<PAGE> 1
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):
JUNE 30, 1995
_____________
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7872 95-4062211
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
700 Liberty Avenue 07083
Union, New Jersey (Zip Code)
(Address of principal
executive offices)
(908) 964-5666
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 1995, the registrant completed its acquisition of
substantially all of the assets of (i) SKF USA Inc.'s Seeger Division, which
manufactures fasteners, and (ii) all of the outstanding stock of SKF GmbH's
Seeger-Orbis GmbH subsidiary, which also manufactures fasteners directly and
through its wholly owned subsidiaries. The acquired assets are located in
Somerset, New Jersey, U.S.A.; Bingley, U.K.; Konigstein, Germany; and Diadema,
Brazil. The acquired assets consist of real estate, machinery and equipment,
inventories, receivables, intellectual property rights and other intangibles
used in the manufacture and sale of metal fastener products.
The purchase price of Deutsche Mark 47,456,000 plus U.S. Dollars
7,943,958 was determined as a result of arm's length negotiations between
unrelated parties. In order to fund this acquisition, the registrant obtained
a new credit facility with The National Bank of Boston. The registrant intends
to use the acquired assets in substantially the same manner as previously used
by the seller.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired:
No financial statements are available at this time. An
extension to file the financial statements within 60 days is
hereby requested.
(b) Pro forma financial information
No proforma financial information is available at this time.
An extension to file the required financial information within
60 days is hereby requested.
(c) Other Exhibits:
(1) Asset Purchase Agreement dated as of June 29, 1995
between the Company's wholly-owned subsidiary, Waldes
Truarc Inc., and SKF USA Inc.
(2) Share Purchase Agreement dated as of June 29/30, 1995
among the Company, SKF GmbH and TransTechnology
Seeger-Orbis GmbH.
(3) $115,000,000 Revolving Credit and Term Loan Agreement
dated as of June 30, 1995 among the Company, various
subsidiaries of the Company, and The First National
Bank of Boston.
<PAGE> 3
SIGNATURES
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.
Date: July 14, 1995
TRANSTECHNOLOGY CORPORATION
Valentina Doss
---------------------------
Valentina Doss
Vice President, General
Counsel & Secretary
<PAGE> 4
EXHIBIT INDEX
(1) Asset Purchase Agreement dated as of June 29, 1995
between the Company's wholly-owned subsidiary, Waldes
Truarc Inc., and SKF USA Inc.
(2) Share Purchase Agreement dated as of June 29/30, 1995
among the Company, SKF GmbH and TransTechnology
Seeger-Orbis GmbH.
(3) $115,000,000 Revolving Credit and Term Loan Agreement
dated as of June 30, 1995 among the Company, various
subsidiaries of the Company, and The First National
Bank of Boston.
<PAGE> 1
Exhibit 1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") entered into on June 29th , 1995, by
and between SKF USA Inc., a Delaware corporation ("Seller"), and WALDES TRUARC,
INC., a Delaware corporation ("Purchaser").
RECITALS
A. Through the Seeger Division (the "Division"), Seller is engaged in the
business (the "Business") of designing, developing, manufacturing, assembling,
and selling fasteners (the "Products").
B. Seller desires to sell the Business to Purchaser, and Purchaser desires
to purchase the Business from Seller.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, and intending to be legally bound hereby, Purchaser and
Seller hereby agree as follows:
GENERAL PROVISIONS
A. Definitions: Appendix A to this Agreement sets forth the definitions
of certain terms used in this Agreement. Those terms shall have the meanings
set forth on Appendix A where used herein and identified with initial capital
letters.
B. Other Definitions and Meanings; Interpretation: For purposes of this
Agreement, the term "parties" means (except where
<PAGE> 2
the context otherwise requires) Purchaser and Seller; the term "person" includes
any natural person, firm, association, partnership, corporation, or other entity
other than the parties; and the words "hereof", "herein", and other words of
similar import refer to this Agreement as a whole. The table of contents and
the headings of the Sections of this Agreement have been included herein for
convenience of reference only and shall not be deemed to affect the meaning of
the operative provisions of this Agreement. All dollar amounts referred to
herein are in United States Dollars.
C. Knowledge: Where a statement contained in this Agreement is said to be
to "Seller's knowledge" (or words of similar import), such expression means
that, after having conducted an inquiry and due diligence review, the
management of Division and Seller believes the statement to be true, accurate,
and complete in all material respects. Purchaser shall be deemed to have all
knowledge of all persons who have, on its behalf, participated directly in the
negotiations concerning this Agreement.
1. Purchase and Sale.
1.1 Transaction. On and subject to the terms and conditions of this
Agreement, Seller will sell to Purchaser and Purchaser will purchase from Seller
the Business as a going
2
<PAGE> 3
concern, such transaction consisting of the following: (a) at the Closing,
Purchaser will purchase from Seller, and Seller will sell, transfer, and assign
to Purchaser, all of the Acquired Assets; (b) at the Closing, Purchaser will
assume and become directly and solely responsible for the payment or discharge
of all of the Assumed Liabilities; and (c) Purchaser will pay to Seller the
Purchase Price as herein provided. Notwithstanding such transaction,
Seller will retain the Excluded Assets and the Excluded Liabilities and
Purchaser will have no rights or obligations with respect thereto.
1.2 Acquired Assets. For purposes hereof, the term "Acquired Assets"
means all assets, properties, and rights, whether real, personal, or mixed,
whether tangible or intangible, wherever located, and whether or not recorded on
the books of the Business, held by Seller as of the Closing which relate
primarily to Seller's conduct of the Business, including, all assets reflected
on the books of the Business on the Closing Date, but excluding the Excluded
Assets. Without limiting the generality of the foregoing, the Acquired Assets
will include all of Seller's rights, title, and interest in and to the following
assets (other than Excluded Assets) which are used by Seller primarily in its
conduct of the Business as of the Closing:
3
<PAGE> 4
(a) All petty cash and notes, accounts, and trade acceptances
receivable;
(b) All prepaid and similar items, including, without limitation,
all prepaid expenses, deferred charges, advance payments, and other prepaid
items;
(c) All inventories, wherever located, including, without
limitation, inventories of raw materials, components, assemblies, subassemblies,
work-in-process, finished goods, replacement parts, spare parts, operating
supplies, and packaging;
(d) All real property (whether as owner, lessor, lessee, or
otherwise) including, without limitation, all land, buildings, improvements,
fixtures, and appurtenances thereto, and all such items under construction;
(e) All personal property (whether as owner, lessor, lessee,
or otherwise), including, without limitation, all machinery, equipment, tooling,
dies, molds, jigs, patterns, gauges, materials handling equipment, furniture,
office equipment, cars, trucks, and other vehicles;
(f) All orders, contracts, and commitments for the purchase of
goods and/or services, including, without limitation, all such items relating to
the purchase of capital, tooling, products, supplies, and services;
4
<PAGE> 5
(g) All orders, contracts, and commitments for the sale of
Products of the Division, including, without limitation, all such items relating
to distribution, dealership, and similar arrangements;
(h) All other orders, contracts, and commitments necessary to the
operation of the Business, including, without limitation, all leases and
licenses.
(i) All Intellectual Property (whether as owner, inventor,
employer of an inventor, licensor, licensee or otherwise), including, without
limitation, all patents, trademarks, trade names, copyrights, trade secrets,
technical information, manufacturing processes and techniques, designs,
drawings, and other know-how;
(j) All permits, approvals, qualifications, and the like and
issued by any government or governmental unit, agency, board, body, or
instrumentality, whether federal, state or local, and all applications therefor;
and
(k) Subject to the provisions of Section 6.1 hereof, all business
books, records, documents, and other data, including, without limitation, all
financial, operating, inventory, legal, personnel, payroll, and customer
records, and all sales and promotional literature, correspondence, and files.
5
<PAGE> 6
1.3 Excluded Assets. For purposes hereof the term "Excluded Assets"
means the following rights, properties, and assets as the same shall exist as of
the Closing:
(a) All cash and cash equivalent items (other than petty cash)
held by Seller as of the Closing, including without limitation, certificates of
deposit, time deposits and marketable securities;
(b) All rights, properties, and assets of Seller used by Seller
primarily in a business other than the Business, including, without limitation,
businesses conducted by Seller other than the Business;
(c) The name and trademark "SKF" and related trademarks, corporate
names, and trade names incorporating "SKF" or the stylized "SKF" logo which is
used by Seller as part of any trademark or trade name; and
(d) All assets held by Seller, whether in trust or otherwise, in
respect of employee benefit plans pertaining to employees of the Business,
except to the extent such plans are assumed by Purchaser pursuant to Section 9
hereof.
1.4 Assumed Liabilities. For purposes hereof the term "Assumed
Liabilities" means all liabilities reflected on the books of the Business on the
date hereof and all liabilities and
6
<PAGE> 7
obligations of Seller under executory orders, contracts, and other commitments
included in the Acquired Assets together with:
(a) All liabilities and obligations arising out of, resulting
from, or relating to claims, whether founded upon negligence, breach of
warranty, strict liability in tort, and/or other similar legal theory, seeking
compensation or recovery for or relating to injury to person or damage to
property from an event or events occurring after the date hereof (including
product recalls) and arising out of a defect or alleged defect of a Product
delivered by Purchaser after the date hereof;
(b) All liabilities and obligations arising out of, resulting
from, or relating to violation of any law, statute, ordinance, or governmental
requirement in connection with the use, design and ownership of the Acquired
Assets by Purchaser after the date hereof or by conduct of the Business by
Purchaser after the Closing;
(c) All liabilities and obligations arising out of, resulting
from, or relating to claims seeking return, replacement, and/or repair of
Products pursuant to either express product warranties by Seller or product
warranties or obligations implied or provided by law.
(d) All obligations and liabilities under the Union
7
<PAGE> 8
Contract.
1.5 Excluded Liabilities. For the purposes hereof the term "Excluded
Liabilities" means the following liabilities and obligations as the same shall
exist as of the Closing:
(a) All liabilities and obligations incurred by Seller in
connection with the conduct of its businesses other than the Business;
(b) All liabilities and obligations of the Business which have
been fully discharged or satisfied by Seller prior to the Closing in
transactions in the ordinary course of business and not in breach of this
Agreement;
(c) All liabilities and obligations arising out of, resulting
from, or relating to claims, whether founded upon negligence, breach of
warranty, strict liability in tort, and/or other similar theory, seeking
compensation or recovery for or relating to injury to person or damage to
property from an event or events occurring before or after the Closing
(including product recalls) and arising out of a defect or alleged defect of a
Product delivered by Seller prior to the date hereof;
(d) All liabilities and obligations of Seller, or any predecessor
thereof, related to the Industrial Retention and Relocation Program of the City
of New York;
8
<PAGE> 9
(e) All liabilities and obligations arising out of, resulting
from, or relating to claims asserted by Sylvia Bridges; and
(f) Liabilities and obligations not within Assumed Liabilities.
2. Payment and Closing.
2.1 Purchase Price. The term "Purchase Price" means Seven million,
nine hundred forty-three thousand, nine hundred fifty-eight dollars
($7,943,958).
2.2 Payment of the Purchase Price. At the Closing or on the following
day, Purchaser will pay Seller the Purchase Price by depositing, by bank wire
transfer, the required amount (in immediately available funds) in an account of
the Seller, which account shall be designated by the Seller for such purpose at
least five (5) business days prior to the date of the required payment.
2.3 Closing the Transaction.
(a) The Closing. For purposes hereof, the term "Closing" means
the time at which the transactions contemplated hereby will be consummated after
satisfaction or waiver of the conditions set forth in Sections 2.4 and 2.5 of
this Agreement
(b) Time, Date and Place of Closing. The Closing will occur on
June 29, 1995 or such other date as the parties may
9
<PAGE> 10
agree in writing (the "Closing Date"). The Closing will take place at the
offices of SKF USA Inc., 1100 First Avenue, King of Prussia, PA 19406, or at
such other place as the parties may agree in writing.
2.4 Purchaser's Obligations. At the Closing, Purchaser will deliver
to Seller the following:
(a) the documents, certificates, and other items referred to in
Appendix B hereof; and
(b) the amount specified in Section 2.1 hereof.
2.5 Seller's Obligations. At the Closing, Seller will deliver to
Purchaser the following:
(a) the documents, certificates, and other items referred to in
Appendix G hereof;
(b) Ownership to the Acquired Assets as herein contemplated; and
(c) executed and notarized deeds, bills of sale, and such other
instruments satisfactory in form and substance to Purchaser pursuant to which
Seller conveys the Acquired Assets to Purchaser.
3. Representations and Warranties of the Seller. The Seller represents
and warrants to Purchaser that:
3.1 Organization and Existence. (a) Seller is a
10
<PAGE> 11
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power to own the Acquired Assets
and conduct the Business. Seller is duly qualified to do business in each
jurisdiction where the routine of its activities in connection with the conduct
of the Business requires it to be so qualified.
(b) Power and Authority. Seller has full power and authority
under its Amended Articles of Incorporation and By-Laws and the laws of the
State of Delaware to execute, deliver, and perform this Agreement.
(c) Authorization. The execution, delivery, and performance of
this Agreement by Seller has been duly authorized by all requisite corporate
action on the part of Seller.
(d) Binding Effect. This Agreement is a valid, binding, and legal
obligation of Seller.
3.2 Finders. Seller has not engaged and is not directly or indirectly
obligated to anyone acting as a broker, finder, or in any other similar capacity
in connection with Seller's sale of the Business.
3.3 Representations and Warranties True and Complete. All
representations and warranties of Seller in this Agreement are
11
<PAGE> 12
true, accurate, and complete as of the date hereof.
3.4 Financial Statements. Except as otherwise disclosed therein, the
financial statements identified on Schedule 3.4 are true and correct in all
material respects and present fairly, in accordance with generally accepted
accounting principles guided by the SKF Financial Manual, a copy of which has
been furnished to Purchaser, the financial position and results of operations of
the Business as of the dates and for the periods therein set forth, subject only
to normal year-end adjustments in the case of those statements which relate to
interim periods.
3.5 Receivables. Except as otherwise disclosed in Schedule 3.5, (1)
Seller has Ownership of all accounts receivable, credits, and similar items
relating to the Business listed on Schedule 3.5; (2) all of such receivables and
items have arisen out of Seller's ordinary course of conduct of the Business;
and (3) adequate reserves have been established on the books of the Business in
accordance with Seller's standard practices and procedures for establishing
reserves for delinquent and/or uncollectible accounts.
3.6 Inventories.
(a) Except as otherwise disclosed on Schedule 3.6, (1) Seller has
Ownership of all inventories relating to the
12
<PAGE> 13
Business, all of which are described on Schedule 3.6; and (2) except for
inventory reserves reflected on the books of the Business, all inventories of
supplies, raw materials, work-in-process, and finished goods, are in good
condition and of a quality usable or saleable in the ordinary course of business
of the Seller.
(b) The inventories have not been valued in compliance with the
SKF Financial Manual nor with the Seeger-Orbis GmbH standard cost accounting
guidelines used by Seeger-Orbis GmbH in 1994. Purchaser agrees to continue the
project, which Seller had begun prior to closing, relative to recosting the
inventories in accordance with Seeger-Orbis GmbH standard cost accounting
guidelines used by Seeger-Orbis GmbH in 1994. Seller and Purchaser agree to
cooperate with each other to recalculate the inventory value as at December 31,
1994 using the product cost values that result from applying the Seeger-Orbis
GmbH standard cost accounting guidelines as would be applicable for 1994. Any
adjustment to the inventories value, which result from changes between the book
value of the inventories and the recalculated inventories, whether upward or
downward will be taken into account in determining the amount of Aggregate
Claims under Section 5.5 of this Agreement.
13
<PAGE> 14
3.7 Real Estate. Except as otherwise disclosed on Schedule 3.7, (1)
Seller does not own the real property used by the Division in the conduct of its
Business; (2) in all respects, Seller has the right under valid and subsisting
leases to occupy and control as a lessee (subject to the terms of such leases
and to the possible effect of the Bankruptcy Code in the event of a lessor's
bankruptcy or the effect of a condemnation or confiscation of the leased
premises) all of the real property used by the Division in the conduct of the
Business and all such real property is listed as "leased" on Schedule 3.7; (3)
to Seller's knowledge, Seller is not in Default under any such lease; and (4)
all improvements to such real properties are in good condition and repair,
ordinary wear and tear excepted, given the purposes for which the same are used
in Seller's conduct of the Business.
3.8 Personal Property. Except as otherwise disclosed on Schedule 3.8,
(1) Seller has Ownership of all tangible personal property listed as "owned" on
Schedule 3.8; (2) Seller has the right under valid and subsisting leases to
possess and control as lessee all of the tangible personal property listed as
"leased" on Schedule 3.8 (subject to the terms of such leases and to the
possible effect of the Bankruptcy Code in the event of a lessor's bankruptcy or
the effect of a condemnation or confiscation of the
14
<PAGE> 15
leased property); (3) to Seller's knowledge, Seller is not in Default under any
such lease; and (4) all of such personal properties are in good condition and
repair, ordinary wear and tear excepted, given the uses for which the same were
intended in Seller's conduct of the Business.
3.9 Litigation. Except as otherwise disclosed on Schedule 3.9, (1)
there presently exists with the respect to the Business no pending litigation,
arbitration, proceedings, actions, claims, or investigations, of which Seller
has received notice, at law or in equity; (2) to Seller's knowledge, there is no
threatened litigation, arbitration, proceeding, action, claim or investigation,
at law or in equity, which would, individually or in the aggregate, have a
material and adverse effect on the Business; and (3) Seller is subject to no
notice, writ, injunction, order, or decree of any court, agency, or other
governmental authority relating to the Business.
3.10 Liabilities. Except as otherwise disclosed on Schedule 3.10,
(1) Seller is not in Default under any note, bond, debenture, mortgage,
indenture, security agreement, guaranty, or other instrument of indebtedness;
and (2) the reserves established on the books of the Business have been
established in accordance with Seller's standard practices and procedures and
such reserves
15
<PAGE> 16
are reasonable.
3.11 No Defaults. Except as set out in Schedule 3.11, the execution
and delivery of this Agreement by Seller and the consummation of the
transactions by Seller contemplated herein will not, to Seller's knowledge:
(1) violate any provision of applicable law or the Amended Articles of
Incorporation or By-Laws of the Seller, (2) violate any provisions of, or grant
to any third party the right to terminate, or result in the acceleration of any
obligation under any governmental license or other authorization, loan document,
agreement, mortgage, lien, lease, instrument, order, arbitration award, judgment
or decree to which the Seller is a party or by which it is bound, or (3) affect
any legal qualifications necessary to carry on the Business.
3.12 Governmental Approval. Except as set out in Schedule 3.12, no
authorization, consent or approval of, or filing with, any public body or
authority is necessary on the part of Seller in connection with the consummation
by Seller of the transactions contemplated in this Agreement.
3.13 Payment of Taxes; Tax Liens: Except as otherwise disclosed in
Schedule 3.13, (1) all tax returns required to be filed by Seller with respect
to the Business have been or will be filed on or before the Closing; and (2) all
taxes indicated as due
16
<PAGE> 17
and payable on such returns have been or will be paid when required by law.
3.14 Changes in Condition. Except as has been disclosed to the
Purchaser, there have not been with respect to the Business since December 31,
1994:
(a) Any changes in the corporate and financial structure,
properties, assets or liabilities relating to the Business which have or are
reasonably expected to have a Material Adverse Effect. "Material Adverse
Effect" means an effect which, directly or indirectly, subjects the Business to
any liability, damage, deficiency, loss, cost or expense of US$77,000 or more or
which otherwise has or is likely to have a material adverse impact on the
financial condition, business or operations of the Business (other than a matter
of general economic or political nature which does not affect the Business
uniquely);
(b) Any material change in the accounting methods or practices
followed by the Seller, or any material change in depreciation, amortization or
inventory valuation policies or rates theretofore used or adopted;
(c) Any sale, lease, abandonment or other disposition by the
Seller, of any real property, or, other than in the ordinary course of business,
of any machinery, equipment or
17
<PAGE> 18
other operating property, or any sale, assignment, transfer, license or other
disposition by the Seller of any Intellectual Property (as hereinafter defined),
relating to the Business; or
(d) Any other occurrence, event or condition (i) not in the
ordinary course of business; and (ii) specifically relating to the operations of
the Business (as opposed to those resulting from general economic, financial or
market conditions or circumstances generally affecting the Business or resulting
from the announcement of this Agreement) which, to the knowledge of the Seller
is expected to have a Material Adverse Effect.
3.15 Insurance. Seller has insurance coverage as set out in Schedule
3.15 for its assets and business. There are no Defaults with respect to any
provision contained in any insurance policy, nor has there been a failure to pay
any premiums thereunder or to give any notice or present any material claim
thereunder in a due and timely fashion. There is no occurrence potentially
giving rise to a material claim under any insurance policy with respect to which
a claim has not been asserted or for which a provision has not been made.
3.16 Contracts. (a) Schedule 3.16 contains a complete and accurate
list of the Material Contracts (as hereinafter defined) to which the Seller is a
party and is bound on the date
18
<PAGE> 19
hereof. Except as may be set forth in Schedule 3.16, all Material Contracts to
which the Seller is a party are valid and binding agreements of the Seller and,
to the knowledge of the Seller, the other parties thereto (subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting enforcement of creditors' rights and to general principles
of equity) and are in full force and effect, enforceable against such other
parties thereto in accordance with their terms. There exists no breach or
Default of any Material Contract by the Seller, or to the knowledge of Seller,
by another party thereto, which would permit the cancellation or rescission of
such Material Contract or would lead to a claim in excess of US$5,000. No
outstanding claims or receivables under any Material Contract in excess of
US$5,000 in the single case and US$21,000 in the aggregate are subject to expire
pursuant to any statute of limitations prior to August 1, 1995.
(b) A "Material Contract" shall mean any contract, agreement,
commitment, arrangement, or series of related contracts or arrangements of any
kind affecting the Business either (i) with a duration in excess of twelve (12)
months from the date of this Agreement and which involve annual payments or
receipts by the Seller of US$21,000 or more or (ii) which involves total
payments
19
<PAGE> 20
or receipts by the Seller over the term of the contract of US$41,000 or more.
3.17 Compliance with Laws. Administrative approvals, licenses and
registrations which are necessary to operate and continue the business and
operations of the Seller are without exception existing and valid. To the
knowledge of the Seller, there are no past or present circumstances specifically
relating to the Seller which would justify a revocation or a limitation of these
approvals, licenses and registrations or which would justify the imposition of
additional requirements. The Division and the Business are presently being
operated in material compliance with all applicable domestic and foreign laws,
rules, regulations, approvals, licenses, registrations and other legal
requirements, of which failure to comply with could have a Material Adverse
Effect.
3.18 Labor Issues and Key Management. Schedule 3.18 hereto
contains (a) a complete and accurate list of the employment and consulting
agreements to which the Seller is a party or by which the Seller is bound
pursuant to which it is obligated to pay a total annual compensation of
US$65,000 or the equivalent thereof, and (b) a description of the termination
notice provisions thereof. The Seller has furnished the Purchaser true and
correct copies of such employment and consulting agreements. The Seller is not
20
<PAGE> 21
subject to any collective bargaining agreements except as disclosed in Schedule
3.18 hereto, nor, to the knowledge of the Seller, is there any threatened labor
dispute. The Seller has furnished the Purchaser with true and correct copies of
all agreements between the Seller and the employees working primarily in the
Business.
3.19 Employee Benefit Plans. Except for plans set forth or described
on Schedule 3.19 hereto, the Seller does not maintain or contribute to any
employee pension benefit or welfare plan or medical benefit plan, or any other
severance, bonus, stock option, stock purchase, retirement insurance, profit
sharing, or defined compensation plan, agreement or arrangement for the benefit
of current or former employees ("Employee Plans").
Except as set forth in Schedule 3.19, proper provisions or reserves
regarding funding of any Employee Plan have been included in the financial
statements in respect of the Seller's pension obligations towards current or
former employees of the Companies.
3.20 Machinery and Equipment. The machinery and equipment regularly
being used by the Seller in the Business are adequate to the Business
as currently being conducted, and such machinery and equipment is in good repair
(save for reasonable wear and tear and subject to normal maintenance
requirements), and is
21
<PAGE> 22
either owned by the Seller free and clear of all liens or encumbrances
whatsoever or is leased under valid leases which, except as disclosed on
Schedule 3.20, will not be affected by the consummation of the transactions
contemplated by this Agreement.
3.21 Title to Acquired Assets. Seller has good title to all of the
Acquired Assets. Acquired Assets are subject to no liens, mortgages, pledges,
encumbrances or charges of any kind except for retention of title agreements
entered into in the ordinary course of business.
3.22 Environmental Matters. Under current interpretation of existing
applicable legislation and/or applicable administrative regulations existing on
the date hereof relating to environmental protection, there were and are no
emissions or effluents by the operations of the Business which violate such
legislation and/or administrative regulations.
