
2. Securities Subject to this Agreement
(a) Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns Registrable
Securities of record or has provided evidence reasonably satisfactory to
Holdings that such Person has the right to acquire such Registrable Securities,
whether or not such acquisition has actually been effected and disregarding any
legal restrictions upon the exercise of such right.
3.Piggy-Back Registration
<PAGE>
(a) Right to Piggyback. Subject to the last sentence
of this subsection (a), whenever Holdings proposes to register any shares of
Common Stock (or securities exercisable or exchangeable for or convertible into,
or options to acquire, Common Stock) with the SEC under the Securities Act and
the registration form to be used may be used for the registration of the
Registrable Securities (a "Piggyback Registration"), Holdings will give written
notice to the Purchaser, at least 30 days prior to the anticipated filing date,
of its intention to effect such a registration, which notice will specify the
proposed offering price, the kind and number of securities proposed to be
registered, the distribution arrangements and such other information that at the
time would be appropriate to include in such notice, and will, subject to
subsection (b) below, include in such Piggyback Registration all Registrable
Securities with respect to which Holdings has received written requests for
inclusion therein within 20 days after the effectiveness of Holdings' notice.
Except as may otherwise be provided in this Agreement, Registrable Securities
with respect to which such request for registration has been received will be
registered by Holdings and offered to the public in a Piggyback Registration
pursuant to this Section 3 on the terms and conditions at least as favorable as
those applicable to the registration of shares of Registrable Securities to be
sold by Holdings and by any other person selling under such Piggyback
Registration.
(b) Priority on Piggyback Registration. Holdings
shall use all reasonable efforts to cause the managing underwriter or
underwriters of a proposed Underwritten Offering to permit the Registrable
Securities requested to be included in the registration statement for such
offering to be included on the same terms and conditions as any similar class of
equity securities of Holdings or of such other security holders included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a written opinion to Holdings that either
because of (i) the kind or combination of securities which the holders of
Registrable Securities, Holdings and any other persons or entities intend to
include in such offering or (ii) the size of the offering which such holders,
Holdings and such other persons intend to make, are such that the success of the
offering would be materially and adversely affected by inclusion of the
Registrable Securities requested to be included, then (a) in the event that the
size of the offering is the basis of such managing underwriter's opinion, the
amount of securities to be offered for the accounts of such holders shall be
reduced pro rata (according to the Registrable Securities proposed
<PAGE>
for registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter or underwriters; provided that if securities are being
offered for the account of other persons or entities as well as Holdings, then
with respect to the Registrable Securities intended to be offered by such
holders, the proportion by which the amount of such class of securities intended
to be offered by such holders is reduced shall not exceed the proportion by
which the amount of such class of securities intended to be offered by such
other persons or entities is reduced; and (b) in the event that the kind (or
combination) of securities to be offered is the basis of such managing
underwriter's opinion, (x) the Registrable Securities to be included in such
offering shall be reduced as described in clause (a) above (subject to the
proviso in clause (a)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
(c) Selection of Underwriters. If any Piggyback
Registration is an Underwritten Offering, Holdings will select a managing
underwriter or underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized standing.
4. Hold-Back Agreements. Each holder of Registrable Securities
whose Registrable Securities are covered by a Registration Statement filed
pursuant to Section 3 hereof agrees, if requested by the managing underwriters
in an Underwritten Offering, not to effect any public sale or distribution of
securities of Holdings of the same class as the securities included in such
Registration Statement, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such Underwritten Registration), during the
30-day period prior to, and during the 180-day period beginning on, the closing
date of each Underwritten Offering made pursuant to such Registration Statement,
to the extent timely notified in writing by Holdings or the managing
underwriters; provided, however, that each holder of Registrable Securities
shall be subject to the hold-back restrictions of this Section 4(a) only once
during any 365-day period.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering any such agreement;
<PAGE>
provided, however, that any such holder shall undertake, in its request to
participate in any such Underwritten Offering, not to effect any public sale or
distribution of any Registrable Securities held by such holder and covered by a
Registration Statement commencing on the date of sale of the Registrable
Securities unless it has provided 45 days prior written notice of such sale or
distribution to the underwriter or underwriters.
5. Registration Expenses. All reasonable expenses incident to
Holdings' performance of or compliance with this Agreement, including without
limitation all (i) registration and filing fees, fees and expenses associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel as
may be required by the rules and regulations of the NASD), (ii) fees and
expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the managing
underwriters), (iii) printing expenses (including expenses of printing
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses), (iv) fees and
disbursements of counsel for Holdings and for the sellers of the Registrable
Securities, and customary out of pocket expenses and fees paid by issuers to the
extent provided for in an underwriting agreement (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Securities, transfer taxes or legal expenses of any Person other
than Holdings and the selling holders), (v) the cost of securities acts
liability insurance if Holdings so desires and (vi) fees and expenses of other
Persons retained by Holdings (all such expenses being herein called
"Registration Expenses") will be borne by Holdings, regardless whether the
Registration Statement becomes effective. Each holder of Registrable Securities
will pay any fees or disbursements of counsel to such holder and all
underwriting discounts and commissions and transfer taxes, if any, and provide
other fees, costs and expenses of such holder (other than Registration Expenses)
relating to the sale or disposition of such holder's Registrable Securities.