The Seller possesses all environmental, zoning or similar permits
required for the conduct and operation of the Business and is in compliance with
all the requirements and limitations thereof and all such permits are in full
force and effect.
To the knowledge of the Seller, there are no threatened proceedings
against the Seller relating to the operation of the Business and/or its
facilities on the grounds of violating
22
<PAGE> 23
legislation and/or administrative regulations with respect to the protection of
the environment, including, without limitation, disposal and/or storage of
industrial effluent, sewage and other wastes. The Seller has adequate
facilities and/or arrangements to comply with such legislation and/or
administrative regulations.
3.23 Intellectual Property. Schedule 3.23 hereto sets forth a complete
and accurate list of all copyrights, patents, trademarks, trade names, service
marks, applications, registrations and licenses therefor, (such intellectual
property together with know-how, collectively, the "Intellectual Property") used
in the Business and owned by the Seller or in which the Seller has an interest,
and identifies whether such Intellectual Property is owned or used. The Seller
has rights to all inventions of any of its employees related to and useful to
the Business. Except as set forth on such Schedule 3.23 hereto, Seller has not
licensed to any person any Intellectual Property listed on such Schedule or any
other know-how of the Seller related to the Business. To the extent the
Intellectual Property used by the Seller is not owned by the Seller, the Seller
is authorized by the owners thereof to use such Intellectual Property. The
Intellectual Property comprises all Intellectual Property necessary to permit
the operation of the Business as now being conducted. None of the Intellectual
Property
23
<PAGE> 24
is subject to any liens or other encumbrances. The conduct of the Business as
now conducted does not, to the knowledge of the Seller, conflict with or
infringe any Intellectual Property rights of any third person in any way. There
is nothing to prevent the current use of the corporate names and trade names
(including but not limited to "Seeger", "Anderton" and "Waldes") by the Seller
hereunder.
3.24 Savings Plan. Seller represents and warrants that the Plan, as
defined in section 9.3 of this Agreement, satisfies the qualification
requirements under IRC section 401(a) and that the Plan has been operated,
administered and funded in accordance with the requirements of all applicable
laws, including without limitation the IRC and the Employee Retirement Income
Security Act of 1974, as amended, and all relevant regulations thereunder.
4. Representations, Warranties, Guarantees and Covenants of Purchaser.
Purchaser represents, warrants, covenants and guarantees to Seller the
following:
4.1 Purchaser is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the corporate power to
consummate the transaction contemplated by this Agreement.
4.2 Purchaser has full power and authority under its
24
<PAGE> 25
Articles of Incorporation and By-Laws and the laws of Delaware to execute,
deliver and perform this Agreement.
4.3 The execution, delivery, and performance of this Agreement have
been duly authorized by all requisite corporate actions on the part of the
Purchaser.
4.4 Other than Handelsbanken Markets, Purchaser has not engaged and is
not directly or indirectly obligated to anyone acting as a broker, finder, or in
any other similar capacity in connection with Purchaser's purchase of the
Business and Purchaser shall indemnify and hold harmless the Seller against and
from any broker's, finder's or similar claim, including any claim made by
Handelsbanken Markets, asserting a right to compensation arising from an
engagement or other agreement between the claimant and Purchaser.
4.5 All representations, warranties, guarantees and covenants of
Purchaser in this Agreement are true, accurate and complete as of the date
hereof.
5. Indemnification.
5.1 Seller hereby agrees to indemnify and hold Purchaser harmless
against and from any liabilities, losses or damages suffered or incurred by the
Purchaser, including interest thereon as well as reasonable outside attorneys'
fees incurred by Purchaser
25
<PAGE> 26
in connection with any action, suit, proceeding, demand, assignment, or judgment
incident to any of the matters indemnified against in this Section 5 as a result
of a breach or inaccuracy of any representation, warranty or covenant by Seller
contained in this Agreement.
5.2 Seller agrees to indemnify and hold harmless Purchaser from any
liabilities, losses and damages resulting from product liability claims and
product recalls with respect to products delivered by Seller prior to the date
hereof.
5.3 Seller shall bear any additional tax liability, including interest
and penalty, resulting from a tax assessment against the Seller with respect to
any tax periods or tax returns filed prior to the date hereof.
5.4 Claims by Purchaser can be asserted only to the extent that the
damages suffered by Purchaser have not been recognized as compensable damage or
have not been reimbursed to the Purchaser by an insurance company. No claim
shall be brought by the Purchaser with respect to any item or matter fully and
accurately disclosed in any Schedule hereto.
5.5 Seller shall not be liable under Section 5 unless the aggregate
amount of (i) the claims under Sections 5.1, 5.2, 5.3 and 5.4 of the Share
Purchase Agreement between SKF GmbH,
26
<PAGE> 27
TransTechnology Seeger-Orbis GmbH (currently doing business under the name kimo
Buroservice GmbH) and TransTechnology Corporation in respect to the sale and
purchase of the shares of Seeger-Orbis GmbH, (the "Share Purchase Agreement")
and (ii) any claims arising under Sections 5.1, 5.2 and 5.3 of this Agreement,
(collectively, the "Aggregate Claims") exceeds the sum (each sum hereafter
referred to as the "Basket") of (x) DM 2,500,000, and (y) the amount by which
the reserve in the Financial Statements (as defined in the Share Purchase
Agreement) for any Scheduled Defect (as defined in the Share Purchase Agreement)
exceeds the amount actually paid to satisfy claims pursuant to such Scheduled
Defect, and (z) the amount by which reserve in the Financial Statements
established for any such Scheduled Defect was changed or eliminated subsequent
to the date hereto. In addition, the Seller shall only be liable for the amount
by which the Aggregate Claims exceeds the Basket and to the extent such excess
is allocable to a claim or claims arising under Sections 5.1, 5.2 or 5.3 of this
Agreement. These limitations shall not apply to liabilities for breaches of the
representations, warranties, guarantees and covenants in Sections 3.1, 3.11,
3.12, 3.13, 3.19, 3.21, 6.2 and 7.1 of this Agreement nor shall the foregoing
limitations apply to the indemnification set out in the immediately succeeding
sentence.
27
<PAGE> 28
Seller shall indemnify and hold harmless Purchaser, each of its affiliates, and
each of their directors, officers, employees, agents and representatives from
and against any and all claims, demands, suits or proceedings, for liability,
loss, damage, penalty, or tax (including payment of legal fees and expenses in
connection with any defense against same), brought by any person, corporation,
governmental agency or other entity, to the extent it arises from or relates to,
directly or indirectly, the operation, administration, funding or qualified
status of the Plan, as defined in section 9.3 of this Agreement, prior to the
Closing.
5.6 Purchaser agrees to give the Seller prompt written notice of any
event, or any written claim by a third party (including tax and other
governmental authorities), of which it obtains knowledge, which could give rise
to any liability losses or damages as to which Seller would have responsibility
to indemnify under this Agreement. Such written notice shall set forth the
basis on which a claim for indemnity hereunder is requested and, in the case of
claims by third parties, shall advise the Seller whether the Purchaser intends
to contest same. The Purchaser shall have the right to contest such claim, in
which case the Seller shall have the right to be represented, at its own
expense, by its own counsel, its participation to be subject to the reasonable
28
<PAGE> 29
direction of the Purchaser.
5.7 If the Purchaser determines not to contest such claim, the Seller
shall have the right, at its own expense, to contest and defend against such
claim by giving written notice to the Purchaser within fifteen (15) days after
the receipt of the Purchaser's notice that it intends not to contest. If the
Seller determines to contest such claim, the Purchaser shall have the right to
be represented, at its own expense, by its own counsel, its participation to be
subject to the reasonable direction of the Seller. If the Seller determines to
contest such claim, it shall be deemed to have agreed that such claim is
absolutely subject to indemnification hereunder, and, if the Seller subsequently
determines to settle such claim, such settlement shall be subject to Section
5.10 hereof. If the Seller fails to undertake the defense of or settle or pay
any such third-party claims within fifteen (15) days after the Purchaser has
given written notice to the Seller advising that the Purchaser does not intend
to contest such claim, or if the Seller, after having given notice to the
Purchaser that it intends to contest such claim, fails promptly to defend,
settle, or pay such claim, then the Purchaser may take any and all necessary
action to dispose of such claim, including, without limitation, the settlement
or full payment thereof upon
29
<PAGE> 30
such terms as it shall deem appropriate, in its sole discretion, and the Seller
shall be liable to indemnify, upon demand, the Purchaser for the full amount of
the indemnity claim thereof.
5.8 Purchaser hereby agrees to indemnify and hold Seller harmless
against and from any losses or damages suffered or incurred by the Seller,
including interest thereon as well as reasonable outside attorneys' fees
incurred by Seller in connection with any action, suit, proceeding, demand,
assignment or judgment arising from a breach or inaccuracy of any
representation, warranty or covenant by Purchaser contained in Section 4 of this
Agreement, Purchaser's failure to pay or satisfy or cause to be paid or
satisfied any of the Assumed Liabilities when due and payable, or nonperformance
of any obligations to be performed on the part of the Purchaser under this
Agreement.
5.9 In any case, each party shall make available to the other and its
attorneys at all reasonable times during normal business hours, all books,
records, and other documents in its possession relating to such claim and the
party contesting any such claim shall be furnished with all reasonable
assistance in connection therewith by the other party or parties.
5.10 In the event that a party has a firm proposal acceptable to the
third party to settle any such third party claim,
30
<PAGE> 31
the indemnifying party shall advise the indemnified party in writing of the
terms of the proposed settlement. If such proposed settlement is unsatisfactory
to the indemnified party, the indemnified party shall have the right, at its
expense, to contest such claim by giving written notice of such election to the
indemnifying party within fifteen (15) days of the indemnified party's receipt
of the advice of the proposed settlement. If the proposed settlement rejected
by the indemnified party calls for the payment of only monetary damages to the
third-party claimant, the indemnifying party shall have the right to tender the
defense to the indemnified party, in which case the indemnifying party's
liability to the indemnified party hereunder with respect to such claim shall be
limited to the dollar amount of the proposed settlement rejected by the
indemnified party as unsatisfactory, and the indemnified party shall have full
authority for the future defense of such claim and, except for the indemnifying
party's liability up to an amount equal to the proposed settlement, full
responsibility for any and all liabilities, obligations, costs and expenses
resulting therefrom. In no event shall either party have any authority to
conclude any settlement subject to the indemnification provisions of this
Agreement in the absence of the written consent of the other party hereto except
as specifically
31
<PAGE> 32
provided herein.
5.11 The period during which claims under the respective
representations, warranties, guarantees and covenants of Seller contained in
Section 3 and of Purchaser contained in Section 4 shall be pursuable shall be
until June 30, 1996, except that such period for claims under Section 3.22 shall
be June 30, 1998; for claims under Section 3.1 shall be 30 years after the date
hereof; and for claims under Section 3.13 shall be the applicable statute of
limitations period.
6. Additional Agreements
6.1 Access to Former Business Records. For a period of ten (10) years
(in the case of tax records) and five (5) years (in the case of other records),
from the date hereof, Purchaser will retain all business records constituting
part of the Acquired Assets. During such period, Purchaser will afford duly
authorized representatives of Seller displaying appropriate credentials free and
reasonable access to all of such records and will permit such representatives to
make abstracts from, or to take copies of any of such records, or to obtain
temporary possession of any thereof as may be reasonably required by Seller.
6.2 Seller's Obligation Not to Compete. (a) For a period of three (3)
years from the date hereof, Seller shall not
32
<PAGE> 33
compete, directly or indirectly, with the Purchaser or any Affiliate thereof in
the geographic areas and the lines of business of the Business as of the date
hereof; in particular, Seller shall not hold any interest, directly or
indirectly, in any company or other entity which competes with the Business, and
shall not support such company or other entity in any other way. This
prohibition does not apply in the event that Seller, after the date hereof, will
become the direct or indirect owner of a business, which in part but not as a
whole, competes with the Business (such competing part being hereinafter
referred to as the "Competing Business"), provided that (i) Purchaser shall be
granted, immediately after Seller becomes the direct or indirect owner of the
Competing Business, a right of first purchase/refusal with respect to the
Competing Business, and (ii) Seller shall divest of the Competing Business
within one year after Seller became its direct or indirect owner. Furthermore,
this prohibition does not apply to the ownership of stock up to 5% in a publicly
traded company solely for investment purposes.
For purposes of this provision, geographic area shall mean those
countries where the Division manufactures or distributes Products on the date
hereof.
(b) Except where Seller is obligated to offer
33
<PAGE> 34
employment rights under employment arrangements in effect on the date hereof,
Seller covenants not to offer, or to allow any of its affiliates to offer, any
employment to any current or future employees of the Purchaser. The covenant in
this Section 6.2(b) shall expire one year from the date hereof.
(c) For each breach by the Seller of the covenant set forth in
section 6.2(a) hereof, Seller shall pay to Purchaser a contractual penalty of
US$28,000. If Seller continues to breach the covenant after receiving a written
demand from Purchaser, Seller shall pay an additional penalty of US$28,000 for
each calendar month during which the breach continues. This penalty is in
addition to any other legal remedies which Purchaser may have, including the
right to request injunctive relief or to claim damages in excess of the penalty.
6.3 Assistance. Seller shall cooperate with Purchaser in order to
assist Purchaser to obtain novations and consents to assignments or other
transfers of interests in orders, contracts and commitments included in the
Acquired Assets. If any such novation or consent is not obtained in respect of
any order, contract or commitment included in the Acquired Assets, the Seller
will cooperate in reasonable arrangements required by Purchaser to provide the
Purchaser with the benefits under such order, contract
34
<PAGE> 35
or commitment.
7. Covenant to Discontinue the Use of Names and Name Components.
7.1 Seller undertakes to, after the date hereof, refrain from using,
directly or indirectly (by any affiliated enterprise) any trademark, trade name,
firm name, service mark or component thereof exclusively being used or owned by
Seller or any Affiliate thereof, including but not limited to "Seeger", "Waldes"
and "Anderton".
7.2 Immediately after the date hereof, Purchaser will refrain from
using, directly or indirectly, any trade name, trademark, service mark, firm
name or component thereof in connection with "SKF".
8. Actions After Closing.
8.1 Further Conveyances. After the Closing, Seller will, without
further cost or expense to Purchaser, execute and deliver to Purchaser (or cause
to be executed and delivered to Purchaser), such additional instruments of
conveyance, and Seller shall take such other and further actions as Purchaser
may reasonably request and which are ordinarily provided by a seller, more
completely to sell, transfer, and assign to Purchaser and vest in Purchaser
ownership to the Acquired Assets.
35
<PAGE> 36
9. Employees and Employee Benefits.
9.1 Employment. Effective as of the Closing, Purchaser shall offer
employment to each employee of the Business. Except where Seller is obligated
to offer employment rights under employment arrangements in effect on the date
hereof, Seller will neither employ nor offer employment to any employees hired
by Purchaser during the twelve (12) month period commencing on the Closing Date
without the prior written consent of Purchaser.
9.2 Pension Plan. Seller is currently a contributing employer with
respect to the Electronics Local 431 Pension Plan and related Trust Agreement
(the "Pension Plan"), a multiemployer plan covering hourly employees of the
Business who are represented by the Union. With respect to the Pension Plan,
Purchaser will replace Seller as contributing employer with respect to such
employees as of the Closing and will thereafter make payments into the Machine
and Instrument Pension Trust Fund in accordance with the provisions of Article
XV of the Union Contract. Seller shall be relieved of all obligations to make
contributions with respect to the Pension Plan with respect to services rendered
by employees of the Business after the Closing.
With respect to the Pension Plan, Purchaser represents that its financial
condition is adequate to meet the financial
36
<PAGE> 37
sufficiency requirements or ERISA Reg. Section 2643.14 and agrees that it wishes
to treat the transaction contemplated by this Agreement as a sale of assets
described in and covered by ERISA section 4204, that it will cooperate fully in
the securing of a variance of the bond/escrow and sale-contract requirements of
ERISA section 4204(a)(1)(B) and (C) in accordance with Reg. Section 2643.11,
including the provision of required financial information, and that, if such
variance is not granted, or if Seller or the Pension Plan so request pending
consideration of a variance request by the Pension Plan, it will provide the
bond or escrow arrangement required under ERISA section 4204(a)(1)(B). Seller
agrees that it is secondarily liable to the Pension Plan with respect to certain
withdrawal liability in the event of certain Purchaser withdrawals as specified
in and in accordance with ERISA section 4204(a)(1)(C).
9.3 Savings Plan. Purchaser agrees to assume all liabilities and
obligations with respect to, and become the successor employer to Seller under
the Seeger, Inc. 401(k) Savings Plan (a prototype profit-sharing/401(k) plan
sponsored by Massachusetts Mutual Life Insurance Company and funded with a Group
Annuity Contract between Massachusetts Mutual Life Insurance Company and Seller)
(the "Seeger Plan") as of the Closing, including entering into and continuing to
fund a comparable group
37
<PAGE> 38
annuity contract (or similar arrangement) to which the funds maintained under
the current Group Annuity Contract will be transferred, and to continue to make
and allow employer and employee contributions to the Seeger Plan in accordance
with the terms thereof for at least thirty (30) days following the Closing.
Purchaser further agrees that if and when the Seeger Plan is substantially
amended, frozen, terminated or merged into the TransTechnology Corporation
Retirement Savings (the "TTC Plan"), it will permit non-collectively bargained
employees of the Business to participate in the TTC Plan on the same basis as
other similarly situated employees of Purchaser and give service credit
thereunder, for all purposes, for prior service with Seller.
Seller will discontinue all employer and employee contributions to the
Seeger Plan as of the Closing, except for any employer matching contributions
attributable to employee salary reduction contributions made prior to the
Closing. Seller agrees to provide Purchaser with such information regarding
employees of the Businesses previously employed by Seller as may be requested by
Purchaser in connection with administration of the Seeger Plan with respect to
such employees, and to cooperate fully in arranging the assumption of the Seeger
Plan and Group Annuity Contract by Purchaser.
38
<PAGE> 39
9.4 Accrued Vacation. As of the Closing, Purchaser will assume all
obligations of Seller to employees of the Business who become employees of the
Purchaser at the Closing for accrued vacation. Seller will have no obligation
to make any payment to employees after the date hereof with respect to any
vacation pay entitlement.
9.5 Workers' Compensation. Purchaser will bear the cost and expense of
workers' compensation claims filed after the date hereof arising out of injuries
sustained on, or after the date hereof by employees of the Business.
9.6 Severance Payments. Seller will bear the entire cost and expense
of severance payments payable to employees of the Business whose employment with
the Business is terminated by Seller before the Closing. Purchaser will bear
the entire cost and expense of severance payments payable to employees of the
Business whose employment with the Business is terminated by Purchaser at or
after the Closing.
9.7 Liabilities with respect to Employees; COBRA. Except as otherwise
provided in this Section 9.7, as of the Closing, Purchaser shall assume all
liabilities (including liabilities for taxes, penalties, expenses (such as
administrative expenses), and other amounts) of Seller with respect to all
persons
39
<PAGE> 40
who are, as of the Closing, current employees of the Business (or are
beneficiaries of such persons). Except in the case of COBRA liabilities
described below, the preceding sentence shall not apply to liabilities that
(i) arise prior to the Closing, (ii) relate solely to periods prior to the
Closing, or (iii) are not caused in whole or in part, directly or indirectly
by this Agreement or the transaction contemplated by this Agreement.
Accordingly, for example, the first sentence of this Section 9.7 shall apply
to any liability that is based in whole or in part, directly or indirectly, on
any termination of employment (or alleged termination of employment) that
occurs by virtue of an employee of the Business ceasing to be employed by
Seller and becoming employed by Purchaser. The first sentence of this
Section 9.7 shall also apply to indirect forms of compensation required by law
such as liabilities arising under the health plan continuation requirements of
Code section 4980B and of Part 6 of Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974 (or under similar State or local laws)
("COBRA liabilities"). The COBRA liabilities assumed shall include (i) all
such liabilities without regard to, for example, whether the "qualifying event"
giving rise to such liability occurred before, on or after the Closing and
(ii) all requirements arising under the same laws, such as the obligation to
40
<PAGE> 41
provide notices. In addition, commencing as of the Closing, Purchaser agrees
(i) to provide to all salaried employees of the Business who become employed by
Purchaser health coverage that is comparable to the health coverage provided to
similarly situated employees of Purchaser, and (ii) to provide to all other
employees of the Business who become employed by Purchaser health and other
coverages pursuant to the Union Contract.
10. Notices. Except as otherwise provided herein, any notices required
hereunder shall be in writing and shall be deemed to have been validly served,
given or delivered upon delivery thereof to the party to be notified (in the
case of a fax, by delivery with confirmation of receipt), in each case to the
address of the party to be notified, as follows:
(a) If to Buyer:
TransTechnology Corporation
700 Liberty Avenue
Union, New Jersey 07083-0198
U.S.A.
Attention: Valentina Doss, Esq.
Vice President, Secretary and General Counsel
Telephone: 001-908-964-5666
Telefax: 001-908-688-8618
With copies to:
Pfaltz & Woller, P.A.
382 Springfield Avenue
Summit, New Jersey 07901
U.S.A.
41
<PAGE> 42
Attention: Gerald C. Harvey, Esq.
Telephone: 001-908-273-1974
Telefax: 001-908-273-9279
(b) If to Seller:
SKF USA Inc.
1100 First Avenue
King of Prussia, Pennsylvania 19406-0907
U.S.A.
Attention: Allen G. Belenson, Esq.
Vice President, Secretary and General Counsel
Telephone: 001-610-962-4464
Telefax: 001-610-265-0404
11. Miscellaneous Provisions.
11.1 Assignment. Neither party shall assign or delegate this Agreement
or any rights, obligations or claims arising hereunder to a third party, except
that the Purchaser may effect such assignment or delegation to an affiliate.
11.2 Transfer Taxes. The Purchaser will bear all transfer taxes and
fees which may result from the sale and transfer of the Acquired Assets from
Seller to Purchaser, including filing and recording fees, sales taxes and taxes
substantially similar thereto. Purchaser shall furnish Seller an executed
Resale Certificate (Form ST-3) covering the inventories to be transferred
hereunder.
11.3 Bulk Sales. Purchaser waives compliance by Seller with the
provisions of any so-called bulk sales law of any state.
42
<PAGE> 43
Seller will indemnify Purchaser from and against loss or damage Purchaser may
suffer arising out of such noncompliance.
11.4 Amendments. Amendments and alterations to this Agreement,
including this Section 11.4, are only valid if they are set out in a writing and
signed on behalf of both Seller and Purchaser.
11.5 Public Announcement. Neither party shall make any public
announcement of the transactions contemplated herein except at a time and in a
manner agreed by both parties in writing or required under applicable laws and
regulations.
11.6 Confidentiality. The parties shall treat as confidential and
not disclose to any third party either the contents or the existence of this
Agreement, except that relevant information may be submitted to pertinent
authorities.
11.7 Survival. All representations, warranties, guarantees and
covenants made by the parties in or pursuant to this Agreement shall survive
the date hereof. There are no representations, warranties, guarantees or
covenants of Seller beyond those set forth in this Agreement.
11.8 Severability. In the event any provision of this Agreement shall
finally be determined by a competent court or tribunal to be unlawful or
unenforceable, such provision shall be
43
<PAGE> 44
deemed severed from this Agreement, but every other provision of this Agreement
shall remain in full force and effect, and in substitution for any such
provision held unlawful or unenforceable, there shall be substituted a provision
of similar meaning reflecting the original intent of the parties to the extent
permissible under applicable laws.
11.9 No Third Parties. This Agreement is not intended to, and shall
not, create any rights in or confer any benefits upon any person other than the
parties hereto.
11.10 Incorporation by Reference. The Appendices to this Agreement
and the Schedules constitute integral parts of this Agreement and are hereby
incorporated into this Agreement by this reference.
11.11 Governing Law. This Agreement will be governed by and construed
in accordance with the internal substantive laws prevailing in the State of New
Jersey, except where the substantive laws of another jurisdiction mandatorily
apply.
11.12 Counterparts. More than one counterpart of this Agreement may
be executed by the parties hereto, and each fully executed counterpart shall be
deemed an original without production of the others.
11.13 Complete Agreement. This Agreement sets forth the
44
<PAGE> 45
entire understanding or the parties hereto with respect to the subject matter
hereof and supersedes all agreements, covenants, arrangements, communications,
representations, or warranties, whether oral or written, by any officer,
employee, or representative of either party relating thereto.
45
<PAGE> 46
IN WITNESS WHEREOF, SKF USA Inc. and WALDES TRUARC, INC. have each caused
this Agreement to be executed by their respective duly authorized officers and
have caused their respective corporate seals to be hereunto affixed and
attested, all as of the date first above written.
SKF USA Inc.
By: /s/ Allen G. Belenson
---------------------------------
Allen G. Belenson, Vice President
(Corporate Seal)
Attest:
By: /s/ Timothy D. Gifford
---------------------------------------
Timothy D. Gifford, Assistant Secretary
WALDES TRUARC, INC.
By: /s/ Chandler J. Moisen
----------------------------------
Chandler J. Moisen, Vice President
(Corporate Seal)
Attest:
By: /s/ Valentina Doss
-------------------------
Valentina Doss, Secretary
46
<PAGE> 47
Appendix A
CERTAIN DEFINITIONS
The following terms have the meanings set forth below where
used in the Agreement and identified with initial capital letters:
Acquired Assets As defined in Section 1.2 of the Agreement
Agreement As defined in the Preamble to the Agreement
Assumed Liabilities As defined in Section 1.4 of the Agreement
Business As defined in Recital A to the Agreement
Closing As defined in Section 2.3(a) of the Agreement
Closing Date As defined in Section 2.3(b) of the Agreement
Default An occurrence which constitutes, or with notice or lapse
of time would constitute, a breach or default under a
contract, order, or other commitment.
Division As defined in Recital A to the Agreement
Encumbrance Any encumbrance or lien, including, without limitation,
any mortgage, judgment lien, materialman's lien,
mechanic's lien, security interest, encroachment,
undisclosed lease, zoning violation, easement, or other
restriction, in each case having a material adverse
effect on the thing or right so encumbered.
Excluded Assets As defined in Section 1.3 of the Agreement
Excluded Liabilities As defined in Section 1.5 of the Agreement
Intellectual Property As defined in Section 3.23 of the Agreement
Material Contract As defined in Section 3.16 of the
<PAGE> 48
Agreement
Material Event Any event, condition, circumstance, change, or
occurrence which has had a material and adverse effect
on the Business or the properties, assets, liabilities
(fixed or otherwise) or condition (financial or
otherwise) of the Business, including, without
limitation, any of the same resulting from any --
(1) act of God, flood, windstorm, earthquake, accident,
fire, explosion, casualty, riot, labor strike,
requisition or taking of property by governmental
authority, war, embargo, or other event outside
Seller's control;
(2) termination, cancellation, or substantial
modification of any contract, commitment,
obligation, or business relationship; or
(3) Default by Seller under any contract, commitment,
or other obligation.
Ownership Such ownership as confers upon the person having it good
and marketable title to and control over the thing or
right owned, free and clear of any and all Encumbrances
except Permitted Encumbrances.
Pension Plans As defined in Section 9.2 of the Agreement
Products As defined in Recital A to the Agreement
Purchase Price As defined in Section 2.1 of the Agreement
Purchaser As defined in the Preamble to the Agreement
Seller As defined in the Preamble to the Agreement
Union Local 431 of the International Union of Electronic,
Electrical, Technical, Salaried, and Machine Workers
(AFL-CIO).
<PAGE> 49
Union Contract Collective Bargaining Agreement between Seeger, Inc. and
Local 431 of the International Union of Electronic,
Electrical, Technical, Salaried, and Machine Workers
(AFL-CIO) For the Term January 1, 1993 through December
31, 1995.
<PAGE> 1
Exhibit 2
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT (the "Agreement") entered into on June 29,
1995 by and between SKF GmbH with its registered office in Schweinfurt
("Seller"), TransTechnology Seeger-Orbis GmbH (currently doing business under
the name "kimo Buroservice GmbH") with its current registered office in Kronberg
and with its future registered office in Konigstein ("Purchaser"), and
TransTechnology Corporation, a Delaware corporation ("TTC").
WHEREAS, Seller is the sole owner of all of the equity interests in the
aggregate nominal amount of DM 14,600,000 (Deutsche Mark fourteen million six
hundred thousand) (the "German Shares") in Seeger-Orbis GmbH with its registered
office in Konigstein (the "German Company"); and
WHEREAS, the German Company owns (i) all of the issued and outstanding
shares of Anderton International Ltd. with its registered office in Bingley,
U.K. (the "UK Company"), consisting of 1,200,000 ordinary shares, with a par
value of one British Pound each (the "UK Shares"), and (ii) 4,215,343 quotas,
with a par value of R$1 each, of a total of 4,215,344 issued and outstanding
quotas (the "Brazilian Shares" and, collectively, together with the German
Shares and the UK Shares, the "Shares"), of Seeger-Reno Industria e Commercia
Ltda. with its registered office in the City of Diadema, Brazil (the "Brazilian
Company" and, collectively, together with the German Company and the UK Company,
the "Companies"); and
WHEREAS, concurrent herewith an affiliate of the Seller is selling and
Purchaser is acquiring, or causing to be acquired through an affiliate, certain
of the assets relating to the business of developing, manufacturing,
distributing and marketing of retaining rings of such Seller affiliate located
in Somerset, New Jersey, USA, or used or held by such Seller affiliate in the
<PAGE> 2
United States (collectively, the "US Assets") and Purchaser intends to assume,
or cause to be assumed through an affiliate certain of the liabilities relating
to such business (collectively, the "US Liabilities" and, together with the US
Assets, the "US Business") pursuant to a separate agreement (the "US Asset
Agreement"); and
WHEREAS, Seller intends to sell and transfer all of the equity
interests in the German Company, and Purchaser intends to acquire all of the
shares in the German Company subject to the terms and conditions herein
contained.
NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
1. Sale and Purchase and Assignment and Transfer of the German Shares.
1.1 Pursuant to the terms and conditions of this Agreement, Seller
hereby sells and assigns to Purchaser and Purchaser hereby purchases and
accepts the transfer from Seller of all of the equity interests in the
German Company, consisting of one equity interest in the nominal amount
of DM 12,000,000.-(Deutsche Mark twelve million) and one equity interest
in the nominal amount of DM 2,600,000.-(Deutsche Mark two million six
hundred thousand).
The assignment by the Seller shall be conditioned upon (i) the receipt of
the Purchase Price (as defined below) by the Seller pursuant to Section 2
hereof, and (ii) the retirement of the Financial Debt of the Companies
(as defined in Section 3.27 below) by the Purchaser pursuant to Section
6.6. below.
1.2 The execution of this Agreement by the Seller also constitutes the
shareholder consent to the transfer of the German Shares as required by
Section 5 para. 1 of the German Company's Articles of Association.
2
<PAGE> 3
1.3 Upon transfer of the German Shares, Buyer shall be entitled to the
profits relating to the German Shares for the whole fiscal year of 1995.
2. Consideration
The consideration to be paid hereunder by the Purchaser to the Seller, or
to entities designated by the Seller, for the German Shares shall be DM
47,456,000 (the "Purchase Price"). An amount of DM 45,221,000 of the
Purchase Price shall be payable by wire transfer in funds available on
the date hereof; the remainder of the Purchase Price in the amount of DM
2,235,000 shall be payable by delivery to the Seller of a promissory
note (abstraktes Schuldanerkenntnis) in favor of the Seller which the
Purchaser shall deliver to the Seller on the date hereof. TTC hereby
separately guarantees the payment of the Purchase Price.
The consideration for the US Business shall be payable in accordance with
the US Asset Agreement.
3. Representations, Warranties, Guarantees and Covenants of the Seller
The Seller represents, warrants, covenants and guarantees ("sichert zu
i.S.v. Section 463 Satz 1 BGB und garantiert selbststandig") to Purchaser
that:
3.1 Organization
Each of the Companies is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and each of the Companies has the corporate power to carry
on its business as it is now being conducted.
3
<PAGE> 4
3.2 Interest in Other Entities
Except as set forth in Schedule 3.2, none of the Companies has a direct or
indirect ownership in any other corporation, joint venture, partnership
and other enterprise. Except as set forth in Schedule 3.2, the Companies
are not subject to any conditional transfer agreements or similar
arrangements which provide for the transfer of complete or partial
ownership in any corporation, joint venture, partnership or other
enterprise to any of the Companies.
3.3 Key Management, Distributors, Agents
The name and title of each managing director, executive and other key
manager of the Companies is set forth in Schedule 3.3 hereto.
Schedule 3.3 hereto also sets forth a true and complete list of all
distributors and agents who are acting for and on behalf of any of the
Companies or in connection with the marketing or distribution of any
products of any of the Companies, and the nature of each of the Companies'
commitments and obligations to any such distributor or agent. The
distribution and agency agreements to which the Companies are a party and
all amendments thereto are in full force and effect and contain no unusual
provisions. To the knowledge of the Seller, there are no actions, suits,
proceedings, investigations or claims now pending or threatened against
any of the Companies initiated by any distributor or agent of the
Companies outside the ordinary course of business, except as indicated on
Schedule 3.3.
4
<PAGE> 5
3.4 Articles of Association
Seller has furnished to Purchaser true and accurate copies of the Articles
of Association or comparable charter or organizational documents of each
of the Companies and all amendments thereto in effect on the date hereof.
3.5 Capitalization
The authorized capital of each of the Companies is as set forth on
Schedule 3.5 hereto and the number or amount of capital shares, stock or
equity interests in each Company is currently owned by the entities as
described on such Schedule.
Seller is the sole legal and beneficial owner, free and clear of any
liens, claims or encumbrances, of all of the German Shares and has full
capacity and authority to enter into and perform this Agreement and to
transfer good and valid title to the German Shares free and clear as
aforesaid. The German Shares constitute all of the equity interests
issued by the German Company. All of the German Shares are fully paid and
non-assessable. None of the German Shares were issued in violation of
pre-emptive rights of a shareholder of the German Company. All of the
German Shares have been issued in full compliance with all applicable laws
of the Federal Republic of Germany. Any and all stated capital increases
or decreases of the German Company have been effected in full compliance
with the laws of the Federal Republic of Germany and will not lead to any
claims against a shareholder of the German Company. There are no
outstanding subscriptions, calls, options, warrants, rights, contracts,
commitments or undertakings to which the Seller or the German Company is a
party or by which the Seller or the German Company is bound relating to
the German Shares. All capital contributions in kind regarding the German
Shares have been made and had at least the full value at which they
5
<PAGE> 6
were transferred and accepted. No distributions have been made by the
German Company in violation of the rules on the maintenance of stated
capital ("Kapitalerhaltungs-grundsatz").
Seller guarantees that the German Company is the sole legal and
beneficial owner, free and clear of any liens, claims or encumbrances of
all of the UK Shares and all of the Brazilian Shares and that it has the
full capacity and authority to consummate the transactions contemplated
herein and to transfer good and valid title to the UK Shares and the
Brazilian Shares, respectively, being free and clear as aforesaid. The
UK Shares constitute all of the shares of the UK Company. The Brazilian
Shares constitute all of the quota of the Brazilian Company with the
exception of one quota, with a par value of R$1. All of the UK Shares
and the Brazilian Shares are fully paid and non-assessable. None of the
UK Shares and Brazilian Shares have been issued in violation of
pre-emptive rights of any shareholder of the respective Company. All of
the UK Shares and the Brazilian Shares have been issued in full
compliance with applicable law. There are no outstanding subscriptions,
calls, options, warrants, rights, contracts, commitments or
understandings to which the German Company or any of the respective
Companies is a party or by which the German Company or any of the
respective Companies will be bound relating to the UK Shares or the
Brazilian Shares.
None of the German Shares are or will be subject to any restrictions with
respect to their transferability.
The Shares do not constitute all or substantially all of the assets of the
Seller (Section 419 German Civil Code "BGB").
6
<PAGE> 7
3.6 No Defaults
The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not (i) violate any provision of
applicable law or the Articles of Association (or comparable charter or
organizational documents) of the Seller or any of the Companies, (ii)
violate any provisions of, or grant to any third party the right to
terminate, or result in the acceleration of any obligation under any
governmental license or other authorization, loan document, agreement,
mortgage, lien, lease, instrument, order, arbitration award, judgment or
decree to which the Seller or any of the Companies is a party or by which
it is bound, or (iii) affect any of the Companies' legal qualifications
to carry on its business.
3.7 Governmental Approval
No authorization, consent or approval of, or filing with, any public body
or authority is necessary on the part of Seller or any of the Companies
in connection with the consummation by Seller of the transactions
contemplated in this Agreement.
3.8 Financial Statements
Seller has provided to Purchaser true and complete copies of (i)
financial statements of the German Company and the UK Company consisting
of the audited balance sheet and statement of income as of December 31,
1994, (ii) financial statements of the Brazilian Company consisting of
the unaudited balance sheet and statement of income as of December 31,
1994, (iii) unaudited financial statements of each of the individual
Companies consisting of the balance sheets and income statements as of
April 30, 1995, and (iv) the proforma unaudited consolidated balance
sheet and income statement of the Companies as of
7
<PAGE> 8
December 31, 1994 (collectively, the "Financial Statements").
The Financial Statements of each of the Companies have been prepared in
accordance with internationally generally accepted accounting principles
guided by the SKF Financial Manual, a complete and current copy of which
has been furnished to Purchaser. The Financial Statements (including any
related notes) present a true and fair view of the financial position and
the results of operations of the Companies.
In addition, not forming part of the Financial Statements, Seller
provided Purchaser with other true and correct historical financial data
of the Company.
3.9 Tax Liabilities
Each of the Companies has duly and timely filed all federal, state,
municipal, local and foreign income, excise, property, sales and other
tax returns which are required to be filed for taxable periods ending
prior to the date hereof or on the date hereof and has or will have paid
or established adequate reserves which are fully reflected in the
Financial Statements for all due taxes with respect to tax periods ending
prior to or on December 31, 1994. Each of the Companies has paid or
fully accrued on its books an amount (which is adequately reflected in
the Financial Statements) sufficient to pay taxes in respect of such
periods which are not yet due and payable. There are no agreements,
waivers or other arrangements, presently in effect or contemplated, with
any governmental agency which provide for an extension of the time for
filing any returns or the assessment of any tax or deficiency, nor are
there any actions, suits, proceedings, investigations or claims now
pending against any of the Companies in respect of any tax or assessment,
or any matters under discussion between the Seller or any of the
Companies and any authority relating to any taxes
8
<PAGE> 9
or assessments asserted by any such authority against any of the
Companies. No Company is a party to, or bound by, or has any obligation
under a tax sharing or similar agreement.
3.10 No Undisclosed Liabilities
Except as may be set forth in Schedule 3.10, none of the Companies has
any liability of any nature, whether absolute, contingent, accrued or
otherwise, which exceeds DM 40,000 individually and DM 160,000 in the
aggregate and (i) which is not the subject of any schedule hereto, (ii)
which should have been, but is not reflected in or reserved for in the
Financial Statements, (iii) which is in excess of the amount shown or
reserved for in the Financial Statements, or (iv) which has been
incurred other than in the ordinary course of business since the date of
the Financial Statements.
Except as listed in Schedule 3.10, no contractual relationships between
any of the Companies on the one hand and the Seller and/or related
companies controlled by or under common control with the Seller on the
other hand are in existence.
3.11 Changes in Condition
Except as has been disclosed to the Purchaser, there have not been,
prior to the date hereof, in any of the Companies since December 31,
1994:
3.11.1 Any changes in the corporate and financial structure, properties, assets
or liabilities of any of the Companies which have or are reasonably
expected to have a Material Adverse Effect. "Material Adverse Effect"
means an effect which, relates to an occurrence, event or condition
prior to the date hereof and which, directly or indirectly, subjects the
Companies or their respective businesses taken as a whole to any
liability, damage,
9
<PAGE> 10
deficiency, loss, cost or expense of DM 600,000 or more in the aggregate
or which otherwise has or is likely to have a material adverse impact on
the financial condition, business or operations of any of the Companies
(other than a matter of general economic or political nature which does
not affect the Companies uniquely);
3.11.2 Any material change in the accounting methods or practices followed by
any of the Companies, or any material change in depreciation,
amortization or inventory valuation policies or rates theretofore used
or adopted;
3.11.3 Any sale, lease, abandonment or other disposition by any of the
Companies, of any real property, or, other than in the ordinary course
of business, of any machinery, equipment or other operating property, or
any sale, assignment, transfer, license or other disposition by any of
the Companies of any Intellectual Property (as hereinafter defined);
3.11.4 Any declaration or payment of any dividend or other distribution
on or in respect of equity interests or shares of the capital stock of
any of the Companies, or any direct or indirect redemption, retirement,
purchase or other acquisition by any of the Companies of any such equity
interests or shares; or
3.11.5 Any other occurrence, event or condition (i) not in the ordinary
course of business; and (ii) specifically relating to the operations of
any of the Companies (as opposed to those resulting from general
economic, financial or market conditions or circumstances generally
affecting the lines of business in which any of the Companies is engaged
or resulting from the announcement of this Agreement) which, to the
knowledge of the Seller or the Companies is expected to have a Material
Adverse Effect.
10
<PAGE> 11
3.12 Ordinary Course of Business
Between December 31, 1994 and the date hereof, the operations and
financial matters of each of the Companies have been conducted in
substantially the same manner as heretofore, in compliance with orderly
business practices, with the care of a prudent businessman and in
material compliance with all applicable laws and regulations.
3.13 Insurance
Each of the Companies has the usual and necessary insurance coverage for
its assets and business until the date hereof, at which time such
insurance coverage terminates. There are no material defaults with
respect to any provision contained in any insurance policy, nor has
there been a failure to pay any premiums thereunder or to give any
notice or present any material claim thereunder in a due and timely
fashion. There is no occurrence potentially giving rise to material
claim under any insurance policy with respect to which a claim has not
been asserted or for which a provision has not been made.
3.14 Contracts
3.14.1 Schedule 3.14 hereto contains a complete and accurate list of
the Material Contracts (as hereinafter defined) to which any Company is
a party and is bound on the date hereof. Except as may be set forth in
Schedule 3.14, all Material Contracts to which any of the Companies is a
party are valid and binding agreements of the respective Company and, to
the knowledge of the Seller or the Companies, the other parties thereto
(subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting enforcement of creditors' rights and to
general principles of equity) and are in full force and effect,
enforceable against
11
<PAGE> 12
such other parties thereto in accordance with their terms. There exists
no breach or default of any Material Contract by any Company, or to the
knowledge of Seller or the Companies, by another party thereto, nor has
any event occurred which with the passage of time or giving of notice
would constitute a default thereunder, which would permit the
cancellation or rescission of such Material Contract or would lead to a
claim in excess of DM 40,000. No outstanding claims or receivables
under any Material Contract in excess of DM 40,000 in the single case
and DM 160,000 in the aggregate are subject to expire pursuant to any
statute of limitations prior to August 1, 1995.
3.14.2 A "Material Contract" shall mean any contract, agreement, commitment,
arrangement, or series of related contracts or arrangements of any kind
affecting the business of any of the Companies either (i) with a
duration in excess of twelve (12) months from the date of this Agreement
and which involves annual payments or receipts by any of the Companies
of DM 160,000 or more or (ii) which involves total payments or receipts
by any of the Companies over the term of the contract of DM 320,000 or
more. In addition, "Material Contract" shall mean any power of attorney
or guarantee which could have a material impact on the business of any
of the Companies.
3.15 Claims
Except as set forth in Schedule 3.15, there is, to the knowledge of the
Seller and the Companies, (i) no suit, action or claim; (ii) no
investigation or inquiry by any administrative agency or governmental
body; and (iii) no legal, administrative or arbitration proceeding
pending or, after due inquiry, threatened, against any of the Companies
or any of their respective properties, assets or business or to which
any of the Companies is a party involving DM 80,000 or more.
12
<PAGE> 13
3.16 Compliance with Laws
Except as set forth in Schedule 3.16, administrative approvals, licenses
and registrations which are necessary to operate and continue the
business and operations of each of the Companies are without exception
existing and valid. To the knowledge of the Seller or any of the
Companies, there are no past or present circumstances specifically
relating to a Company which would justify a revocation or a limitation
of these approvals, licenses and registrations or which would justify
the imposition of additional requirements. The businesses and
operations of the Companies are presently being operated in material
compliance with all applicable domestic and foreign laws, rules,
regulations, approvals, licenses, registrations and other legal
requirements, of which failure to comply with could have a Material
Adverse Effect.
3.17 Labor Issues and Key Management
Schedule 3.17 hereto contains (a) a complete and accurate list of the
employment and consulting agreements to which any of the Companies is a
party or by which any of the Companies is bound pursuant to which it is
obligated to pay a total annual compensation of DM 100,000 or the
equivalent thereof, and (b) a description of the termination notice
provisions. The Seller has furnished the Purchaser the true and correct
copies of such employment and consulting agreements. None of the
Companies is subject to any collective bargaining agreements except as
disclosed in Schedule 3.17 hereto, nor, are there any facts, to the
knowledge of the Seller or any of the Companies, of any threatened labor
dispute. The Seller has furnished the Purchaser with true and correct
copies of all agreements between any of the Companies and their
employees as a whole ("Betriebsvereinbarungen"). Neither the
Purchaser nor the Companies will enter into any agreements or
commitments with Hans Adams, presently Managing Director
13
<PAGE> 14
(Geschaftsfuhrer) of the German Company, who will, without any costs or
liabilities to the Companies and/or the Purchaser, resign as
Geschaftsfuhrer of the German Company effective as of the date hereof.
3.18 Employee Benefit Plans
Except for plans set forth or described on Schedule 3.18 hereto, no
Company maintains or contributes to any employee pension benefit or
welfare plan or medical benefit plan, or any other severance, bonus,
stock option, stock purchase, retirement insurance, profit sharing, or
defined compensation plan, agreement or arrangement for the benefit of
current or former employees ("Employee Plans") nor will any Company take
any action directly or indirectly to obligate it under, or to institute
any such Employee Plan.
Except as set forth in Schedule 3.18, proper provisions or reserves
regarding funding of any Employee Plan have been included in the
Financial Statements in respect of any of the Companies' pension
obligations towards current or former employees of the Companies.
3.19 Machinery and Equipment
The machinery and equipment regularly being used by the Companies in
their businesses are adequate to the business of each of the Companies
as they are currently being conducted, and such machinery and equipment
is in a good repair (save for reasonable wear and tear and subject to
normal maintenance requirements), and is either owned by the respective
Company free and clear of all liens or encumbrances whatsoever or is
leased under valid leases which will not be affected by the consummation
of the transactions contemplated by this Agreement.
14
<PAGE> 15
3.20 Title to Assets
Each of the Companies has good title to all of its assets, which assets
are not subject to any material liens, mortgages, pledges, encumbrances
or charges of any kind except for retention of title agreements entered
into in the ordinary course of business.
3.21 Inventory
Except to the aggregate extent of the reserve for obsolete and slow
moving inventories reflected on each of the Companies' books and records
as of the date of the Financial Statements, the inventory of supplies,
raw materials, work-in-progress and finished goods consists of items of
a good condition and of a quality usable or merchantable in the ordinary
course of business of the Companies and is recorded on the books and
records of the respective Companies in compliance with the principles
set forth in the SKF Financial Manual. The Purchaser was not provided
with all the information necessary to determine that the inventories of
the German and UK Companies are valued in accordance with Seller's Net
Realizable Value Policy as defined in the SKF Financial Manual.
3.22 Environmental Matters
3.22.1 Except as disclosed on Schedule 3.22.1, under Applicable Law (as defined
hereinafter) there were and are no emissions of effluents by the
operations of any of the Companies which violate such Applicable Law.
"Applicable Law" shall mean the current interpretation of existing
applicable city, county, state and federal legislation and/or
applicable city, county, state and federal administrative regulations
existing on the date hereof relating to environmental protection.
There were and are no emissions or effluents by the operations of any
of the
15
<PAGE> 16
Companies which violate applicable law.
Except as disclosed on Schedule 3.22, the Companies possess all
environmental, zoning or similar permits required for the conduct and
operation of their respective businesses and are in compliance with all
the requirements and limitations thereof and all such permits are in
full force and effect.
To the knowledge of the Seller and the Companies, there are no
threatened proceedings against any Company on the grounds of violating
Applicable Laws, including, without limitation, disposal and/or storage
of industrial effluent, sewage and other wastes. The Company has
adequate facilities and/or arrangements to comply with such Applicable
Law.
3.22.2 With respect to any environmental problems which may arise and which
constitute a breach of Seller's representations, warranties, guarantees
and covenants under this Section 3.22, and with respect to the
environmental matters disclosed in Schedule 3.22.1 hereto, Seller or a
designated affiliate shall initiate, implement and direct, as promptly
as practicable and in consultation with the purchaser, remediation
measures to the extent necessary for the Sites to meet the Applicable
Law (the "Remediation Measures"), and shall obtain any required approval
of the Remediation Measures by the competent municipal, state and
federal authorities (collectively the "Authorities"). The locations at
which such environmental problems or matters are identified shall
hereinafter be referred to as the "Site" or the "Sites". The Purchaser
shall initially bear any costs of the Remediation Measures and the costs
of obtaining the required Authority approvals (the "Remediation Costs"),
but Seller shall subsequently indemnify the purchaser for the
Remediation Costs to the extent such Remediation
16
<PAGE> 17
Costs, together with the other claims listed in Section 5.6 of this
Agreement, exceed DM 2,500,000.
In the event the Seller or its designated affiliate fails to perform, as
promptly as practicable, the Remediation Measures as required by the
Authorities, the Purchaser shall set a reasonable deadline for such
performance and shall inform the Seller of such deadline in writing.
Upon expiration of the deadline, the Purchaser or its designee shall
perform the Remediation Measures at the Seller's expense. The
indemnification for such expenses shall not be subject to the
limitations contained in Section 5.6 to the extent the delay in the
performance of the Remediation Measures is caused by the Seller.
Seller or its designated affiliate shall, and shall instruct any
consultants and contractors it may use (the "Consultants") to, make
fully available to the Purchaser and its authorized representatives or
agents any and all data used by Seller or its designated affiliate and
any Consultants in formulating any workplans for environmental
investigations, and any proposed revisions thereto, and in assessing
the Sites, including, but not limited to, all such data previously
submitted, if any, and in the future proposed to be submitted, to the
Authorities in connection therewith.
Seller or its designated affiliate shall implement the Remediation
Measures in respect to the Sites as required by the Authorities and as
promptly as practicable. Seller or its designated affiliate shall
consult with Purchaser in the choice of the Consultants, if any, to be
used in connection with such implementation, and shall not use
Consultants reasonably objectionable to the Purchaser. All Remediation
Measures to be undertaken shall be coordinated with the Purchaser so as
not to unduly disturb the manufacturing and business operations at the
Sites.
17
<PAGE> 18
The Purchaser hereby grants Seller or its designated affiliate and its
Consultants reasonable access to the Sites in order to implement any
Remediation Measures required by the Authorities.
The Purchaser and Seller or its designated affiliate shall share with
each other all reports, data, writings, technical information and
communications concerning the investigation of the Sites and the
implementation of any Remediation Measures. The Purchaser and the
Seller or its designated affiliate anticipate that any such information
may be used by them in the joint defense of any claims that may be
asserted by the municipal, state and federal governments at the
respective Site.
The Purchaser and Seller intend that Seller or its designated affiliate
shall interact with the Authorities in connection with the obtaining of
the necessary approvals or permits, if any, and the implementation of
any Remediation Measures. Seller or its designated affiliate shall keep
the Purchaser fully informed, in advance, of the dates of all meetings
with any Authority and shall provide the Purchaser with all information
disclosed to any Authority, including copies of all correspondence sent
to any Authority by any Consultants or Seller or its designated
affiliate and received by either the Consultant, Seller or its
designated affiliate from any Authority. The Purchaser and its
authorized representatives or agents may, if they desire, be present at
all meetings with any Authority. The Purchaser agrees that neither it
nor its subsidiaries or affiliates shall independently provide
information, meet, or otherwise communicate with, any Authority with
respect to any Remediation Measures unless it believes that it has a
legal obligation to do so.
In the event that permits must be obtained in connection with any
Remediation Measures, Seller or its designated affiliate and the
Purchaser shall consult and agree with
18
<PAGE> 19
respect to the submission of applications for such permits in the name
of the Company at which the Site is located, and the Purchaser shall
cause the respective Company to sign any such applications, permits or
other documents connected therewith.
3.23 Intellectual Property
Schedule 3.23 hereto sets forth a complete and accurate list of all
copyrights, patents, trademarks, tradenames, service marks,
applications, registrations and licenses therefor, (such intellectual
property together with know-how, collectively, the "Intellectual
Property") owned by any Company or in which any Company has an interest
or used by any Company in its business, and identifies whether such
Intellectual Property is owned or used. All of the Companies have
rights to all claimed inventions of any of their employees related to
and useful to the businesses. Except as set forth on such Schedule
3.23 hereto, no Company has licensed to any person any Intellectual
Property listed on such Schedule or any other know-how of such Company.
To the extent the Intellectual Property used by the Companies is not
owned by the Companies, the Companies are authorized by the owners
thereof to use such Intellectual Property. The Intellectual Property
comprises all intellectual property necessary to permit the operation
of the businesses of the Companies as now being conducted. None of the
Intellectual Property is subject to any liens or other encumbrances.
The conduct of the businesses of the Companies as now conducted does
not, to the knowledge of the Seller or the Companies, conflict with or
infringe upon any intellectual property of any third person in any way.
There is nothing to prevent the current use of the corporate names and
trade names (including but not limited to "Seeger," "Anderton" and
"Waldes") by the Companies.
19
<PAGE> 20
3.24 Wilischthal
The closure of the Wilischthal facilities by Seeger-Orbis in Wilischthal
GmbH ("SOWT") and the transfer of the assets and the business of the
Wilischthal facilities to the UK Company do not violate any contractual
or other commitments that the German Company may have entered into or
become bound by in connection with the acquisition or operation of such
facilities, and there are no claims, liabilities (including tax
liabilities) or charges that have arisen or could arise out of the
closure of these facilities which effect the Companies. Seller is the
sole owner of all of the equity interests in SOWT, and such ownership
shall in no event revert back to the German Company. Prior hereto,
Seller and the German Company have provided for the cancellation of the
provision in the Stock purchase Agreement relating to SOWT dated
November 29, 1993 (Urkundennr. 2366 K/93 des Notars Dr. Kutter in
Schweinfurt), as amended on December 22, 1994 (Urkundennr. 2917 K/94
des Notars Dr. Kutter in Schweinfurt), whereby the ownership of all of
the equity interests in SOWT would revert back to the German Company
under certain conditions.
3.25 Sale of Subsidiaries
There are no claims, liabilities (including tax liabilities) or charges
that have arisen or could arise out of the sale by the German Company of
its equity interests in Seeger-Orbis S.A. Bruxelles in December 1991,
Seeger Gesellschaft m.b.H. on March 3, 1993, Anderton Italia
S.p.A. on June 2, 1993, and Seeger, Inc. on September 12, 1994.
20
<PAGE> 21
3.26 Purchase of Salterfix
There are no claims, liabilities (including tax liabilities) or
charges that have arisen or could arise out of the acquisition by the UK
Company of the assets of the Salterfix division of Salter Springs &
Pressings Limited in December 1990.
3.27 Financial and Intercompany Debt
Schedule 3.27 hereto contains a complete and accurate description of the
Financial Debt (as defined below) of the Companies as of June 23, 1995
(the "Determination Date"). There is no other interest bearing debt.
"Financial Debt" shall mean all financial debt of the Companies except
for the positions below (using designations from the financial
statements of the Companies prepared by the Seller and furnished to the
Purchaser) (such positions hereinafter being referred to as the "Trade
Receivables and Payables"):
(i) Trade accounts and acceptances receivable - SKF
(net of reserves for doubtful accounts - SKF);
(ii) other current receivables - SKF;
(iii) Trade accounts and acceptances payable - SKF; and
(iv) other current liabilities - SKF;
(v) operating lease payments pursuant to a leasing contract dated
January 1, 1991 amongst SKF Linear-Systeme and the German
Company.
Except for Financial Debt, Trade Receivables and Payables, rights
and obligations arising under this Agreement and rights and obligations
arising in the ordinary course of business, there are no financial
21
<PAGE> 22
relationships between the Companies and the Seller or any of its
affiliates.
3.28 Date of Representations, Warranties, Guarantees and Covenants
(Zusicherungen und Garantien)
The representations, warranties, guaranties and covenants (Zusicherungen
und Garantien) of Seller in this Agreement are true, accurate, and
complete in all material respects as of the date hereof (or as of such
other date specified in this Section 3) and shall survive the date
hereof as provided in Section 5.12 below.
4. Representations, Warranties, Guarantees and Covenants of Purchaser
Purchaser and TTC represent, warrant, covenant and guarantee ("sichern
zu i. S. v. Section 463 Satz 1 BGB und garantieren selbstandig") to
Seller the following:
4.1 Purchaser is a limited liability company duly organized and validly
existing under the laws of Germany, and has the corporate power to
consummate the transactions contemplated by this Agreement. TTC is a
corporation duly organized, validly existing and in good standing under
the laws of Delaware, and has the corporate power to consummate the
transactions contemplated by this Agreement.
4.2 Purchaser has full corporate power and authority under its Articles of
Association under the laws of Germany to execute, deliver and perform
this Agreement. TTC has full corporate power and authority under its
Articles of Incorporation and By-laws under the laws of Delaware to
execute, deliver and perform this Agreement.
22
<PAGE> 23
4.3 The execution, delivery, and performance of this Agreement have been
duly authorized by all requisite corporate actions on the part of the
Purchaser and TTC.
4.4 All representations, warranties, guarantees and covenants of Purchaser
and TTC in this Agreement are true, accurate, and complete in all
material respects as of the date hereof.
4.5 Immediately after the date hereof, Purchaser and TTC will cause the
Companies to refrain from using, directly or indirectly, any trade name,
trademark, service mark, firm name or component thereof in connection
with "SKF".
5. Consequences of Incorrect Representations, Warranties, Guarantees and
Covenants
5.1 Subject to the legal principles of (i) Schadens-minderungspflicht
(mitigation of damages) (ii) Vorteilsausgleichung (adjustment of damages
by benefits received) and (iii) knowledge of defects by the purchaser
pursuant to Section 460 of the German Civil Code ("BGB") (Kenntnis des
Kaufers hinsichtlich Mangeln) other than matters listed as "Scheduled
Defects" on any schedule attached to this Agreement and which may lead to
liabilities, losses or damages suffered or incurred by the Purchaser or
the Companies (the "Scheduled Defects"), Seller hereby agrees to
indemnify for and hold the Purchaser and the Companies harmless against,
pursuant to Section 463 BGB, any liabilities, losses or damages suffered
or incurred by the Purchaser or the Companies, including interest thereon
(as well as reasonable outside attorney's fees incurred by them in
connection with any action, suit, proceeding, demand, assignment or
judgment incident to any of the matters indemnified against in this
Section 5), as a result of a breach or inaccuracy of any representation,
warranty, guaranty or covenant by Seller contained in this Agreement.
Purchaser will inform
23
<PAGE> 24
Seller of the final resolution of any Scheduled Defect or any change to
or any elimination of any reserve in respect to any Scheduled Defect.
5.2 Subject to the legal principles as set forth in Section 5.1, Seller
agrees to indemnify for and hold Purchaser and the Companies harmless
against any liabilities, losses and damages resulting from product
liability claims and product recalls with respect to products delivered
by any of the Companies prior to the date hereof.
5.3 Subject to the legal principles as set forth in Section 5.1, Seller shall
bear any additional tax liability, including interest and penalty,
resulting from a tax assessment against any of the Companies with respect
to any tax periods or tax returns filed prior to the date hereof.
5.4 Subject to the legal principles as set forth in Section 5.1, Seller
agrees to indemnify for and hold Purchaser and the Companies harmless
against any liabilities, losses and damages resulting from the Scheduled
Defects.
5.5 Claims for indemnification by Purchaser under this Section 5 can be
asserted only to the extent that the liabilities, losses or damages
suffered by Purchaser or any of the Companies have not been or will not
be reimbursed to the Purchaser or any of the Companies by an insurance
company under an insurance policy of any of the Companies existing prior
to the date hereof. No claim for indemnification shall be brought by the
Purchaser with respect to any item or matter fully and accurately
reflected and reserved against in the Financial Statements.
5.6 Seller shall not be liable under Section 5 unless the aggregate amount of
(i) the claims for indemnification under Sections 5.1, 5.2, 5.3 and 5.4,
and (ii) any claims
24
<PAGE> 25
arising under the U.S. Asset Agreement as provided in Section 7.1
(collectively, the "Aggregate Claims") exceeds the sum (such sum
hereinafter referred to as the "Basket") of (x) DM 2,500,000, (y) the
amount by which the reserve in the Financial Statements for any
Scheduled Defect exceeds the amount actually paid to satisfy claims
pursuant to such Scheduled Defect, and (z) the amount by which such
reserve in the Financial Statements was changed or eliminated subsequent
to the date hereof. In addition, the Seller shall only be liable for
the amount by which the Aggregate Claims exceed the Basket. This
limitation shall not apply to liabilities, losses or damages for
breaches of the representations, warranties, guarantees and covenants in
Sections 3.1, 3.2, 3.4, 3.5, 3.6, 3.7, 3.24, and 3.25 of this Agreement.
5.7 Purchaser agrees to give the Seller prompt written notice of any
event, or any written claim by a third party (including tax and other
government authorities), of which it obtains knowledge, which could give
rise to any liabilities, losses or damages as to which it may require
indemnification under this Agreement. Such written notice shall
set forth the basis on which a claim for indemnity hereunder is
requested and, in the case of claims by third parties, shall advise the
Seller whether the Purchaser intends to contest same. The Purchaser
shall have the right to contest such claim, in which case the Seller
shall have the right to be represented, at its own expense, by its own
counsel, its participation to be subject to the reasonable direction of
the Purchaser.
5.8 If the Purchaser determines not to contest such claim, the Seller shall
have the right, at its own expense to contest and defend against such
claim by giving written notice to the Purchaser within fifteen days
after the receipt of the Purchaser's notice that it intends not to
contest. If the Seller determines to contest such claim, the Purchaser
shall have the right to be represented, at its own expense, by its own
counsel, its participation to
25
<PAGE> 26
be subject to the reasonable direction of the Seller. If the Seller
determines to contest such claim, it shall be deemed to have agreed that
such claim is subject to indemnification hereunder to the extent the
amount of the settlement or judgment exceeds the amount for which the
Purchaser was willing to settle initially pursuant to Section 5.10. If
the Seller determines to settle such claim, such settlement shall be
subject to Section 5.10 hereof. If the Seller fails to undertake the
defense of or settle or pay any such third-party claims within 15 days
after the Purchaser has given written notice to the Seller advising that
the Purchaser does not intend to contest such claim, or if the Seller,
after having given notice to the Purchaser that it intends to contest
such claim, fails promptly to defend, settle, or pay such claim, then
the Purchaser may take any and all necessary action to dispose of such
claim, including, without limitation, the settlement or full payment
thereof upon such terms as it shall deem appropriate, in its sole
discretion, and the Seller shall be liable to indemnify, upon demand,
the Purchaser for the full amount of the indemnity claim thereof.
5.9 In any case, each party shall make available to the other and its
attorney at all reasonable times during normal business hours, all
books, records, and other documents in its possession relating to such
claim and the party contesting any such claim shall be furnished with
all reasonable assistance in connection therewith by the other party or
parties.
5.10 In the event that a party desires to settle any such third-party claim,
the settling party shall advise the other party in writing of the terms
of the proposed settlement. If such proposed settlement is
unsatisfactory to such other party, such other party shall have the
right, at its expense, to contest such claim by giving written notice of
such election to the settling party within 15 days of such other party's
26
<PAGE> 27
receipt of the advice of the proposed settlement. If such other party
delivers no such written notice within such 15 days, the settling party
may offer the proposed settlement to the third party making such claim.
If the proposed settlement is not accepted by the third party making
such claim, any new proposed settlement which the settling party may
wish to present to the third party making such claim shall again be
subject to the provisions of this Section 5.10.
5.11 The Purchaser's determination not to contest a claim by a third party
shall in no event constitute a waiver of the Purchaser's right to
request indemnification from the Seller under this Section 5 for
Purchaser's liabilities, losses or damages in connection with such
claim.
5.12 The period during which claims under the respective representations,
warranties, guarantees and covenants of Seller contained in Section 3
and of Purchaser contained in Section 4 shall be pursuable until June
30, 1996, except that such period for claims (i) under Section 3.9 or
resulting from Scheduled Defects based on claims by third parties shall
be determined by the statute of limitations applicable to such claims,
(ii) under Section 3.22 shall be June 30, 1998, and (iii) for claims
under Section 3.1 and 3.5 shall be 30 years after the date hereof.
6. Additional Agreements
6.1 Efforts for Consummation
Subject to the terms and conditions provided herein, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this
27
<PAGE> 28
Agreement and to cooperate with each other in connection with the
foregoing.
6.2 Board of Directors, Management
Seller will cause all shareholder members of the German Company's
Supervisory Board (Aufsichtsrat) or Advisory Committee
(Beirat/Verwaltungsrat), if any, to resign as of the date hereof. The
respective letters of resignation have been submitted to the Purchaser
concurrent herewith.
6.3 Konigstein Real Property
Purchaser acknowledges and accepts that prior hereto the German Company
has concluded and notarized an agreement for the sale of certain real
estate in Konigstein-Schneidhain (surplus land of approx. 16,500 qm as
per the map attached as Schedule 6.3 hereto, hereinafter defined as the
"Konigstein Real Property") to the Seller for the price of DM 3,500,000
(Deutsche Mark three million five hundred thousand). The parties hereto
undertake to cause the transaction contemplated in such agreement to be
consummated as promptly as practicable. Seller shall indemnify and hold
Purchaser, its affiliates and the German Company harmless from any and
all costs (including reasonable advisor fees), taxes (including, but not
limited to, real estate transfer taxes, if any, incurred in connection
with transactions contemplated herein and income taxes payable on any
gain realized in connection with the transfer of the Konigstein Real
Property), fees, expenses, losses or damages incurred in connection with
the sale of the Konigstein Real Property to the Seller or any liability,
including environmental liability relating to the Konigstein Real
Property. Purchaser shall involve the Seller in any tax assessment
relating to the Konigstein Real Property which may require
indemnification under this Section 6.3. This obligation to indemnify
shall not be subject to the limitations set
28
<PAGE> 29
forth in Section 5.6 of this Agreement and shall survive the date hereof
for a period of 30 years, and any claim hereunder must be asserted in
writing prior to such expiration date.
6.4 Seller's Obligation Not to Compete
6.4.1 For a period of 3 years from the date hereof, Seller shall not compete,
directly or indirectly, with the Companies in the geographic areas and
the lines of business of the Companies as of the date hereof; in
particular, Seller shall not hold any interest, directly or indirectly,
in any company or other entity which competes with any Company, and shall
not support such company or other entity in any other way. This
prohibition does not apply in the event that Seller, after the date
hereof, will become the direct or indirect owner of a business, which in
part but not as a whole, competes with the Companies (such competing part
being hereinafter referred to as the "Competing Business"), provided that
(i) Purchaser shall be granted, immediately after Seller becomes the
direct or indirect owner of the Competing Business, a right of first
purchase/refusal with respect to the Competing Business, and (ii) Seller
shall divest of the Competing Business within one year after Seller
became its direct or indirect owner. Furthermore, this prohibition does
not apply to the ownership of stock up to 5% in a publicly traded company
solely for investment purposes.
For purposes of this provision, geographic area shall mean those
countries where the Companies operate on the date hereof.
6.4.2 Seller covenants not to offer, or to allow any of its affiliates
to offer, any employment to any current or future employees of the
Companies. Except as provided in employment agreements existing at the
date hereof, Seller covenants not to employ, or to allow any of its
29
<PAGE> 30
affiliates to employ, any current or future employees of the Companies.
The covenants in this Section 6.4.2 shall expire one year from the date
hereof.
6.4.3 For each breach by the Seller of the covenants set forth in Sections
6.4.1 and 6.4.2 hereof, Seller shall pay to Purchaser a contractual
penalty of DM 40,000. If Seller continues to breach the covenant after
receiving a written demand from Purchaser, Seller shall pay an additional
penalty of DM 40,000 for each calendar month during which the breach
continues. This penalty is in addition to any other legal remedies which
Purchaser may have, including the right to request injunctive relief or
to claim damages in excess of the penalty.
6.4.4 To the extent permitted by law, the Sections 74 et seq. HGB shall not
apply to this covenant not to compete.
6.5 Right of First Refusal of Orbis GmbH
Seller undertakes to effect as promptly as practicable the removal from
the respective Land Register of the right of first refusal by Orbis GmbH
in respect to certain real estate owned by the German Company and located
in Konigstein.
6.6 Retirement of Financial Debt
On the day hereof the Purchaser shall retire or cause to be retired the
Financial Debt (as defined in Section 3.27 above) plus accrued interest,
and TTC hereby separately guarantees Purchaser's obligation to retire
the Financial Debt. However, the Trade Receivables and Payables (as
defined in Section 3.27 above) shall be cleared among the Companies and
the Seller and its affiliates in the ordinary course of business.
30
<PAGE> 31
With respect to the cash pooling arrangement which the German Company
maintains with Dresdner Bank in Schweinfurt (the "Account"), Purchaser
and Seller recognize that deposits may be made into, or debits drawn
against the Account subsequent to the Determination Date (as defined in
Section 3.27 above). Seller and the German Company have attempted and
will attempt to maintain the status quo on the Account at the end of each
day subsequent to the Determination Date. Within ten (10) days from the
date hereof, there shall be a reconciliation amongst the parties
hereto for any activity on the Account since the Determination Date,
with any balance due the Purchaser or the Seller, as the case may be,
paid by the other party within five (5) days after the completion of the
reconciliation. In the course of such reconciliation the parties will
furnish each other with the information necessary to determine the
activity on the Account and to achieve such reconciliation.
6.7 Miscellaneous Documents
Seller shall, as promptly as practicable, deliver to Purchaser executed
copies of (i) the agreement among the German Company and Aktiebolaget SKF
to terminate the service agreement dated February 29, 1985 and September
6, 1985 as of the date hereof, (ii) the agreement among SKF Treasury
Center AB and the UK Company providing for the termination of a loan
agreement dated April 5, 1995, (iii) the notarized agreement providing
for the purchase of the Konigstein Real Property, and (iv) the approval
by the German Company and the Seller of the self-dealing provision of the
German Civil Code (Section 181) in respect to the asset transfers of the
German Company in 1984.
31
<PAGE> 32
7. Ancillary Documents and Related Actions
In addition to the transactions contemplated herein, the parties shall
enter into the following agreements and take the following action:
7.1 The US Asset Agreement is being concluded and the transactions
contemplated therein are being [consummated]? [on the date hereof.]
7.2 Seller agrees to permit TTC, the Purchaser and the Companies to
use the Seller's data processing services at reasonable cost for a period
of ninety (90) days from the date hereof.
8. Covenant to Discontinue the Use of Names and Name Components
Seller undertakes to, after the date hereof, refrain from using, and will
ensure that its affiliates will not use, directly or indirectly (by any
affiliated enterprise), unless expressly permitted by the Purchaser, any
trademark, tradename, firm name, service mark or component thereof
exclusively being used or owned by the Companies, including but not
limited to "Seeger", "Waldes" and "Anderton".
9. Notices
Except as otherwise provided herein, any notice required hereunder shall
be in writing, and shall be deemed to have been validly served, given or
delivered upon delivery thereof to the party to be notified (in the case
of a fax, by delivery with confirmation of receipt), in each case to the
address of the party to be notified, as follows:
32
<PAGE> 33
(a) If to Purchaser:
TransTechnology Corporation
700 Liberty Avenue
Union, New Jersey 07083-8198
U.S.A.
Attention: General Counsel
Telephone: 001-908-964-5666
Telefax: 001-908-688-8618
With copies to:
Jones, Day, Reavis & Pogue
Triton House
Bockenheimer Landstrasse 42
60323 Frankfurt am Main
Germany
Attention: Partner-in-Charge
Telephone: (49)(69) 9726 3939
Telefax: (49)(69) 9726 3993
(b) If to Seller:
SKF GmbH
Gunnar-Wester-Str. 12
97421 Schweinfurt
Germany
Attention: Geschaftsfuhrer
Telephone: 0049-9721-563308
Telefax: 0049-9721-563499
With copies to:
SKF Group Headquarters
Hornsgatan 1
41550 Goteborg
Sweden
Attention: General Counsel
Telephone: 0046-31-371807
Telefax: 0046-31-371691
10. Miscellaneous Provisions
10.1 Neither party shall assign or delegate this Agreement or any rights,
obligations or claims arising hereunder to a third party, except that the
Purchaser may effect such assignment or delegation to an affiliate or to
the bank which is financing the transactions effected hereunder.
However, Seller and Purchaser are entitled to assign any
33
<PAGE> 34
such claims against the respective counter-party or counter-parties to an
enterprise related to the respective party (verbundenes Unternehmen)
within the meaning of Sections 15 of the German Stock Corporation Act
(Aktiengesetz).
10.2 Where a statement contained in this Agreement is said to be to "Seller's
or the Companies' knowledge" (or words of similar import) such expression
means that, after having conducted an inquiry and due diligence review,
the management of Seller or any of the Companies, as the case may be, has
reason to believe the statement to be true, accurate, and complete in all
material respects. Purchaser shall be deemed to have all knowledge of
all persons who have, on its behalf, participated directly in the
negotiations concerning this Agreement.
10.3 The Purchaser will bear all transfer taxes and fees which may result from
the sale and transfer of the Shares from Seller to Purchaser, such as
real estate transfer tax, notary's fees, filing and recording fees,
except for such costs, fees, expenses, losses or damages as set forth in
Section 6.3 of this Agreement.
10.4 Amendments and alterations to this Agreement, including this Section
10.4, are only valid if they are made in the form of this present
Agreement.
10.5 Neither party shall make any public announcement of the transactions
contemplated herein except at a time and in a manner agreed by both
parties in writing or required under the applicable laws and regulations.
10.6 The parties shall treat as confidential and not disclose to any third
party either the contents or the existence of this Agreement, except that
relevant information may be submitted to pertinent authorities.
34
<PAGE> 35
10.7 All representations, warranties, guarantees and covenants made by
the parties in or pursuant to this Agreement shall survive the date
hereof. There are no representations, warranties, guarantees or
covenants of Seller beyond those contained in Sections 3, 5, 6 and 8
hereof.
10.8 Notwithstanding Purchaser's remedies against Seller pursuant to Section 5
hereof, Purchaser waives any additional remedies he may have against
Seller pursuant to Sections 459 et seq. BGB resulting from the breach of
or from inaccuracies in the representations, warranties, guarantees and
covenants contained in Sections 3, 5, 6 and 8 hereof.
10.9 In the event that any provision of this Agreement shall finally be
determined by a competent court or tribunal to be unlawful or
unenforceable, such provision shall be deemed severed from this
Agreement, but every other provision of this Agreement shall remain in
full force and effect, and in substitution for any such provision held
unlawful or unenforceable, there shall be substituted a provision of
similar meaning reflecting the original intent of the parties to the
extent permissible under applicable laws.
10.10 The language of this Agreement is English.
10.11 This Agreement and all connected and arising rights and obligations,
except for the US Asset Agreement and compulsory laws relevant to the
Companies in their respective jurisdictions, are governed by German Law.
Place of venue is Frankfurt/Main.
35
<PAGE> 36
SKF GMBH TRANSTECHNOLOGY SEEGER - ORBIS
GMBH, currently doing business as
kimo Buroservice GmbH
By: By:
----------------- -----------------------------
Andreas Hartmann, Michael Berthelot,
Prokurist Geschaftsfuhrer
TRANSTECHNOLOGY CORPORATION
By: By:
----------------- -----------------------------
Hans Adams, Michael Berthelot,
Prokurist Chairman, President and
Chief Executive Officer
36
<PAGE> 1
Exhibit 3
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of June 30,
1995, by and among TRANSTECHNOLOGY CORPORATION, a Delaware corporation having
its principal place of business at 700 Liberty Avenue, Union, New Jersey
07083-8198, USA ("TransTechnology"), TRANSTECHNOLOGY SEEGER-ORBIS GmbH (in the
process of changing its name from Kimo Buroservice GmbH), a German limited
liability company having its principal place of business on the date hereof at
Kronberg, Germany ("GmbH"), TTUK ACQUISITION CO. LIMITED, an English limited
liability company (registered no. 3062174) having its registered office at P.O.
Box 6, Ferncliffe Road, Bingley, West Yorkshire BD16 2PL, England ("Limited"),
THE FIRST NATIONAL BANK OF BOSTON, a United States national banking association
("FNBB"), the other lending institutions listed on Schedule 1 and Schedule 2
hereto, THE FIRST NATIONAL BANK OF BOSTON, acting through its London Branch and
its Frankfurt Branch, as fronting bank (in such capacity, the "Fronting Bank"),
THE FIRST NATIONAL BANK OF BOSTON, as issuing bank (in such capacity, the
"Issuing Bank") and THE FIRST NATIONAL BANK OF BOSTON, as Agent for the Lenders
(as hereinafter defined), the Fronting Bank and the Issuing Bank (in such
capacity, the "Agent").
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Accounts Receivable. All rights of TransTechnology or any of the
Borrowing Base Subsidiaries to payment for goods sold, leased or otherwise
marketed in the ordinary course of business and all rights of TransTechnology
or any of the Borrowing Base Subsidiaries to payment for services rendered in
the ordinary course of business and all sums of money or other proceeds due
thereon pursuant to transactions with account debtors, except for that portion
of the sum of money or other proceeds due thereon that relate to sales, use or
property taxes in conjunction with such transactions, recorded on books of
account in accordance with generally accepted accounting principles.
Acquisition. The SO Acquisition and the related acquisition by WTI
pursuant to the Asset Purchase Agreement of certain assets located in the
United States and previously used by the Seeger division of SKF USA Inc. in the
Business.
Acquisition Date. The first date on which the Share Purchase Agreement
and the Asset Purchase Agreement have been executed.
Acquisition Documents. Collectively, the Share Purchase Agreement, the
Asset Purchase Agreement, the Merger Documents and all agreements, schedules,
<PAGE> 2
-2-
exhibits and other documents required to be entered into or delivered pursuant
thereto or in connection with the Acquisition, each in the form delivered to the
Agent on the Acquisition Date.
Affiliate. With respect to any Person, any other Person that would be
considered to be an affiliate of such Person under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if such Person were issuing securities.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham, Dana & Gould or such other counsel as
may be approved by the Agent.
Anderton. Anderton International Limited, an English limited liability
company (registered no. 348001).
Anderton Assumption Agreement. The agreement among Limited, Anderton, the
Lenders and the Agent, made or to be made simultaneously with the English Asset
Transfer, in form and substance satisfactory to the Agent and the Lenders,
pursuant to which Anderton shall assume all of Limited's rights, duties and
obligations under this Credit Agreement.
Applicable Margin. (a) With respect to any portion of Term Loan B which
is a Base Rate Loan, two percent (2%) per annum, and with respect to any
portion of Term Loan B which is a Eurocurrency Rate Loan, three and one-quarter
percent (3.25%) per annum. (b) With respect to any other Loan hereunder, for
each period commencing on a Reset Date through the date immediately preceding
the next Reset Date (each such period, a "Rate Setting Period"), the Applicable
Margin shall be the applicable margin set forth in the chart below (the
"Pricing Grid") with respect to the applicable Type of the Loan and the
applicable performance ratios (both of which must apply for the corresponding
Applicable Margin or Commitment Fee Rate to apply), as determined for the
Reference Period ended on the last day of the fiscal quarter ended immediately
preceding the applicable Rate Setting Period.
<PAGE> 3
-3-
<TABLE>
<CAPTION>
Applicable Margin
-----------------
Performance Ratios Base Rate Eurocurrency Commitment
- - ------------------ --------- ------------ ----------
Loans Rate Loans Fee Rate
- - -------------------------------------------------------------------
<S> <C> <C> <C>
Ratio 1: 2.50:1 or lower 0% 1.5% .375%
Ratio 2: higher than 4.00:1
- - -------------------------------------------------------------------
Ratio 1: 3.25:1 or lower, but 0.5% 2.0% .375%
higher than 2.50:1
Ratio 2: 4.00:1 or lower, but
higher than 3.50:1
- - -------------------------------------------------------------------
Ratio 1:3.75:1 or lower, but 1.0% 2.5% .5%
higher than 3.25:1
Ratio 2: 3.50:1 or lower, but
higher than 3.00:1
- - -------------------------------------------------------------------
Ratio 1: higher than 3.75:1 1.5% 3.0% .5%
Ratio 2: 3.00:1 or lower
- - -------------------------------------------------------------------
</TABLE>
"Ratio 1" is the ratio of Senior Funded Indebtedness to Consolidated
EBITDA, with Consolidated EBITDA calculated for a Reference Period ended on the
last day of the fiscal quarter ended immediately preceding the applicable Rate
Setting Period, provided that, for any period prior to the Acquisition Date
included in any such Reference Period, Consolidated EBITDA shall include the
consolidated EBITDA (mutatis mutandis to reflect such amount's reference to
Seeger-Orbis and its Subsidiaries) of Seeger-Orbis and its Subsidiaries (in the
amounts for each fiscal quarter set forth in Schedule 4 hereto).
"Ratio 2" is the ratio of Consolidated EBITDA to Consolidated Total
Interest Expense, with Consolidated EBITDA calculated as in Ratio 1, and
Consolidated Total Interest Expense calculated from the Closing Date and for
the first three completed fiscal quarters after the Closing Date by annualizing
the actual consolidated interest expense of TransTechnology and its
Subsidiaries paid or due and payable between July 1, 1995 and the date of
calculation, and thereafter calculated for a Reference Period ended on the last
day of the fiscal quarter ended immediately preceding the applicable Rate
Setting Period.
Notwithstanding the foregoing, from the Closing Date until the first
Reset Date following the fiscal quarter ended March 31, 1996, (i) the
Commitment Fee Rate shall be 0.5%, (ii) the Applicable Margin with respect to
Base Rate Loans shall not be less than 1.0%, and (iii) the Applicable Margin
with respect to Eurocurrency Rate Loans shall not be less than 2.5%.
If no Compliance Certificate is delivered when required by Section 9.4(d),
then, for the period commencing on the next Reset Date following the date on
which such delivery was required through the date immediately following the
date of actual delivery to the Agent of such Compliance Certificate, the
Applicable Margin and the Commitment Fee Rate shall be set at the highest
applicable rate or margin set forth above.
<PAGE> 4
-4-
Approved Acquisition. An acquisition by any member of the
TransTechnology Group of the shares or of substantially all of the assets of a
corporation or business, as the case may be, whose operations are substantially
concentrated in the Business (such corporation or business, the "Target"),
provided that the following conditions are met:
(a) the sum of (i) the purchase price payable for the Target (including
all deferred amounts), plus (ii) all Indebtedness of the Target
being assumed by the purchaser in connection with the acquisition
pursuant to clause (b) below, shall not exceed six (6) times the
Target's Consolidated EBITDA (mutatis mutandis to reflect such
amount's reference to the Target) for the Reference Period ended on
the last day of the fiscal quarter ended immediately preceding the
proposed date of completion of the acquisition;
(b) no Indebtedness of the Target, other than (i) Capitalized Leases
and (ii) liabilities incurred in the ordinary course of business
not related to the borrowing of money, shall be assumed by the
purchaser in connection with the acquisition;
(c) the assets of the Target shall be subject to no lien, encumbrance,
mortgage, pledge, charge, restriction or other security other than
liens which would be Permitted Liens hereunder and lessor's
interests under the Capitalized Leases of the Target being assumed
by the purchaser;
(d) TransTechnology shall have delivered to the Agent pro forma
financial statements in form and substance satisfactory to the
Agent, evidencing compliance of TransTechnology and its
Subsidiaries, including the Target from and after the proposed date
of completion of the acquisition, with the financial covenants set
forth in Section 11 following acquisition of the Target for the
period of twelve (12) months following the proposed date of
completion of the acquisition, assuming total outstanding amounts
of and interest rates on the Loans to be the same as those in
effect (after giving effect to the drawdown of Second US Tranche of
Term Loan A) at such date, and assuming repayments on such Loans in
the amounts and at the times scheduled in accordance with this
Credit Agreement; and
(e) the Agent shall have received documentation (including, without
limitation, legal opinions and other documentation similar to that
required to be delivered in connection with the Acquisition)
satisfactory to it in its sole discretion granting first priority
liens in its favor, on behalf of the Lenders, on the assets and, if
applicable, the shares of the Target and on the assets and, if
applicable, the shares of any member of the TransTechnology Group
acquiring the Target's assets or shares, as the case may be.
<PAGE> 5
-5-
Approved Acquisition Date. See Section 4A.1.4.
Asset Purchase Agreement. The Asset Purchase Agreement between WTI and
SKF USA Inc., a Delaware corporation, dated or to be dated on the Acquisition
Date, with respect to the acquisition by WTI of the assets of the Seeger
Division of SKF USA Inc. used in the Business.
Assignment and Acceptance. See Section 20.1.1 and 20.1.2.
Balance Sheet Date. March 31, 1995.
Banks. FNBB and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to Section 20.
Base Rate. With respect to amounts denominated in Dollars, the Dollar
Base Rate; with respect to amounts denominated in Deutschmarks, the DM Base
Rate; and with respect to amounts denominated in Sterling, the Sterling Base
Rate, with each of the Dollar Base Rate, DM Base Rate and Sterling Base Rate
being referred to herein as a "Base Rate".
Base Rate Loans. Revolving Credit Loans, International Facility Loans and
all or any portion of the Term Loans bearing interest calculated by reference
to a Base Rate.
Borrowers. TransTechnology, GmbH and Limited, collectively, and each
individually being referred to as a "Borrower".
Borrowing Base. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Banks and the Agent pursuant to Section 9.4(f), which is equal
to the sum of:
(a) 80.00% of Eligible Accounts Receivable for which invoices have
been issued and are payable; plus
(b) 50.00% of the net book value (determined on a first-in
first-out basis at lower of cost or market) of Eligible Inventory
provided however that the aggregate amount included in the Borrowing Base
under this clause (b) shall not exceed $19,000,000, provided that such
$19,000,000 amount may be adjusted by the Agent to reflect any
acquisitions or divestitures subsequent to the Closing Date;
Borrowing Base Report. A Borrowing Base Report signed by the president,
chief executive officer, controller or chief financial officer of
TransTechnology and in substantially the form of Exhibit A hereto.
Borrowing Base Subsidiary. Any of the following Subsidiaries of
TransTechnology: The Palnut Company, a Delaware corporation; The Electronic
<PAGE> 6
-6-
Connections and Assemblies, Inc., a Delaware corporation; Industrial Retaining
Ring Company, a New Jersey corporation; Retainers, Inc., a New Jersey
corporation; and WTI.
Brazilian Pledge Agreement. The Pledge of Shares made or to be made by
GmbH in favor of the Fronting Bank with respect to the share capital of the
Brazilian Subsidiary, in form and substance satisfactory to the Agent and the
Lenders.
Brazilian Subsidiary. Seeger-Reno Industria e Commercia Ltda., a
Brazilian corporation.
Business. The business of designing, developing, manufacturing,
assembling and/or selling industrial fasteners.
Business Day. Any day (other than a Saturday or Sunday) on which banking
institutions in Boston, Massachusetts, are open for the transaction of banking
business and, in the case of Eurocurrency Rate Loans, DM Loans and Sterling
Loans, also a day which is a Eurocurrency Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by
TransTechnology or any of its Subsidiaries in connection with the purchase or
lease by TransTechnology or any of its Subsidiaries of Capital Assets that
would be required to be capitalized and shown on the balance sheet of such
Person in accordance with generally accepted accounting principles.
Capitalized Leases. Leases (unless otherwise stated, under which
TransTechnology or any of its Subsidiaries is the lessee or obligor), the
discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.
CERCLA. See Section 8.18.
Charges over Shares. The Charge over Shares, to be dated on or prior to
the Closing Date, from TTSO Inc. in favour of the Agent with respect to the
share capital of Limited and the Charge over Shares, to be dated on or prior to
the Closing Date, from Limited in favour of the Agent with respect to the share
capital of Anderton, each in form and substance satisfactory to the Lenders and
the Agent.
Closing Date. The first date on which the conditions set forth in
Section 12 have been satisfied and any Revolving Credit Loan, International
Facility Loan or initial
<PAGE> 7
-7-
Tranche of Term Loan A and Term Loan B are to be made or any Letter of Credit is
to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of TransTechnology
and its Subsidiaries that are or are intended to be subject to the security
interests and mortgages created by the Security Documents.
Collateral Assignments of Acquisition Documents. (a) The Collateral
Assignment, to be dated on or prior to the Closing Date, to the Agent of all of
WTI's right, title and interest in, to and under the Asset Purchase Agreement,
including (without limitation) the consent thereto from SKF USA Inc. pursuant
to Section 11.1 of the Asset Purchase Agreement, and (b) the Collateral
Assignment, to be dated on or prior to the Closing Date, to the Fronting Bank
of all of GmbH's right, title and interest in, to and under the Share Purchase
Agreement, including (without limitation) the consent thereto from Seeger-Orbis
pursuant to Section 10.1 of the Share Purchase Agreement, all in form and
substance satisfactory to the Lenders and the Agent.
Collateral Instrument. Letters of credit, guarantees, indemnities and
performance bonds in form and substance satisfactory to the Fronting Bank issued
or to be issued by the Fronting Bank to or for the account of either GmbH or
Limited pursuant to Section 3.1 and Section 3.3, respectively.
Collateral Notes. See Section 12.21.
Commitment. As to any Lender, such Lender's Revolving Credit
Commitment, Term Loan A Commitment or Term Loan B Commitment, as the case
may be.
Commitment Fee Rate. For each Rate Setting Period, the rate per annum
set forth in the Pricing Grid under the column headed "Commitment Fee Rate",
with respect to the performance ratios applicable to such Rate Setting Period,
determined as set forth in the definition of "Applicable Margin".
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of TransTechnology and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Current Assets. All assets of TransTechnology and its
Subsidiaries on a consolidated basis that, in accordance with generally
accepted accounting principles, are properly classified as current assets, but
excluding any assets characterized as belonging to or being employed in
operations identified as discontinued operations on the most recent
consolidated balance sheet of TransTechnology and its Subsidiaries referred to
in Section 8.4.1 or, if later, the most
<PAGE> 8
-8-
recent such balance sheet the most recent such balance sheet delivered to the
Lenders pursuant to Section 9.4(a) or (b).
Consolidated Current Liabilities. All liabilities of TransTechnology and
its Subsidiaries on a consolidated basis maturing on demand or within one (1)
year from the date as of which Consolidated Current Liabilities are to be
determined, and such other liabilities as may properly be classified as current
liabilities in accordance with generally accepted accounting principles, but
excluding any of the Obligations.
Consolidated EBITDA. With respect to any period, Earnings Before Interest
and Taxes for such period, before provision for any depreciation and
amortization, determined in accordance with generally accepted accounting
principles.
Consolidated Excess Cash Flow. With respect to TransTechnology and its
Subsidiaries and any particular fiscal period, an amount equal to (a)
Consolidated Operating Cash Flow for such period less (b) the sum of (i)
Consolidated Total Interest Expense for such period, plus (ii) any mandatory
repayments or prepayments (whether scheduled or otherwise) of principal on any
Indebtedness of TransTechnology or any of its Subsidiaries paid or due and
payable during such period plus (iii) any voluntary repayments or prepayments
of principal on any Indebtedness of TransTechnology or any of its Subsidiaries
made during such period, except for repayments of Revolving Credit Loans made
other than in connection with a permanent reduction or termination of the Total
Revolving Credit Commitment pursuant to Section 2.3 plus (iv) an amount equal
to the amount of repayments of Revolving Credit Loans and Unpaid Reimbursement
Obligations as may be necessary to ensure that, as of the last day of such
fiscal period, the aggregate amount of Revolving Credit Availability plus the
total amount of cash and cash equivalents held by TransTechnology and its
Subsidiaries exceeds $7,000,000.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of TransTechnology and its Subsidiaries, after deduction of all
expenses, taxes and other proper charges, determined in accordance with
generally accepted accounting principles.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, less, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
Consolidated Operating Cash Flow. For any period, an amount equal to (i)
the sum of (A) Consolidated EBITDA for such period, plus (B) if applicable,
in-flows resulting from Net Working Capital Changes for such period, less (ii)
the sum of (A) cash payments for all income taxes paid during such period, plus
(B) Capital Expenditures made during such period to the extent permitted by
Section 11.6, plus (C) amounts included in clause (i) above and attributable to
gains on asset sales during such period, to the extent such asset sales are
permitted by Section 10.5, plus (D) Distributions made during such period, to
the extent permitted by Section 10.4, plus (E) if applicable, out-flows
resulting from Net Working Capital Changes for such period,
<PAGE> 9
-9-
less (iii) amounts otherwise included in Consolidated Operating Cash Flow and
attributable to the operations of the Brazilian Subsidiary.
Consolidated Total Assets. All assets of TransTechnology and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate amount
of interest required to be paid or accrued by TransTechnology and its
Subsidiaries during such period on all Indebtedness of TransTechnology and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of
Capitalized Leases and including commitment fees, agency fees, facility fees
and similar fees or expenses in connection with the borrowing of money, but
excluding the non cash amortization of fees paid under the Credit Agreement on
the Closing Date.
Consolidated Total Liabilities. All liabilities of TransTechnology and
its Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles and all Indebtedness of
TransTechnology and its Subsidiaries, whether or not so classified.
Conversion Request. A notice given by a Borrower to the Agent or the
Fronting Bank, as the case may be, of such Borrower's election to convert or
continue a Loan in accordance with Section 2.7.
Copyright Mortgages. The several Copyright Mortgage and Security
Agreements, dated or to be dated on or prior to the Closing Date, made by
TransTechnology and its Subsidiaries in favor of the Agent and in form and
substance satisfactory to the Lenders and the Agent.
Counter Indemnity. Any indemnity or counter indemnity from GmbH or
Limited, as the case may be, in favor of the Fronting Bank with respect to any
Collateral Instrument issued to or for the account of either GmbH or Limited,
in the standard form of indemnity or counter indemnity used by the Fronting
Bank or in such other form and substance as may be satisfactory to the Fronting
Bank and including (without limitation) any letter of credit application
incorporating indemnification language satisfactory to the Fronting Bank.
Credit Agreement. This Revolving Credit and Term Loan Agreement,
including the Schedules and Exhibits hereto.
Debenture. The Debenture, dated or to be dated on or prior to the Closing
Date, made by Anderton in favour of the Agent and in form and substance
satisfactory to the Lenders and the Agent.
Default. See Section 14.1.
<PAGE> 10
-10-
Deutschmarks or DM. Deutschmarks in lawful currency of the Federal
Republic of Germany.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of TransTechnology, other than
dividends payable solely in shares of common stock of TransTechnology; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of TransTechnology, directly or indirectly through a Subsidiary of
TransTechnology or otherwise; the return of capital by TransTechnology to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of TransTechnology.
DM Base Rate. The annual rate of interest announced from time to time by
the DM Lending Office of the Fronting Bank as its "base rate" for loans
denominated in Deutschmarks.
DM Equivalent. On any date of determination, with respect to an amount
denominated in Deutschmarks, such amount of Deutschmarks, and with respect to
an amount denominated in Sterling or Dollars, the amount of Deutschmarks which
could be purchased with that amount of Sterling or Dollars, as the case may be,
at the spot rate of exchange quoted by the Fronting Bank in the Frankfurt
Foreign Exchange Market at or about 11:00 a.m. (Frankfurt time) on the date of
determination for the purchase of Deutschmarks with Sterling or Dollars, as the
case may be.
DM Eurocurrency Loan. See Section 3.1
DM Eurocurrency Rate. For any Interest Period with respect to a DM Loan,
the rate of interest equal to the rate per annum (rounded upwards to the
nearest 1/16 of one percent) at which the Fronting Bank's DM Lending Office is
offered deposits in Deutschmarks two (2) Eurocurrency Business Days prior to
the beginning of such Interest Period in the Frankfurt interbank market for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the DM Loan to
which such Interest Period applies, divided by (ii) a number equal to 1.00
minus the Eurocurrency Reserve Rate, if applicable.
DM Facility Loans. The DM Eurocurrency Loans and the DM Overdraft
Advances, collectively.
DM Lending Office. Initially, the Frankfurt-am-Main branch of FNBB in its
capacity as Fronting Bank, and thereafter such office as the Fronting Bank, in
its sole discretion acting in good faith, may notify to the Agent and
TransTechnology.
DM Loan. Any International Facility Loan or portion of Term Loan A which
is denominated in Deutschmarks.
DM Overdraft Advance. See Section 3.1.
<PAGE> 11
-11-
Dollar Base Rate. The higher of (i) the annual rate of interest announced
from time to time by FNBB at its head office in Boston, Massachusetts, as its
"base rate" for loans denominated in Dollars, and (ii) one.half of one percent
(1/2%) above the Federal Funds Effective Rate. For the purposes of this
definition, "Federal Funds Effective Rate" shall mean for any day, the rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day on such transactions received by the
Agent from three funds brokers of recognized standing selected by the Agent.
Dollar Equivalent. On any date of determination, with respect to an
amount denominated in Dollars, such amount of Dollars, and with respect to an
amount denominated in Sterling or Deutschmarks, the amount of Dollars which
could be purchased with that amount of Sterling or Deutschmarks, as the case
may be, at the spot rate of exchange quoted by the Fronting Bank in the London
Foreign Exchange Market at or about 11:00 a.m. (London time) on the date of
determination for the purchase of Dollars with Sterling or Deutschmarks, as the
case may be.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto and of each Term B Lender designated as such in
Schedule 2 hereto; thereafter, such other office of such Lender, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Revolving Credit Loan or any
International Facility Loan or any Tranche of Term Loan A or Term Loan B is
made or is to be made, and the date on which any Loan or is converted or
continued in accordance with Section 2.7, as the case may be, or all or any
portion of either of the Term Loans is converted or continued in accordance
with Section 4A.5(b) or Section 4B.5(b), as the case may be.
Earnings Before Interest and Taxes. The consolidated earnings (or loss)
from the operations of TransTechnology and its Subsidiaries for any period,
after all expenses and other proper charges but before payment or provision for
any income taxes or interest expense for such period, determined in accordance
with generally accepted accounting principles.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to
such Accounts Receivable) (i) that TransTechnology reasonably and in good faith
determines to be collectible; (ii) that are with account debtors that (A) are
not Affiliates of TransTechnology, (B) purchased the goods or services giving
rise to the relevant Account Receivable in an arm's length transaction, (C) are
not insolvent or
<PAGE> 12
-12-
involved in any case or proceeding, whether voluntary or involuntary, under any
bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
dissolution, liquidation or similar law of any jurisdiction and (D) are, in the
Agent's reasonable judgment, creditworthy; (iii) that are in payment of
obligations that have been fully performed and are not subject to dispute or
any other similar claims that would reduce the cash amount payable therefor;
(iv) that are not subject to any pledge, restriction, security interest or
other lien or encumbrance other than those created by the Loan Documents; (v)
in which the Agent has a valid and perfected first priority security interest;
(vi) that are not outstanding for more than ninety (90) days past the date of
the respective invoices therefor; (vii) that are not due from an account debtor
located in Indiana, Minnesota or New Jersey unless TransTechnology or the
Borrowing Base Subsidiary which is the relevant account payee (A) has received
a certificate of authority to do business and is in good standing in such state
or (B) has filed a notice of business activities report with the appropriate
office or agency of such state for the current year; (viii) that are not due
from any single account debtor if more than twenty-five percent (25%) of the
aggregate amount of all Accounts Receivable owing from such account debtor
would otherwise not be Eligible Accounts Receivable; (ix) that are payable in
Dollars or Canadian dollars; (x) that are not payable from an office outside of
the United States, Canada or Puerto Rico, unless the relevant sale is made
pursuant to a letter of credit, or guaranty or on other terms, in each case
acceptable to the Agent; (xi) that are not secured by a letter of credit or
guaranty unless the Agent has a prior, perfected security interest in such
letter of credit or guaranty; (xii) that are not due from any single account
debtor if and to the extent that, after inclusion of such Account Receivable in
Eligible Accounts Receivable, the aggregate amount of Eligible Accounts
Receivables owing from such account debtor would exceed $6,000,000; (xiii) that
are not due from the United States of America, any state or local government
within the United States of America, or any department, agency, office or
instrumentality thereof, unless such Account Receivable has been assigned to
the Agent in accordance with and pursuant to the terms and provisions of the
Assignment of Claims Act of 1940, 41 U.S.C. Section 15; and (xiv) that are
deemed by the Agent, based upon reasonable credit, collateral, accounting or
other considerations, to be acceptable for inclusion as Eligible Accounts
Receivable.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $5,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $500,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of $5,000,000,000, provided
that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD;
(iv) the central bank of any country which is a member of the OECD; (v) with
respect to any assignment of any portion of Term Loan B, any
<PAGE> 13
-13-
investment fund, financial institution or other institutional lender (other
than any financial institution which but for the amount of its total assets or
net worth would have been an Eligible Assignee under clauses (i)-(iii) above)
having total assets in excess of $100,000,000; and (vi) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company, investment fund or other financial
institution or other Person approved by the Agent, such approval not to be
unreasonably withheld.
Eligible Inventory. With respect to TransTechnology or any of the
Borrowing Base Subsidiaries, finished goods and raw materials and component
parts inventory owned by TransTechnology or such Borrowing Base Subsidiary;
provided that Eligible Inventory shall not include any inventory (i) held on
consignment, or not otherwise owned by TransTechnology or such Borrowing Base
Subsidiary, or of a type no longer sold by TransTechnology or such Borrowing
Base Subsidiary, (ii) which has been returned by a customer and has not passed
re-inspection or otherwise been approved by TransTechnology or such Borrowing
Base Subsidiary as good for re-sale, or is damaged or subject to any legal
encumbrance other than Permitted Liens, (iii) which is not in the possession of
TransTechnology or such Borrowing Base Subsidiary unless the Agent has received
a waiver from the party in possession of such inventory in form and substance
satisfactory to the Agent, (iv) which is held by TransTechnology or such
Borrowing Base Subsidiary on property leased by TransTechnology or any of its
Borrowing Base Subsidiaries, unless the Agent has received a waiver from the
lessor of such leased property and, if any, sublessor thereof in form and
substance satisfactory to the Agent, (v) as to which appropriate Uniform
Commercial Code financing statements showing TransTechnology or such
Borrowing Base Subsidiary as debtor and the Agent as secured party have not
been filed in the proper filing office or offices in order to perfect the
Agent's security interest therein, (vi) which has been shipped to a customer of
TransTechnology or such Borrowing Base Subsidiary regardless of whether such
shipment is on a consignment basis, (vii) which is not located within the
United States of America, (viii) which the Agent reasonably deems to be
obsolete or not marketable, (ix) which consists of work-in-progress,
maintenance spare parts, property used in packaging or shipping of inventory,
or inventory of a like use or character to the foregoing or which does not
conform to all standards imposed by any governmental agency, division or
department thereof which has regulatory authority over such goods, or the use
or sale thereof, or (x) which is deemed by the Agent, based upon reasonable
credit, commercial, accounting or other considerations, to be unacceptable
for inclusion as Eligible Inventory.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by TransTechnology or any
ERISA Affiliate, other than a Multiemployer Plan.
English Asset Transfer. See Section 9.17.
English Guarantees. The Deed of Guarantee and Indemnity, dated or to be
dated on or prior to the Closing Date, made by Limited in favour of the Agent,
and the Deed of Guarantee of Indemnity, dated or to be dated on or prior to the
Closing
<PAGE> 14
-14-
Date, made by Anderton in favour of the Agent, each in form and substance
satisfactory to the Lenders and the Agent.
English Security Documents. The Debenture, the Intellectual Property
Mortgage and the Charges over Shares, together with such similar documents with
respect to the shares and assets of TransTechnology (Europe) Limited as the
Agent may required.
Environmental Laws. See Section 8.18(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
TransTechnology under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Business Day. Any day (other than a Saturday or Sunday) on
which commercial banks are open for international business (including dealings
in Dollar, Deutschmark and Sterling deposits) in London, England and
Frankfurt-am-Main, Germany.
Eurocurrency Rate. With respect to amounts denominated in Dollars, the
Eurodollar Rate; with respect to amounts denominated in Deutschmarks, the DM
Eurocurrency Rate; with respect to amounts denominated in Sterling, the Sterling
Eurocurrency Rate.
Eurocurrency Rate Loans. Revolving Credit Loans, International Facility
Loans and all or any portion of the Term Loan bearing interest calculated by
reference to a Eurocurrency Rate.
Eurocurrency Reserve Rate. For any day with respect to a Eurocurrency
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.
Eurodollar Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto and of each Term B Lender designated as such in
Schedule 2 hereto; thereafter, such other office of such Lender, if any, that
shall be making or maintaining Eurocurrency Rate Loans denominated in Dollars.
<PAGE> 15
-15-
Eurodollar Rate. For any Interest Period with respect to a Eurocurrency
Rate Loan denominated in Dollars, the rate of interest equal to (i) the
arithmetic average of the rates per annum for the Reference Bank (rounded
upwards to the nearest 1/16 of one percent) of the rate at which the Reference
Bank's Eurodollar Lending Office is offered Dollar deposits two Eurocurrency
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such Eurodollar Lending Office are customarily conducted, for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurocurrency
Rate Loan to which such Interest Period applies, divided by (ii) a number equal
to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
Event of Default. See Section 14.1.
Fee Letter. The letter agreement between FNBB and TransTechnology dated
or to be dated on or prior to the Closing Date with respect to the amount of
certain fees payable or to be paid by the Borrowers jointly and severally under
or in respect of this Credit Agreement.
First US Tranche. With respect to Term Loan A, the Tranche of such Term
Loan made or to be made by the Banks to TransTechnology on the Closing Date, in
the principal amount of $15,000,000, pursuant to Section 4A.1.1.
Fronted Loans. The International Facility Loans, the German Tranche of
Term Loan A and the UK Tranche of Term Loan A, collectively, with each (and any
portion of each) being individually a "Fronted Loan".
Funding Account. See Section 2.8.1.
Generally accepted accounting principles. (i) When used in Section 11,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date,
and (B) to the extent consistent with such principles, the accounting practice
of TransTechnology reflected in its financial statements for the year ended on
the Balance Sheet Date, and (ii) when used in general, other than as provided
above, means principles that are (A) consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, as
in effect from time to time, and (B) consistently applied with past financial
statements of TransTechnology adopting the same principles, provided that in
each case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
<PAGE> 16
-16-
German Merger. The merger of Seeger-Orbis into GmbH with GmbH (or a
successor entity or partnership acceptable to the Agent) as the surviving
corporation, entity or partnership, as the case may be.
German Mortgages. The Real Estate Mortgage(s), to be entered into
simultaneously with the completion of the German Merger, made by GmbH in favour
of the Fronting Bank with respect to the real property of Seeger-Orbis to be
acquired by GmbH at:
(a) Wiesbadener Strasse/Fischbacher Strasse, Konigstein, Germany
(Folio 19-615);
(b) Wiesbadener Strasse, Konigstein, Germany (Folio 21-699); and
(c) Zum Junkerwald, Eichen, Germany (Folio 40-1399),
each in form and substance satisfactory to the Lenders and the Agent.
German Pledge Agreements. The Pledge of Shares, dated or to be dated on
or prior to the Closing Date, made by TTSO Inc. in favor of the Lenders and the
Agent with respect to the share capital of GmbH and the Pledge of Shares, dated
or to be dated on or prior to the Closing Date, made by GmbH in favor of the
Fronting Bank with respect to the share capital of Seeger-Orbis to be acquired
by GmbH pursuant to the fulfillment of certain conditions, each in form and
substance satisfactory to the Lenders and the Agent.
German Security Documents. The Pledges as to Equipment, Inventory and
Intangible Assets and Assignment of Accounts Receivable entered into or to be
entered into on or before the Closing Date by GmbH in favor of the Fronting
Bank with respect to all of the equipment, inventory and accounts receivable of
GmbH, each in form and substance satisfactory to the Lenders and the Agent, and
the German Pledge Agreements.
German Tranche. With respect to Term Loan A, the Tranche of such Term
Loan made or to be made in Deutschmarks by the DM Lending Office of the
Fronting Bank to GmbH on the Closing Date, in the principal amount of the DM
Equivalent of $12,000,000, pursuant to Section 4A.1.2.
GmbH. See the preamble to this Credit Agreement. At any time following
completion of the German Merger, GmbH shall refer to the merged company so
created.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by
TransTechnology or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
<PAGE> 17
-17-
Guaranties. The Parent Guaranty, the Subsidiary Guaranty and the English
Guarantees.
Guarantor. Each Subsidiary of TransTechnology which is a party to the
Subsidiary Guaranty or the English Guarantees.
Hazardous Substances. See Section 8.18(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit; but excluding all
liabilities in respect of Operating Leases.
Intellectual Property Mortgage. The Deed of Mortgage over Intellectual
Property Rights, dated or to be dated on or prior to the Closing Date, made by
Anderton in favor of the Agent and in form and substance satisfactory to the
Lenders and the Agent.
Interest Payment Date. (i) As to any Base Rate Loan, the first day after
last day of the Interest Period with respect thereto; and (ii) as to any
Eurocurrency Rate Loan in respect of which the Interest Period is (A) 3 months
or less, the last day of such Interest Period and (B) more than 3 months, the
date that is 3 months from the first day of such Interest Period and, in
addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan,
International Facility Loan or all or any relevant portion of a Term Loan,
(i) initially, the period commencing on the Drawdown Date of such Loan and
ending on the last day of one of the periods set forth below, as selected by
the relevant Borrower of such Loan in a Loan Request, (A) for any Base Rate
Loan, the last day of the calendar quarter, (B) for any Eurocurrency Rate
Loan, 1, 2, 3 or 6 months; and (ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Revolving
Credit Loan, International Facility Loan or all or such portion of a Term Loan
and ending on the last day of one of the periods set forth above, as selected
by the relevant Borrower of such Loan in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to
the following:
<PAGE> 18
-18-
(a) if any Interest Period with respect to a Eurocurrency Rate Loan
would otherwise end on a day that is not a Eurocurrency Business Day, that
Interest Period shall be extended to the next succeeding Eurocurrency
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurocurrency Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end
on the next succeeding Business Day;
(c) if the relevant Borrower shall fail to give notice as provided
in Section 2.7, such Borrower shall be deemed to have requested a
conversion of the affected Eurocurrency Rate Loan to a Base Rate Loan and
the continuance of all Base Rate Loans as Base Rate Loans on the last day
of the then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan that
begins on the last Eurocurrency Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Eurocurrency Business Day of a calendar month; and
(e) any Interest Period relating to any Eurocurrency Rate Loan that
would otherwise extend beyond the Revolving Credit Loan Maturity Date (if
comprising a Revolving Credit Loan) or the Term Loan A Maturity Date (if
comprising Term Loan A or a portion thereof) or the Term Loan B Maturity
Date (if comprising Term Loan B or a portion thereof) shall end on the
Revolving Credit Loan Maturity Date or (as the case may be) the Term Loan
A Maturity Date or the Term Loan B Maturity Date.
Interest Rate Protection Documents. The documents evidencing the interest
rate cap or swap or other arrangements entered into by TransTechnology pursuant
to Section 9.15, as such arrangements and the related documents may be amended,
modified, varied or supplemented from time to time.
International Facility Loans. The DM Facility Loans made or to be made by
the DM Lending Office of the Fronting Bank to GmbH and the Sterling Facility
Loans made or to be made by the Sterling Lending Office of the Fronting Bank to
Limited pursuant to Section 3 and all liabilities of GmbH and Limited (whether
contingent or otherwise) incurred or to be incurred in connection with the
issuance of Collateral Instruments and delivery of Counter Indemnities pursuant
to Section 3.
International Facility Loan Request. See Sections 3.6 and 3.7.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or
<PAGE> 19
-19-
other commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at any
particular time: (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (ii) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid; (iii) there shall be deducted in
respect of each such Investment any amount received as a return of capital (but
only by repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (iv) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted when paid; and (v) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Lenders. The Banks and the Term B Lenders and, unless the context
otherwise requires, the Fronting Bank and the Issuing Bank, collectively, and
each individually being referred to as a "Lender".
Letter of Credit. See Section 5.1(a).
Letter of Credit Application. See Section 5.1(a).
Letter of Credit Participation. See Section 5.1(d).
Limited. See the preamble to this Credit Agreement. Following completion
of the English Asset Transfer and delivery of the Anderton Assumption
Agreement, all of Limited's liabilities, including without limitation its
liabilities under this Credit Agreement, shall be assumed by Anderton pursuant
to the English Asset Transfer, and upon such assumption and novation all
references herein to Limited shall be deemed to be references to Anderton.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Interest Rate Protection Documents,
the Anderton Assumption Agreement, the Counter Indemnities and the Security
Documents.
Loan Request. A Revolving Credit Loan Request or an International
Facility Loan Request or the Second US Tranche Request.
Loans. The Revolving Credit Loans, the International Facility Loans and
the Term Loans.
Majority Banks. As of any date, so long as there is only one Bank, such
Bank, and so long as there are at least two Banks, two Banks holding at least
sixty-six and two-thirds percent (66 2/3%) of the outstanding principal amount
of the Revolving Credit Notes and the Term A US Tranche Notes and of the
commitments to participate in the German Tranche and UK Tranche of Term Loan A
on such
<PAGE> 20
-20-
date; and if no such principal is outstanding, the Banks whose aggregate
Revolving Credit Commitments and Term A Commitments constitutes at least
sixty-six and two-thirds percent (66 2/3%) of the aggregate of such Commitments.
Majority Lenders. As of any date, so long as there is only one Lender,
such Lender, and so long as there are at least two Lenders, two Lenders whose
aggregate Revolving Credit Commitments, Term A Commitments, Term B Commitments
and commitments to participate in the German Tranche and UK Tranche of Term
Loan A and in the International Facility Loan, constitutes at least sixty-six
and two-thirds percent (66 2/3%) of the aggregate of such Commitments and
commitments.
Majority Term B Lenders. As of any date, so long as there is only one
Term B Lender, such Term B Lender, and so long as there are at least two Term B
Lenders, two Term B Lenders holding at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding principal amount of the Term B Notes on such date.
Maximum DM Amount. The maximum principal amount of International Facility
Loans denominated in Deutschmarks available to GmbH from the DM Lending Office
of the Fronting Bank, as such amount may be reduced from time to time in
accordance with the terms and provisions of this Credit Agreement. At the
Closing Date, prior to the drawdown of any International Facility Loans, the
Maximum DM Amount shall be the DM Equivalent of $4,000,000.
Maximum Sterling Amount. The maximum principal amount of International
Facility Loans denominated in Sterling available to Limited from the Sterling
Lending Office of the Fronting Bank, as such amount may be reduced from time to
time in accordance with the terms and provisions of this Credit Agreement. At
the Closing Date, prior to the drawdown of any International Facility Loans, the
Maximum Sterling Amount shall be the Sterling Equivalent of $2,000,000,
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Merger Documents. The Agreement of Merger entered into or to be entered
into on or before August 31, 1995, or such later date as may have been agreed
in writing by the Agent, between GmbH and Seeger-Orbis, whereby Seeger-Orbis
shall be merged into GmbH and the resulting German limited liability company (or
successor entity or partnership) shall be known as TransTechnology Seeger-Orbis
GmbH, together with the shareholder resolutions of Seeger-Orbis and GmbH with
respect to the proposed merger.
Mortgaged Property. Any Real Estate which is subject to any Mortgage or
German Mortgage or the Debenture.
Mortgages. The several mortgages and deeds of trust from TransTechnology
and its Subsidiaries to the Agent with respect to the fee and leasehold
interests of
<PAGE> 21
-21-
TransTechnology and its Subsidiaries in the Real Estate and in form and
substance satisfactory to the Lenders and the Agent.
Multiemployer Plan. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by TransTechnology or any ERISA
Affiliate.
NCFC. National Canada Finance Corp. and National Bank of Canada (New
York, New York), collectively.
Net Cash Proceeds. If from a sale of assets or of equity, the cash
proceeds received from such sale, net of all costs of sale, underwriting or
brokerage costs, and taxes paid or payable as a result thereof by
TransTechnology and its Subsidiaries, and if from the incurring of
Indebtedness, the cash proceeds received from such incurring of Indebtedness,
net of all costs thereof incurred and fees and all expenses payable in
connection therewith, and taxes paid or payable as a result thereof, by
TransTechnology and its Subsidiaries.
Net Working Capital Changes. For any fiscal period, the net change in
cash position resulting from changes from the immediately preceding like fiscal
period in (i) both billed and unbilled Accounts Receivable, (ii) current
accounts payable of TransTechnology and its Subsidiaries, (iii) current
accruals and accretions (exclusive of interest accruals and accretions) of
TransTechnology and its Subsidiaries and (iv) inventory of TransTechnology and
its Subsidiaries.
Notes. The Term Notes and the Revolving Credit Notes and the Collateral
Notes.
Obligations. All indebtedness, obligations and liabilities of any of
TransTechnology and its Subsidiaries to any of the Lenders and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any
of the Notes, Letter of Credit Applications, Letters of Credit, Interest Rate
Protection Documents, Counter Indemnities or other instruments at any time
evidencing any thereof.
Operating Leases. Leases (unless, otherwise stated, under which
TransTechnology or any of its Subsidiaries is the lessee or obligor) of any
property, whether real, personal or mixed, which are not Capitalized Leases.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
Parent Guaranty. The Guaranty, to be dated on or prior to the Closing
Date, made by TransTechnology in favour of the Agent, pursuant to which
TransTechnology guaranties to the Lenders and the Agent the payment and
<PAGE> 22
-22-
performance of the Obligations of GmbH and Limited, such Guaranty to be in form
and substance satisfactory to the Lenders and the Agent.
Patent Assignments. The several Patent Assignments, dated or to be dated
on or prior to the Closing Date, made by TransTechnology and its Subsidiaries
in favor of the Agent and in form and substance satisfactory to the Banks and
the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 10.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pricing Grid. See the definition of "Applicable Margin".
Projections. See Section 8.4.3.
Rate Setting Period. See the definition of "Applicable Margin".
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by TransTechnology or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Lender
with respect to any Loan referred to in such Note.
Reference Bank. FNBB.
Reference Period. A period of four (4) consecutive fiscal quarters, or,
except with respect to Ratio 1, such shorter period of one, two or three
consecutive fiscal quarters as has elapsed since July 1, 1995.
Reimbursement Obligation. TransTechnology's obligation to reimburse the
Agent, the Issuing Bank and the Banks on account of any drawing under any
Letter of Credit as provided in Section 5.2.
Rental Obligations. All present or future obligations of TransTechnology
or any of its Subsidiaries under any rental agreements or leases of real or
personal property, other than (i) obligations that can be terminated by the
giving of notice without liability to TransTechnology or such Subsidiary in
excess of the liability for rent due as of the date on which such notice is
given and under which no penalty or
<PAGE> 23
-23-
premium is paid as a result of any such termination and (ii) obligations in
respect of Capitalized Leases.
Reset Date. The first day of the month immediately following the month in
which a Compliance Certificate is to be delivered by TransTechnology pursuant
to Section 9.4(d).
Revolving Credit Availability. At any time of reference thereto, the
amount by which the lesser of (a) the Total Revolving Credit Commitment and (b)
the Borrowing Base, each as in effect at such time, exceeds the aggregate of
(i) the outstanding amount of Revolving Credit Loans at such time (after giving
effect to all amounts requested) plus (ii) the sum of the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations at such time.
Revolving Credit Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the amount of such Bank's commitment to make
Revolving Credit Loans to, and to participate in the issuance, extension and
renewal of Letters of Credit for the account of, TransTechnology, as the same
may be reduced from time to time, or if such commitment is terminated pursuant
to the provisions hereof, zero.
Revolving Credit Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Revolving Credit Commitments of all of the Banks.
Revolving Credit Loan Maturity Date. December 31, 2000.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to TransTechnology pursuant to Section 2.
Revolving Credit Loan Request. See Section 2.6.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
Revolving Credit Notes. See Section 2.4.
Second US Tranche. With respect to Term Loan A, the Tranche made or to be
made by the Banks to TransTechnology on the date of the completion of an
Approved Acquisition, which date shall be no later than March 31, 1997, in an
aggregate principal amount of up to $15,000,000, pursuant to Section 4A.1.4.
Second US Tranche Request. See Section 4A.1.4.
Security Agreements. The several Security Agreements, dated or to be
dated on or prior to the Closing Date, between TransTechnology and its
Subsidiaries and the Agent and in form and substance satisfactory to the
Lenders and the Agent.
<PAGE> 24
-24-
Security Documents. The Guaranties, the Security Agreements, the
Mortgages, the Patent Assignments, the Trademark Assignments, the Copyright
Mortgages, the German Security Documents, the English Security Documents, the
Collateral Assignments of Acquisition Documents and the Stock Pledge
Agreements, and any other documents or instruments from time to time securing
any of the Obligations or evidencing such security.
Seeger-Orbis. Seeger-Orbis GmbH, a German limited liability company.
Seeger-Orbis Financial Statements. See Section 8.4.2.
Senior Funded Indebtedness. At any time of determination, the aggregate
principal amount of all funded indebtedness for borrowed money (other than
Subordinated Debt) plus Capitalized Leases of TransTechnology and its
Subsidiaries.
Settling Date. See Section 2.8.2.
Share Purchase Agreement. The Share Purchase Agreement with respect to
the SO Acquisition between GmbH and Seeger-Orbis dated or to be dated on the
Acquisition Date.
SO Acquisition. The acquisition by GmbH of all of the issued and
outstanding share capital, in the aggregate nominal amount of DM 14,600,000, of
Seeger-Orbis on the Acquisition Date.
Sterling or Pound. Pounds sterling in the lawful currency of the United
Kingdom of Great Britain and Northern Ireland.
Sterling Base Rate. The annual rate of interest announced from time to
time by the Sterling Lending Office of the Fronting Bank as its "base rate" for
loans denominated in Sterling.
Sterling Equivalent. On any date of determination, with respect to an
amount denominated in Sterling, such amount of Sterling, and with respect to an
amount denominated in Deutschmarks or Dollars, the amount of Sterling which
could be purchased with that amount of Deutschmarks or Dollars, as the case may
be, at the spot rate of exchange quoted by the Fronting Bank in the London
Foreign Exchange Market at or about 11:00 a.m. (London time) on the date of
determination for the purchase of Sterling with Deutschmarks or Dollars, as the
case may be.
Sterling Eurocurrency Loan. See Section 3.3.
Sterling Eurocurrency Rate. For any Interest Period with respect to a
Sterling Loan, the rate of interest equal to the rate per annum (rounded
upwards to the nearest 1/16 of one percent) at which the Fronting Bank's
Sterling Lending Office is offered deposits in Sterling two (2) Eurocurrency
Business Days prior to the beginning of such Interest Period in the London
interbank market for delivery
<PAGE> 25
-25-
on the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of the Sterling Loan to which
such Interest Period applies, divided by (ii) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
Sterling Facility Loans. The Sterling Eurocurrency Loans and the Sterling
Overdraft Advances, collectively.
Sterling Lending Office. Initially, the London Branch of FNBB in its
capacity as Fronting Bank; and thereafter such office at the Fronting Bank, in
its sole discretion acting in good faith, may notify to the Agent and
TransTechnology.
Sterling Loan. Any International Facility Loan or portion of Term Loan A
which is denominated in pounds Sterling.
Sterling Overdraft Advance. See Section 3.3.
Stock Pledge Agreements. The Stock Pledge Agreements, dated or to be
dated on or prior to the Closing Date, between TransTechnology and certain of
the Guarantors on the one hand and the Agent on the other hand with respect to
each of the Subsidiaries of TransTechnology, each in form and substance
satisfactory to the Lenders and the Agent.
Subordinated Debt. Unsecured Indebtedness of TransTechnology or any of
its Subsidiaries that is expressly subordinated and made junior to the payment
and performance in full of the Obligations, and evidenced as such by a written
instrument containing subordination provisions in form and substance approved
by the Majority Lenders in writing.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Subsidiary Guaranty. The Guaranty, dated or to be dated on or prior to
the Closing Date, made by each Subsidiary of TransTechnology incorporated in
the United States of America or any state, territory or commonwealth thereof in
favor of the Lenders and the Agent pursuant to which each such Subsidiary of
TransTechnology guaranties to the Lenders and the Agent the payment and
performance of the Obligations, such Guaranty to be in form and substance
satisfactory to the Lenders and the Agent.
Survey. In relation to a Mortgaged Property, an instrument survey of such
Mortgaged Property acceptable to the Agent.
Term A Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's commitment to make the First US
Tranche and the Second US Tranche of Term Loan A to TransTechnology, and to
<PAGE> 26
-26-
participate in the German Tranche and the UK Tranche of Term Loan A, as such
commitment may be reduced from time to time, or if such commitment is terminated
pursuant to the provisions hereof, zero.
Term A Commitment Percentage. With respect to each Bank, the percentage
set forth on Schedule 1 hereto as such Bank's percentage of the aggregate Term
A Commitments of all of the Banks.
Term A German Tranche Note. See Section 4A.2.2
Term A Notes. Collectively, the Term A German Tranche Note, the Term A
UK Tranche Note and the Term A US Tranche Notes, and each individually a "Term
A Note".
Term A Note Record. A Record with respect to a Term A Note,
Term A UK Tranche Note. See Section 4A.2.3
Term A US Tranche Notes. See Section 4A.2.1
Term B Commitment. With respect to each Term B Lender, the amount set
forth on Schedule 2 hereto as the amount of such Term B Lender's commitment to
make Term Loan B to TransTechnology.
Term B Commitment Percentage. With respect to each Term B Lender, the
percentage set forth on Schedule 2 hereto as such Term B Lender's percentage of
the aggregate Term B Commitments of all of the Term B Lenders.
Term B Lenders. FNBB and the other lending institutions listed on
Schedule 2 hereto and any other Person who becomes an assignee of any rights
and obligations of a Term B Lender pursuant to Section 20.
Term B Notes. See Section 4B.2.
Term B Note Record. A Record with respect to a Term B Note.
Term Loan A. The term loan facility made available by the Banks and the
Fronting Bank to the Borrowers on the Closing Date and, with respect to the
Second US Tranche, on the Approved Acquisition Date, in an aggregate principal
amount of up to $50,000,000, pursuant to Section 4A.1.
Term Loan A Maturity Date. December 31, 2000.
Term Loan B. The term loan made or to be made by the Term B Lenders to
TransTechnology on the Closing Date in the aggregate principal amount of
$25,000,000 pursuant to Section 4B.1.
Term Loan B Maturity Date. June 30, 2002.
<PAGE> 27
-27-
Term Loans. Term Loan A and Term Loan B, collectively, and each
individually a "Term Loan".
Term Notes. Collectively, the Term A Notes and the Term B Notes, and each
individually a "Term Note".
Term Note Record. A Record with respect to a Term Note.
Title Insurance Company. Commonwealth Land Title Insurance Company.
Title Policy. In relation to each Mortgaged Property located in the
United States of America, an ALTA standard form title insurance policy issued
by the Title Insurance Company (with such reinsurance or co-insurance as the
Agent may require, any such reinsurance to be with direct access endorsements)
in such amount as may be determined by the Agent insuring the priority of the
Mortgage of such Mortgaged Property and that TransTechnology or one of its
Subsidiaries holds marketable fee simple title to such Mortgaged Property,
subject only to the encumbrances permitted by such Mortgage and which shall not
contain exceptions for mechanics liens or persons in occupancy (except as may
be permitted by such Mortgage), shall not insure over any matter except to the
extent that any such affirmative insurance is acceptable to the Agent in its
sole discretion, and shall contain such endorsements and affirmative insurance
as the Agent in its discretion may require.
Total DM Facility Usage. See Section 3.1.
Total Revolving Credit Commitment. The sum of the Revolving Credit
Commitments of the Banks, as in effect from time to time.
Total Sterling Facility Usage. See Section 3.3.
Trademark Assignments. The several Trademark Assignments, dated or to
be dated on or prior to the Closing Date, made by TransTechnology and its
Subsidiaries in favor of the Agent and in form and substance satisfactory to
the Banks and the Agent.
Tranche. With respect to Term Loan A, the distinction between the First US
Tranche, the Second US Tranche, the UK Tranche and the German Tranche of
Term Loan A.
TransTechnology Group. TransTechnology and all of its Subsidiaries on a
consolidated basis.
TTSO Inc. TransTechnology Seeger-Orbis Inc., a Delaware corporation.
Type. As to any Revolving Credit Loan, International Facility Loan,
International Facility Loan or all or any portion of any Term Loan, its nature
as a Base Rate Loan or a Eurocurrency Rate Loan.
<PAGE> 28
-28-
UK Tranche. With respect to Term Loan A, the Tranche of that Term Loan
made or to be made in Sterling by the Sterling Lending Office of the Fronting
Bank to Limited on the Closing Date, in the aggregate principal amount of the
Sterling Equivalent of $8,000,000, pursuant to Section 4A.1.3.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto
adopted by the Agent in the ordinary course of its business as a letter of
credit issuer and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for
which TransTechnology does not reimburse the Agent and the Banks on the date
specified in, and in accordance with, Section 5.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
WTI. Waldes Truarc, Inc., a Delaware corporation.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings
<PAGE> 29
-29-
assigned to them therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section" refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in
this Credit Agreement, each of the Banks severally agrees to lend to
TransTechnology and TransTechnology may borrow, repay, and reborrow from time
to time between the Closing Date and the Revolving Credit Loan Maturity Date
upon notice by TransTechnology to the Agent given in accordance with Section
2.6, such sums in Dollars as are requested by TransTechnology up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Revolving Credit Commitment minus such Bank's
Revolving Credit Commitment Percentage of the sum of the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations, provided that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) plus the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the lesser of (i) the Total Revolving
Credit Commitment and (ii) the Borrowing Base. The Revolving Credit Loans shall
be made pro rata in accordance with each Bank's Revolving Credit Commitment
Percentage. Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by TransTechnology that the conditions
set forth in Section 12 and Section 13, in the case of the initial Revolving
Credit Loans to be made on the Closing Date, and Section 13, in the case of all
other Revolving Credit Loans, have been satisfied on the date of such request.
2.2. REVOLVING CREDIT COMMITMENT FEE. TransTechnology agrees to pay to
the Agent for the accounts of the Banks in accordance with their respective
Revolving Credit Commitment Percentages a commitment fee calculated at the
Commitment Fee Rate per annum on (a) the average daily amount during each
calendar quarter or portion thereof from the Closing Date to the Revolving
Credit Loan Maturity Date by which the Total Revolving Credit Commitment minus
the sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations
exceeds the outstanding amount of Revolving Credit Loans during such calendar
quarter and (b) the average daily amount during each calendar quarter of the
unused availability under the international credit facilities provided in
Section 3. The revolving credit commitment fee shall be payable quarterly in
arrears on the first day of each calendar quarter for the immediately preceding
calendar quarter, commencing on the first such date following the date hereof,
with a final payment on the Revolving Credit Loan Maturity Date or any earlier
date on which the Revolving Credit Commitments shall terminate.
<PAGE> 30
-30-
2.3. REDUCTION OF TOTAL REVOLVING CREDIT COMMITMENT. TransTechnology
shall have the right at any time and from time to time upon five (5) Business
Days prior written notice to the Agent to reduce by $1,000,000 or an integral
multiple thereof or terminate entirely the Total Revolving Credit Commitment,
whereupon the Revolving Credit Commitments of the Banks shall be reduced pro
rata in accordance with their respective Revolving Credit Commitment
Percentages of the amount specified in such notice or, as the case may be,
terminated. Promptly after receiving any notice of TransTechnology delivered
pursuant to this Section 2.3, the Agent will notify the Banks of the substance
thereof. Upon the effective date of any such reduction or termination,
TransTechnology shall pay to the Agent for the respective accounts of the Banks
the full amount of any commitment fee then accrued on the amount of the
reduction. No reduction or termination of the Revolving Credit Commitments may
be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of TransTechnology in substantially the
form of Exhibit B hereto (each a "Revolving Credit Note"), dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Revolving Credit Commitment or, if less, the outstanding amount of
all Revolving Credit Loans made by such Bank, plus interest accrued thereon, as
set forth below. TransTechnology irrevocably authorizes each Bank to make or
cause to be made, at or about the time of the Drawdown Date of any Revolving
Credit Loan or at the time of receipt of any payment of principal on such Bank's
Revolving Credit Note, an appropriate notation on such Bank's Revolving Credit
Note Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Revolving
Credit Loans set forth on such Bank's Revolving Credit Note Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to such
Bank, but the failure to record, or any error in so recording, any such amount
on such Bank's Revolving Credit Note Record shall not limit or otherwise affect
the obligations of TransTechnology hereunder or under any Revolving Credit Note
to make payments of principal of or interest on any Revolving Credit Note when
due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided
in Section 6.11, the Revolving Credit Loans shall bear interest as follows:
(a) each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest
Period with respect thereto at a rate per annum equal to the sum of (i)
the Dollar Base Rate plus (ii) the Applicable Margin with respect to Base
Rate Loans as in effect from time to time; and
(b) each Eurocurrency Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at a rate per annum equal to the
sum of (i) the Eurodollar Rate determined for such Interest Period plus
(ii)
<PAGE> 31
-31-
the Applicable Margin with respect to Eurocurrency Rate Loans as in effect
from time to time.
TransTechnology promises to pay interest on each Revolving Credit Loan in
arrears on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. TransTechnology shall give to
the Agent written notice in the form of Exhibit C hereto (or telephonic notice
confirmed in writing in the form of Exhibit C hereto) of each Revolving Credit
Loan requested hereunder (a "Revolving Credit Loan Request") no less than (i)
one (1) Business Days prior to the proposed Drawdown Date of any Base Rate Loan
or at such other time as may be agreed by TransTechnology and the Agent, and
(ii) three (3) Eurocurrency Business Days prior to the proposed Drawdown Date
of any Eurocurrency Rate Loan. Each Revolving Credit Loan Request shall specify
(A) the principal amount of the Revolving Credit Loan requested, (B) the
proposed Drawdown Date of such Revolving Credit Loan, (C) the Interest Period
for such Revolving Credit Loan, (D) the Type of such Revolving Credit Loan and
(E) the account or accounts to which the principal amount of such Revolving
Credit Loan is to be transferred. Promptly upon receipt of any such notice, the
Agent shall notify each of the Banks thereof. Each Revolving Credit Loan
Request shall be irrevocable and binding on TransTechnology and shall obligate
TransTechnology to accept the Revolving Credit Loan requested from the Banks
or, as the case may be, from the Agent on behalf of the Banks, on the proposed
Drawdown Date therefor.
2.7. CONVERSION OPTIONS.
2.7.1 CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
TransTechnology may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
provided that (i) with respect to any such conversion of a Revolving
Credit Loan to a Base Rate Loan, TransTechnology shall give the Agent at
least one (1) Business Days prior written notice of such election; (ii)
with respect to any such conversion of a Base Rate Loan to a Eurocurrency
Rate Loan, TransTechnology shall give the Agent at least three (3)
Eurocurrency Business Days prior written notice of such election; (iii)
with respect to any such conversion of a Eurocurrency Rate Loan into a
Revolving Credit Loan of another Type, such conversion shall only be made
on the last day of the Interest Period with respect thereto and (iv) no
Loan may be converted into a Eurocurrency Rate Loan when any Default or
Event of Default has occurred and is continuing. All or any part of
outstanding Revolving Credit Loans of any Type may be converted into a
Revolving Credit Loan of another Type as provided herein, provided that
any partial conversion shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. Each Conversion Request relating
to the conversion of a Revolving Credit Loan to a Eurocurrency Rate Loan
shall be irrevocable by TransTechnology.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Revolving Credit Loan of any Type may be continued as a Revolving Credit
<PAGE> 32
-32-
Loan of the same Type upon the expiration of an Interest Period with
respect thereto by compliance by TransTechnology with the notice
provisions contained in Section 2.7.1; provided that no Eurocurrency Rate
Loan may be continued as such when any Default or Event of Default has
occurred and is continuing, but shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of which
officers of the Agent active upon TransTechnology's account have actual
knowledge. In the event that TransTechnology fails to provide any such
notice with respect to the continuation of any Eurocurrency Rate Loan as
such, then such Eurocurrency Rate Loan shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating
thereto. The Agent shall notify the Banks promptly when any such automatic
conversion contemplated by this Section 2.7 is scheduled to occur.
2.7.3. EUROCURRENCY RATE LOANS. Any conversion to or from
Eurocurrency Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurocurrency Rate Loans having the same Interest
Period shall not be less than $5,000,000 or a whole multiple of $1,000,000
in excess thereof.
2.8 FUNDS FOR REVOLVING CREDIT LOANS.
2.8.1. FUNDING ACCOUNT. Not later than 11:00 a.m. (Boston time) on
the proposed Drawdown Date of any Revolving Credit Loans, upon receipt of
the documents required by Sections 12 and 13 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent
will make available in immediately available funds, the amount of the
requested Revolving Credit Loans by transferring such amount from
TransTechnology's account with the Agent's Head Office, identified as the
"TransTechnology Funding Account" (the "Funding Account"), to such account
or accounts as TransTechnology shall have identified in its Revolving
Credit Loan Request pursuant to Section 2.6(E).
2.8.2. FUNDING OF FUNDING ACCOUNT. Not later than 11:00 a.m.
(Boston time) on the last Business Day of each calendar week, or on such
other time or date as the Agent may designate to the Banks from time to
time (each such time, a "Settling Date"), each of the Banks will make
available to the Agent, at its Head Office, in immediately available
funds, the amount of such Bank's Revolving Credit Commitment Percentage of
the debit balance on the Funding Account immediately prior to such
Settling Date. Upon receipt from each Bank of such amounts, the Agent will
credit the aggregate amount made available to the Agent by the Banks on
such Settling Date to the Funding Account. The failure or refusal of any
Bank to make available to the Agent at the aforesaid time and place on any
Settling Date the amount of its Revolving Credit Commitment Percentage of
the debit balance on the Funding Account immediately prior to such
Settling Date shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of
<PAGE> 33
-33-
such other Bank's Revolving Credit Commitment Percentage of such debit
balance.
2.8.3. CREDITS TO FUNDING ACCOUNT BY AGENT. The Agent may, unless
notified to the contrary by any Bank prior to a Settling Date, assume that
such Bank has made available to the Agent on such Settling Date the
amount of such Bank's Revolving Credit Commitment Percentage of the debit
balance on the Funding Account immediately prior to such Settling Date,
and the Agent may (but it shall not be required to), in reliance upon such
assumption, deposit a corresponding amount in the Funding Account. If any
Bank makes available to the Agent such amount at any time after such
Settling Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (i) the average computed for the period referred to in
clause (iii) below, of the weighted average interest rate paid by the
Agent for federal funds acquired by the Agent during each day included in
such period, times (ii) the amount of such Bank's Revolving Credit
Commitment Percentage of such debit balance on the Funding Account, times
(iii) a fraction, the numerator of which is the number of days that elapse
from and including the date of such Settling Date to the date on which the
amount of such Bank's Revolving Credit Commitment Percentage of such debit
balance shall become immediately available to the Agent, and the
denominator of which is 360. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such Bank. If
the amount of such Bank's Revolving Credit Commitment Percentage of such
debit balance is not made available to the Agent by such Bank within three
(3) Business Days following such Settling Date, the Agent shall be
entitled to recover such amount from TransTechnology on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit
Loans made most recently preceding such Settling Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
monthly (or at such other interval as may be specified pursuant to Section
9.4(f) by the Agent by reference to the Borrowing Base Report delivered to the
Banks and the Agent pursuant to Section 9.4(f).
2.10. MATURITY OF REVOLVING CREDIT LOANS. TransTechnology promises to pay
on the Revolving Credit Loan Maturity Date, and there shall become absolutely
due and payable on the Revolving Credit Loan Maturity Date, all of the
Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
2.11. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
sum of the outstanding amount of the Revolving Credit Loans, the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations exceeds the lesser of
(i) the Total Revolving Credit Commitment and (ii) the Borrowing Base, then
TransTechnology shall immediately pay the amount of such excess to the Agent
for the respective accounts of the Banks for application: first, to any Unpaid
<PAGE> 34
-34-
Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to
provide to the Agent cash collateral for Reimbursement Obligations as
contemplated by Section 5.2(b) and (c). Each payment of any Unpaid Reimbursement
Obligations or prepayment of Revolving Credit Loans shall be allocated among
the Banks, in proportion, as nearly as practicable, to each Reimbursement
Obligation or (as the case may be) the respective unpaid principal amount of
each Bank's Revolving Credit Note, with adjustments to the extent practicable
to equalize any prior payments or repayments not exactly in proportion.
2.12. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. TransTechnology
shall have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any Eurocurrency Rate Loans pursuant to this Section 2.12 may be made only
on the last day of the Interest Period relating thereto, unless all costs in
connection with such prepayment are paid in full simultaneously with such
prepayment pursuant to Section 6.10. TransTechnology shall give the Agent, no
later than 10:00 a.m., Boston time, at least three (3) Business Days prior
written notice of any proposed prepayment pursuant to this Section 2.12 of Base
Rate Loans, and four (4) Eurocurrency Business Days notice of any proposed
prepayment pursuant to this Section 2.12 of Eurocurrency Rate Loans, in each
case specifying the proposed date of prepayment of Revolving Credit Loans and
the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of $1,000,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of prepayment and shall be applied, in the absence of instruction by
TransTechnology, first to the principal of Base Rate Loans and then to the
principal of Eurocurrency Rate Loans or both, at the Agent's option. Each
partial prepayment shall be allocated among the Banks, in proportion, as nearly
as practicable, to the respective unpaid principal amount of each Bank's
Revolving Credit Note, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
3. INTERNATIONAL CREDIT FACILITY.
3.1. DM FACILITY LOANS. Subject to the terms and conditions set forth in
this Credit Agreement, (a) the Fronting Bank agrees to lend to GmbH and GmbH
may borrow, repay, and reborrow from time to time between the Closing Date and
the Revolving Credit Loan Maturity Date either (i) upon notice by GmbH to the
Fronting Bank's DM Lending Office given in accordance with Section 3.6, Loans in
Deutschmarks for a specified Interest Period to bear interest at the DM
Eurocurrency Rate (the "DM Eurocurrency Loans"), or (ii) by means of overdraft
advances on GmbH's DM current account with the Fronting Bank's DM Lending
Office (the "DM Overdraft Advances") and (b) the Fronting Bank agrees to issue
Collateral Instruments to or for the account of GmbH upon receipt by it of a
duly-completed and executed Counter Indemnity from GmbH in respect of each
such Collateral Instrument, in form and substance satisfactory to the Fronting
Bank, provided that the aggregate amount of all liabilities of GmbH in respect
of all such Counter Indemnities (whether contingent or otherwise) plus the
total amount of DM
<PAGE> 35
-35-
Eurocurrency Loans and DM Overdraft Advances outstanding at any one time (after
giving effect to all amounts requested) (such aggregate amount being referred
to herein as "Total DM Facility Usage") shall not exceed the DM Equivalent at
such time of $4,000,000. Each request for a DM Eurocurrency Loan or Collateral
Instruments hereunder and each acceptance of a DM Overdraft Advance under this
Section 3.1 shall constitute a representation and warranty by GmbH that the
conditions set forth in Section 12 and Section 13, in the case of the initial
DM Facility Loans or Collateral Instruments (if any) to be made or issued on
the Closing Date, and Section 13, in the case of all other DM Facility Loans or
Collateral Instruments, have been satisfied on the date of such request or
acceptance, as the case may be.
3.2. MANDATORY REPAYMENTS OF DM FACILITY LOANS. If at any time, for any
reason whatsoever, including without limitation fluctuations in currency rates
(a) Total DM Facility Usage exceeds by more that 5% the DM Equivalent at such
time of $4,000,000, or (b) the sum of (i) Total DM Facility Usage plus (ii) the
aggregate amount of the German Tranche of Term Loan A plus (iii) all repayments
of the principal amount of the German Tranche of Term Loan A made or required
to be made on or prior to such time exceeds by more than 5% the DM Equivalent
at such time of $16,000,000, then GmbH shall immediately pay the respective
excess amount(s), up to a maximum amount required to be repaid pursuant to
Section 3.2(b) equal to the amount of Total DM Facility Usage at such time, for
application first, to reduce the outstanding amount of DM Overdraft Advances,
second, to provide cash collateral in respect of any outstanding Counter
Indemnities and third, to any DM Eurocurrency Loans then outstanding.
3.3. STERLING FACILITY LOANS. Subject to the terms and conditions set
forth in this Credit Agreement, (a) the Fronting Bank agrees to lend to Limited
and Limited may borrow, repay, and reborrow from time to time between the
Closing Date and the Revolving Credit Loan Maturity Date either (i) upon notice
by Limited to the Fronting Bank's Sterling Lending Office given in accordance
with Section 3.7, Loans in Sterling for a specified Interest Period to bear
interest at the Sterling Eurocurrency Rate (the "Sterling Eurocurrency Loans"),
or (ii) by means of overdraft advances on Limited's Sterling current account
with the Fronting Bank's Sterling Lending Office (the "Sterling Overdraft
Advances"), and (b) the Fronting Bank agrees to issue Collateral Instruments to
or for the account of Limited upon receipt by it of a duly-completed and
executed Counter Indemnity from Limited in respect of each such Collateral
Instrument, in form and substance satisfactory to the Fronting Bank provided
that that aggregate amount of all liabilities of Limited in respect of all such
Counter Indemnities (whether contingent or otherwise) plus the total amount of
Sterling Eurocurrency Loans and Sterling Overdraft Advances outstanding at any
one time (after giving effect to all amounts requested) (such aggregate amount
being referred to herein as "Total Sterling Facility Usage") shall not exceed
the Sterling Equivalent at such time of $2,000,000. Each request for a Sterling
Eurocurrency Loan hereunder or Collateral Instrument and each acceptance of a
Sterling Overdraft Advance under this Section 3.3 shall constitute a
representation and warranty by Limited that the conditions set forth in Section
12 and Section 13, in the case of the initial Sterling Facility Loans or
Collateral Instrument (if any) to be made or issued on the Closing Date, and
Section 13, in the case of all other
<PAGE> 36
-36-
Sterling Facility Loans or Collateral Instruments, have been satisfied on
the date of such request or acceptance, as the case may be.
3.4. MANDATORY REPAYMENTS OF STERLING FACILITY LOANS. If at any
time, for any reason whatsoever, including without limitation fluctuations
in currency rates (a) Total Sterling Facility Usage exceeds by more than
5% the Sterling Equivalent at such time of $2,000,000, or (b) the sum of
(i) Total Sterling Facility Usage plus (ii) the aggregate amount of the UK
Tranche of Term Loan A plus (iii) all repayments of the principal amount
of the UK Tranche of Term Loan A made or required to be made on or prior
to such time exceeds by more than 5% the Sterling Equivalent at such time
of $10,000,000, then Limited shall immediately pay the respective excess
amount(s), up to a maximum amount required to be repaid pursuant to
Section 3.4(b) equal to the amount of Total Sterling Facility Usage at
such time, for application first, to reduce the outstanding amount of
Sterling Overdraft Advances, second to provide cash collateral in respect
of any outstanding Counter Indemnities, and third, to any Sterling
Eurocurrency Loans then outstanding.
3.5. INTEREST ON INTERNATIONAL FACILITY LOANS. Except as
otherwise provided in Section 6.11, the International Facility Loans shall
bear interest as follows:
(a) with respect to DM Overdraft Advances, interest shall be
payable by GmbH on the day-to-day balance in GmbH's current account
maintained with the Fronting Bank's DM Lending Office at a rate per
annum equal to the sum of (i) the DM Base Rate plus (ii) the
Applicable Margin with respect to Base Rate Loans as in effect from
time to time; and shall be deducted from such current account on the
last Eurocurrency Business Day of each calendar month or on such
other monthly date as such Lending Office may reasonably require
such payments;
(b) with respect to Sterling Overdraft Advances, interest shall
be payable by Limited on the day-to-day balance in Limited's current
account maintained with the Fronting Bank's Sterling Lending Office
at a rate per annum equal to the sum of (i) the Sterling Base Rate
plus (ii) the Applicable Margin with respect to Eurocurrency Rate
Loans as in effect from time to time; and shall be deducted from such
current account on the last Eurocurrency Business Day of each
calendar month or on such other monthly date as such Lending Office
may reasonably require such payments;
(c) each DM Eurocurrency Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at a rate per
annum equal to the sum of (i) the DM Eurocurrency Rate determined for
such Interest Period plus (ii) the Applicable Margin with respect to
Eurocurrency Rate Loans as in effect from time to time. GmbH promises
to pay interest, in accordance with Section 6.3.2, on each DM
Eurocurrency Loan in arrears on each Interest Payment Date with
respect thereto; and
<PAGE> 37
-37-
(d) each Sterling Eurocurrency Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at a rate per annum equal
to the sum of (i) the Sterling Eurocurrency Rate determined for such
Interest Period plus (ii) the Applicable Margin with respect to
Eurocurrency Rate Loans as in effect from time to time. Limited promises
to pay interest, in accordance with Section 6.3.2, on each Sterling
Eurocurrency Loan in arrears on each Interest Payment Date with respect
thereto.
3.6. REQUESTS FOR DM EUROCURRENCY LOANS. GmbH shall give to the Fronting
Bank's DM Lending Office written notice substantially in the form of Exhibit C
hereto (or telephonic notice confirmed in a writing in the form of Exhibit C
hereto) of each DM Eurocurrency Loan requested hereunder (an "International
Facility Loan Request") no less than (i) two (2) Eurocurrency Business Days
prior to the proposed Drawdown Date of such Eurocurrency Rate Loan. Each such
notice shall specify (A) the principal amount of the Loan requested, (B) the
proposed Drawdown Date of such Loan, (C) the Interest Period for such Loan and
(D) the Type of such Loan. Each International Facility Loan Request for a DM
Eurocurrency Loan shall be irrevocable and binding on GmbH and shall obligate
GmbH to accept the DM Eurocurrency Loan requested on the proposed Drawdown Date
therefor. Each such International Facility Loan Request shall be in a minimum
aggregate amount of the DM Equivalent of $100,000 or an integral multiple
thereof.
3.7. REQUESTS FOR STERLING EUROCURRENCY LOANS. Limited shall give to the
Fronting Bank's Sterling Lending Office written notice substantially in the
form of Exhibit C hereto (or telephonic notice confirmed in a writing in the
form of Exhibit C hereto) of each Sterling Eurocurrency Loan requested
hereunder (also referred to herein as an "International Facility Loan Request")
no less than (i) two (2) Eurocurrency Business Days prior to the proposed
Drawdown Date of such Eurocurrency Rate Loan. Each such notice shall specify
(A) the principal amount of the Loan requested, (B) the proposed Drawdown Date
of such Loan, (C) the Interest Period for such Loan and (D) the Type of such
Loan. Each International Facility Loan Request for a Sterling Eurocurrency Loan
shall be irrevocable and binding on Limited and shall obligate Limited to
accept the Sterling Eurocurrency Loan requested on the proposed Drawdown Date
therefor. Each such International Facility Loan Request shall be in a minimum
aggregate amount of the Sterling Equivalent of $100,000 or an integral multiple
thereof.
3.8. EVIDENCE OF DM FACILITY LOANS. The obligations of GmbH to repay all
amounts borrowed by it as DM Eurocurrency Loans and DM Overdraft Advances, all
interest thereon and all other amounts payable by it in respect thereof shall
be evidenced by this Credit Agreement, it being the intention of the parties
hereto that GmbH's obligations with respect to the DM Facility Loans owed by it
is evidenced only as stated herein and not by separate promissory notes or
other instruments.
<PAGE> 38
-38-
3.9. EVIDENCE OF STERLING FACILITY LOANS. The obligations of Limited to
repay all amounts borrowed by it as Sterling Eurocurrency Loans and Sterling
Overdraft Advances, all interest thereon and all other amounts payable by it in
respect thereof shall be evidenced by this Credit Agreement, it being the
intention of the parties hereto that Limited's obligations with respect to the
Sterling Facility Loans owed by it is evidenced only as stated herein and not
by separate promissory notes or other instruments.
3.10. MATURITY OF DM FACILITY LOANS. GmbH promises to pay on the Revolving
Credit Loan Maturity Date, or such earlier date as the Total Revolving Credit
Commitment shall terminate or the obligations with respect to the International
Facility Loan shall be accelerated in accordance with Section 14, and there
shall become absolutely due and payable on the Revolving Credit Loan Maturity
Date or such earlier date, all of the DM Facility Loans outstanding on such
date, together with any and all accrued and unpaid interest thereon, and to
provide on such date cash collateral satisfactory to the Fronting Bank for the
aggregate amount of all liabilities of GmbH (whether contingent or otherwise)
in respect of all Counter Indemnities outstanding on such date.
3.11. MATURITY OF STERLING FACILITY LOANS. Limited promises to pay on the
Revolving Credit Loan Maturity Date, or such earlier date as the Total
Revolving Credit Commitment shall terminate or the obligations with respect to
the International Facility Loan shall be accelerated in accordance with Section
14, and there shall become absolutely due and payable on the Revolving Credit
Loan Maturity Date or such earlier date, all of the Sterling Facility Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon, and to provide on such date cash collateral satisfactory to the
Fronting Bank for the aggregate amount of all liabilities of Limited (whether
contingent or otherwise) in respect of all Counter Indemnities outstanding on
such date.
4A. TERM LOAN A.
4A.1. COMMITMENT TO LEND.
4A.1.1. FIRST US TRANCHE. Subject to the other terms and conditions
set forth in this Credit Agreement, each Bank agrees to lend to
TransTechnology on the Closing Date, in Dollars, the amount of its Term A
Commitment Percentage of the principal amount of $15,000,000.
4A.1.2 GERMAN TRANCHE. Subject to the terms and conditions set
forth in this Credit Agreement, the Fronting Bank agrees to lend to GmbH
on the Closing Date, in Deutschmarks, the principal amount of the DM
Equivalent of $12,000,000.
4A.1.3. UK TRANCHE. Subject to the terms and conditions set forth
in this Credit Agreement, the Fronting Bank agrees to lend to Limited on
the Closing Date, in Sterling, the principal amount of the Sterling
Equivalent of $8.000,000.
<PAGE> 39
-39-
4A.1.4. SECOND US TRANCHE. In addition to the other terms and
conditions set forth in this Credit Agreement, the availability of the
Second US Tranche of Term Loan A is subject to the fulfillment of the
additional conditions that (a) the proceeds of such Loan shall be used by
TransTechnology or another member of the TransTechnology Group to finance
an acquisition which the Majority Banks is satisfied meets the requirements
set forth in the definition of "Approved Acquisition," (b) no less than
thirty (30) days prior to the proposed Approved Acquisition Date,
TransTechnology shall have given to the Agent written notice substantially
in the form of Exhibit C hereto (the "Second US Tranche Request")
specifying (A) the principal amount of Loan requested, which shall be in a
minimum aggregate amount of $1,000,000 or an integral multiple thereof, up
to a maximum principal amount of $15,000,000, (B) the proposed Drawdown
Date of such Loan (the "Approved Acquisition Date"), which shall in no
event be later than March 31, 1997, (C) the Interest Period for such Loan
and (D) the Type of such Loan, and (c) TransTechnology shall have delivered
to each of the Banks copies of the proposed sale and purchase agreement
with respect to the Approved Acquisition as soon as practicable after such
becomes available, and in any event a sufficient number of Business Days
prior to the proposed Approved Acquisition Date to permit the Banks to
determine whether the proposed acquisition meets the requirements set forth
in the definition of "Approved Acquisition". Subject to fulfillment of all
of the conditions referred to in the preceding sentence, each Bank agrees
to lend to TransTechnology on the Approved Acquisition Date the amount of
its Term A Commitment Percentage of the principal amount of Loan requested
in the Second US Tranche Request. The Agent shall notify each of the Banks
promptly upon its receipt of the Second US Tranche Request. The Second US
Tranche Request may be delivered once only, shall be irrevocable and
binding on TransTechnology, and shall oblige TransTechnology to accept the
Second US Tranche of Term Loan A in the principal amount requested from the
Banks on the Approved Acquisition Date. Upon delivery of the Second US
Tranche Request, the aggregate Term A Commitments of the Banks shall
immediately terminate with respect to the amount (if any) by which
$15,000,000 exceeds the principal amount requested in the Second US Tranche
Request. If no Second US Tranche Request has been delivered to the Agent on
or before the fourth Business Day prior to March 31, 1997, the then unused
Term A Commitments of the Banks shall terminate with effect from March 31,
1997.
4A.2. THE TERM A NOTES.
4A.2.1 TERM A US TRANCHE NOTES. The First US Tranche and the Second US
Tranche of Term Loan A shall be evidenced by separate promissory notes of
TransTechnology in substantially the form of Exhibit D-1 hereto (each a
"Term A US Tranche Note"), dated the Closing Date and completed with
appropriate insertions. One Term A US Tranche Note shall be payable to the
order of each Bank with respect to each of the First US Tranche and the
Second US Tranche of Term Loan A in a principal amount equal to such Bank's
Term A Commitment Percentage of representing the obligation of
<PAGE> 40
-40-
TransTechnology to pay to such Bank such principal amounts or, if less,
the outstanding amount of such Bank's Term A Commitment Percentage of the
First US Tranche and the Second US Tranche of Term Loan A, plus interest
accrued thereon, as set forth below. TransTechnology irrevocably authorizes
each Bank to make or cause to be made a notation or notations on the
Record(s) of the Term A US Tranche Notes held by such Bank reflecting the
original principal amount of such Bank's Term A Commitment Percentage of
the applicable Tranches of Term Loan A and, at or about the time of such
Bank's receipt of any principal payment on such Bank's Term A Note(s), an
appropriate notation on such Bank's Term A US Tranche Note Record(s)
reflecting such payment. The aggregate unpaid amount set forth on such
Record(s) shall be prima facie evidence of the principal amount thereof
owing and unpaid to such Bank, but the failure to record, or any error in
so recording, any such amount on such Record(s) shall not affect the
obligations of TransTechnology or any other Borrower hereunder or under any
Term Note to make payments of principal of and interest on any Term Note
when due.
4A.2.2. TERM A GERMAN TRANCHE NOTE. The German Tranche of Term Loan A
shall be evidenced by a promissory note of GmbH in substantially the form
of Exhibit D-2 hereto (a "Term A German Tranche Note"), dated the Closing
Date and completed with appropriate insertions. The Term A German Tranche
Note shall be payable to the order of the Fronting Bank in a principal
amount equal to the German Tranche of Term Loan A, representing the
obligation of GmbH to pay to the Fronting Bank such principal amount, plus
interest accrued thereon as set forth below. GmbH irrevocably authorizes
the Fronting Bank to make or cause to be made a notation or notations on
the Record of the Term A German Tranche Note reflecting the original
principal amount of the German Tranche of Term Loan A and, at or about the
time of the Fronting Bank's receipt of any principal payment on the Term A
German Tranche Note, an appropriate notation on such Record reflecting such
payment. The aggregate unpaid amount set forth on such Record shall be
prima facie evidence of the principal amount of the German Tranche of Term
Loan A owing and unpaid, but the failure to record, or any error in so
recording, any such amount on such Record shall not affect the obligations
of GmbH to make payments of principal of and interest on the German Tranche
of Term Loan A when due hereunder or of TransTechnology or any of its other
Subsidiaries under any other Term Note to make payments of principal of and
interest on any Term Note when due.
4A.2.3. TERM A UK TRANCHE NOTE. The UK Tranche of Term Loan A shall be
evidenced by a promissory note of Limited in substantially the form of
Exhibit D.3 hereto (a "Term A UK Tranche Note"), dated the Closing Date and
completed with appropriate insertions. The Term A UK Tranche Note shall be
payable to the order of the Fronting Bank in a principal amount equal to
the UK Tranche of Term Loan A, representing the obligation of Limited to
pay to the Fronting Bank such principal amount, plus interest accrued
thereon as set forth below. Limited irrevocably authorizes the Fronting
Bank to make or cause to be made a notation or notations on the Record of
the Term
<PAGE> 41
-41-
A UK Tranche Note reflecting the original principal amount of the UK
Tranche of Term Loan A and, at or about the time of the Fronting Bank's
receipt of any principal payment on the Term A UK Tranche Note, an
appropriate notation on such Record reflecting such payment. The aggregate
unpaid amount set forth on such Record shall be prima facie evidence of
the principal amount of the UK Tranche of Term Loan A owing and unpaid,
but the failure to record, or any error in so recording, any such amount
on such Record shall not affect the obligations of Limited to make
payments of principal of and interest on the UK Tranche of Term Loan A
when due or of TransTechnology or any of its other Subsidiaries under any
other Term Note to make payments of principal of and interest on such
Term Note when due.
4A.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN A.
4A.3.1. FIRST US TRANCHE.
TransTechnology promises to pay to the Agent for the account of the
Banks the principal amount of the First US Tranche of Term Loan A in
installments in accordance with Column 1 of the chart attached hereto as
Schedule 3, such installments to be due and payable on the last day of
each calendar quarter of each calendar year, in the amounts set forth
opposite such calendar quarter in such chart, commencing on December 31,
1995, with a final payment on the Term Loan A Maturity Date in an amount
equal to the unpaid balance of the First US Tranche of Term Loan A.
4A.3.2. GERMAN TRANCHE.
GmbH promises to pay to the Fronting Bank the principal amount of
the German Tranche of Term Loan A in installments in accordance with
Column 2 of the chart attached hereto as Schedule 3, such installments to
be due and payable on the last day of each calendar quarter of each
calendar year, in amounts in Deutschmarks as close as possible to the DM
Equivalent of the Dollar amounts set forth opposite such calendar quarter
in such chart, commencing on December 31, 1995, with a final payment on
the Term Loan A Maturity Date in an amount of Deutschmarks equal to the
DM Equivalent of the unpaid balance of the German Tranche of Term Loan A.
4A.3.3. UK TRANCHE.
Limited promises to pay to the Fronting Bank the principal amount of
the UK Tranche of Term Loan A in installments in accordance with Column 3
of the chart attached hereto as Schedule 3, such installments to be due
and payable on the last day of each calendar quarter of each calendar
year, in amounts in Sterling as close as possible to the Sterling
Equivalent of the Dollar amounts set forth opposite such calendar quarter
in such chart, commencing on December 31, 1995, with a final payment
on the Term Loan A
<PAGE> 42
-42-
Maturity Date in an amount equal to the Sterling Equivalent of the unpaid
balance of the UK Tranche of Term Loan A.
4A.3.4. SECOND US TRANCHE.
TransTechnology promises to pay to the Agent for the account of the
Banks the principal amount of the Second US Tranche of Term Loan A in
equal quarterly installments of $600,000 each, or, if the original
principal amount of the Second US Tranche of Term Loan A drawn down on the
Approved Acquisition Date is less than $15,000,000, in such equal
quarterly installments as would, when aggregated from the first payment
date thereof to the Term Loan A Maturity Date, total the original
principal amount of the Second US Tranche of Term Loan A drawn down on the
Approved Acquisition Date (provided that such installments shall in no
event exceed $600,000 each). Such installments shall be due and payable on
the last day of each calendar quarter of each calendar year, commencing on
the last day of the first full calendar quarter following the Approved
Acquisition Date, with a final payment on the Term Loan A Maturity Date in
an amount equal to the unpaid balance of the Second US Tranche of Term
Loan A.
4A.4. OPTIONAL PREPAYMENT OF TERM LOAN A.
Each of TransTechnology, GmbH and Limited shall have the right at any time
to prepay the Term A US Tranche Notes, Term A German Note and Term A UK Note,
respectively, on or before the Term Loan A Maturity Date, as a whole or in
part, upon not less than five (5) Business Days prior written notice to the
Agent (if such prepayment is with respect to the First US Tranche or the Second
US Tranche) or upon not less than five (5) Eurocurrency Business Days prior
written notice to the Fronting Bank (if such prepayment is with respect to the
German Tranche or the UK Tranche), without premium or penalty, provided that
(i) each partial prepayment shall be in the principal amount of $1,000,000 or
the Sterling Equivalent or DM Equivalent thereof or an integral multiple
thereof, (ii) no portion of Term Loan A bearing interest at a Eurocurrency Rate
may be prepaid pursuant to this Section 4A.4 except on the last day of the
Interest Period relating thereto, unless all costs in connection with such
prepayment are paid in full simultaneously with such prepayment pursuant to
Section 6.10, (iii) each partial prepayment of any portion of the Term Loans
made by TransTechnology shall be applied pro rata against the scheduled
installments of principal due on each of the Tranches of Term Loan A and on
Term Loan B, in the inverse order of maturity, and (iv) each partial prepayment
made with respect to the First US Tranche and the Second US Tranche shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective outstanding amount of each Bank's Term A US Tranche Notes, with
adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion. Any prepayment of principal of Term Loan A shall include
all interest accrued to the date of prepayment. No amount repaid with respect
to Term Loan A may be reborrowed.
<PAGE> 43
-43-
4A.5. INTEREST ON TERM LOAN A.
4A.5.1. INTEREST RATES. Except as otherwise provided in Section
6.11, the Tranches of Term Loan A shall bear interest during each Interest
Period relating to all or any portion of such Tranches at the following
rates:
(a) to the extent that all or any portion of the First US
Tranche, the Second US Tranche or the German Tranche of Term Loan A
bears interest during such Interest Period at a Base Rate, such
Tranches of Term Loan A or such portion thereof shall bear interest
during such Interest Period at a rate per annum equal to the sum of
(i) the applicable Base Rate plus (ii) the Applicable Margin with
respect to Base Rate Loans as in effect from time to time;
(b) the UK Tranche of Term Loan A or any portion thereof
shall bear interest during such Interest Period at a rate per annum
equal to the sum of (i) the Sterling Eurocurrency Rate determined
for such Interest Period plus (ii) the Applicable Margin with
respect to Eurocurrency Rate Loans as in effect from time to time;
and
(c) to the extent that all or any portion of the First US
Tranche, the Second US Tranche or the German Tranche of Term Loan A
bears interest during such Interest Period at a Eurocurrency Rate,
such Tranches of Term Loan A or such portion thereof shall bear
interest during such Interest Period at a rate per annum equal to
the sum of (i) the applicable Eurocurrency Rate determined for such
Interest Period plus (ii) the Applicable Margin with respect to
Eurocurrency Rate Loans as in effect from time to time.
TransTechnology promises to pay interest, in accordance with Section 6.3.2
on the First US Tranche and the Second US Tranche of Term Loan A or any
portion thereof outstanding during each Interest Period in arrears on each
Interest Payment Date applicable to such Interest Period. GmbH promises to
pay interest, in accordance with Section 6.3.2, on the German Tranche of
Term Loan A or any portion thereof outstanding during each Interest Period
in arrears on each Interest Payment Date applicable to such Interest
Period. Limited promises to pay interest, in accordance with Section 6.3.2,
on the UK Tranche of Term Loan A or any portion thereof outstanding during
each Interest Period in arrears on each Interest Payment Date applicable
to such Interest Period.
4A.5.2. NOTIFICATION BY BORROWERS. The applicable Borrower shall
notify the Agent, such notice to be irrevocable, at least three (3)
Eurocurrency Business Days prior to the Drawdown Date of any Tranche of
Term Loan A if all or any portion of such Tranche of Term Loan A is to bear
interest at a Eurocurrency Rate. In addition, GmbH shall notify the DM
Lending Office of the Fronting Bank, such notice to be irrevocable, at
least three (3) Eurocurrency Business Days prior to the Drawdown Date of
any portion of the German Tranche of Term Loan A if all or any portion of
such Tranche of Term
-44-
<PAGE> 44
-44-
Loan A is to bear interest at the DM Eurocurrency Rate. The UK Tranche
of Term Loan A shall bear interest at the Sterling Eurocurrency Rate
only (without any option to convert to the Sterling Base Rate), and
Limited shall notify the Sterling Lending Office of the Fronting Bank,
such notice to be irrevocable, at least three (3) Eurocurrency
Business Days prior to the Drawdown Date of all or any portion of the
UK Tranche of Term Loan A as to Limited's election of an Interest
Period with respect to such portion or such Tranche of Term Loan A.
After the First US Tranche, the Second US Tranche or the German
Tranche of Term Loan A have been drawn down, the provisions of Section
2.7 (including the limitations in Section 2.7.3) shall apply mutatis
mutandis with respect to all or any portion of each such Tranche, so
that TransTechnology and GmbH may have the same interest rate options
with respect to their respective portions of Term Loan A (or any part
thereof) as TransTechnology would be entitled to with respect to
the Revolving Credit Loans.
4A.5.3. AMOUNTS, ETC. Amy portion of Term Loan A bearing
interest at a Eurocurrency Rate relating to any Interest Period shall
be in the amount of $1,000,000 or an integral multiple thereof. No
Interest Period relating to any Tranche of Term Loan A or any portion
thereof bearing interest at a Eurocurrency Rate shall extend beyond
the date on which a regularly scheduled installment payment of
principal with respect to such Tranche of Term Loan A is to be made
unless a portion of Term Loan A at least equal to such installment
payment has an Interest Period ending on such date or is then bearing
interest at a Base Rate.
4A.6. TERM A COMMITMENT FEE. TransTechnology agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective Term A
Commitment Percentages a commitment fee calculated at the Commitment Fee Rate
per annum on the average daily amount during each calendar quarter or portion
thereof from the Closing Date to the first to occur of the Approved Acquisition
Date and March 31, 1997 by which the aggregate amount of the Bank's Term A
Commitments exceeds the outstanding principal amount of the Tranches of Term
Loan A plus all repayments or prepayments of the principal of Term Loan A,
during such calendar quarter. The Term Loan A commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter, commencing on the first such date
following the date hereof, with a final payment on the first to occur of the
Approved Acquisition Date and March 31, 1997 or any earlier date on which the
Term A Commitments shall terminate.
4A.7. REDUCTION OF TERM A COMMITMENTS. TransTechnology shall have the
right at any time and from time to time upon five (5) Business Days prior
written notice to the Agent to reduce by $1,000,000 or an integral multiple
thereof or terminate entirely the Term A Commitments, whereupon the Term A
Commitments of the Banks shall be reduced pro rata in accordance with their
respective Term A Commitment Percentages of the amount specified in such notice
or, as the case may be, terminated. Promptly after receiving any notice of
TransTechnology delivered pursuant to this Section 4A.7, the Agent will
notify the Banks
<PAGE> 45
-45-
of the substance thereof. Upon the effective date of any such reduction or
termination, TransTechnology shall pay to the Agent for the respective accounts
of the Banks the full amount of any commitment fee then accrued on the amount
of the reduction. No reduction or termination of the Term A Commitments may be
reinstated.
4B. TERM LOAN B.
4B.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each Term B Lender agrees to lend to TransTechnology
on the Closing Date, in Dollars, the amount of its Term B Commitment Percentage
of the principal amount of $25,000,000.
4B.2. THE TERM B NOTES. Term Loan B shall be evidenced by separate
promissory notes of TransTechnology in substantially the form of Exhibit D-4
hereto (each a "Term B Note"), dated the Closing Date and completed with
appropriate insertions. One Term B Note shall be payable to the order of each
Term B Lender in a principal amount equal to such Lender's Term B Commitment
Percentage of Term Loan B, representing the obligation of TransTechnology to
pay to such Lender such principal amounts or, if less, the outstanding amount
of such Lender's Term B Commitment Percentage of Term Loan B, plus interest
accrued thereon, as set forth below. TransTechnology irrevocably authorizes
each Lender to make or cause to be made a notation or notations on such
Lender's Term B Note Record reflecting the original principal amount of such
Lender's Term B Commitment Percentage of the Term Loan B and, at or about the
time of such Lender's receipt of any principal payment on such