Holdings, in any event, will pay Holdings' own internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the
<PAGE>
expense of any annual audit, the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by Holdings are then listed, rating agency fees
and the fees and expenses of any Person, including special experts, retained by
Holdings.
6. Indemnification
(a) Indemnification by Holdings. Holdings agrees to
indemnify and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors and employees and each Person
who controls such holder (within the meaning of the Securities Act) (the
"Indemnified Parties") against all losses, claims, damages, liabilities and
expenses incurred by such party in connection with any actual or threatened
action arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same arise out of or are based upon any such
untrue statement or omission made in reliance on and in conformity with any
information furnished in writing to Holdings by such holder or its counsel
expressly for use therein; provided, that Holdings shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is completely corrected
in an amendment or supplement to the Prospectus and the holder of Registrable
Securities thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of the Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense after Holdings has furnished such holder with a sufficient number of
copies of the same. Holdings shall also indemnify underwriters, their officers
and directors and each Person who controls such Persons (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Indemnified Parties, if requested.
(b) Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder will (i) give prompt notice to
Holdings of any claim with respect to which
<PAGE>
it seeks indemnification and (ii) permit Holdings to assume the defense of such
claim with counsel reasonably satisfactory to such Person; provided, however,
that any Person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such Person unless
(a) Holdings has agreed to pay such fees or expenses, or (b) Holdings has failed
to assume the defense of such claim or (c) in the reasonable judgment of any
such Person, based upon advice of its counsel, a conflict of interest may exist
between such Person and Holdings with respect to such claims (in which case, if
the Person notifies Holdings in writing that such Person elects to employ
separate counsel at the expense of Holdings, Holdings shall not have the right
to assume the defense of such claim on behalf of such Person). If such defense
is not assumed by Holdings, Holdings will not be subject to any liability for
any settlement made without its consent (but such consent will not be
unreasonably withheld). Holdings will not be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Person entitled to
indemnification a release from all liability in respect to such claim or
litigation. If Holdings is not entitled to, or elects not to, assume the defense
of a claim, Holdings will not be obligated to pay the fees and expenses of more
than one counsel for all Persons entitled to indemnification by Holdings with
respect to such claim, unless in the reasonable judgment of any such Person a
conflict of interest may exist between such Person and any other Person entitled
to indemnification hereunder with respect to such claim, in which event Holdings
shall be obligated to pay the fees and expenses of such additional counsel or
counsels, but only of one such additional counsel for each group of similarly
situated Persons in any one jurisdiction.
(c) Contribution. If for any reason the
indemnification provided for in subsection (a) is unavailable to a Person
entitled to indemnification or is insufficient to hold it harmless as
contemplated by the preceding subsection (a), then Holdings shall contribute to
the amount paid or payable by such Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Person and Holdings, but also the relative
fault of such Person and Holdings, as well as any other relevant equitable
considerations, provided that no holder of Registrable Securities shall be
required to
<PAGE>
contribute an amount greater than the dollar amount of the proceeds received by
such holder of Registrable Securities with respect to the sale of any
securities. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
7. Rule 144. Holdings covenants that it will file the reports
required to be filed by them under the Securities Act and the Exchange Act and
the rules and regulations adopted by the SEC thereunder (or, if it is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities made after September 30, 1999, make publicly available
other information so long as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any holder of Registrable Securities, Holdings will
deliver to such holder a written statement as to whether it has complied with
such information and filing requirements.
8. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities,
in addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, in connection with the breach by Holdings
of its obligations to register the Registrable Securities will be entitled to
specific performance of its rights under this Agreement. Holdings agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and agrees, to the
extent permitted under applicable law, to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Holdings will not on
or after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts
<PAGE>
with the provisions hereof. The rights granted to the holders of Registrable
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of Holdings' securities under any other
agreements. Holdings has not previously entered into any inconsistent agreement
with respect to its securities granting any registration rights to any Person.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions of this Agreement may not be given unless Holdings has obtained the
written consent of holders of at least 66 2/3 % of the principal amount of the
outstanding Registrable Securities (excluding Registrable Securities held by
Holdings or one of its affiliates).
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, facsimile or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable
Securities, at the most current address given by such holder to Holdings in
accordance with the provisions of this Section 8(d), which address initially is,
with respect to the Purchaser, the address set forth next to the Purchaser's
name on the signature pages of the Securities Purchase Agreement, with a copy to
Miles & Stockbridge, 10 Light Street, Baltimore, Maryland 21202 Attention: Glenn
Campbell; and
(ii) if to Holdings, initially to it at True
Temper Corporation, 8275 Tournament Drive, Suite 200, Memphis, Tennessee 38125,
Attention: Vice President--Finance and Administration, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 8(d), with a copy to Kirkland & Ellis, 153 East 53rd Street, New
York, New York 10022, Attention: Frederick Tanne, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail,
<PAGE>
postage prepaid if mailed; when answered back, if delivered by facsimile; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto, including without limitation, and without the need for an
express assignment, subsequent holders of Registrable Securities.
(f) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) New York Law; Submission to Jurisdiction; Waiver
of Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
(i) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of any such provision in such jurisdiction
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement with respect to the subject
matter contained herein and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by Holdings with respect to the securities sold
pursuant to the Securities Purchase Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Equity
Registration Rights Agreement as of the date first written above.
TRUE TEMPER CORPORATION
By:/s/
Name:
Title:
EMHART, INC.
By:/s/
Name:
Title:
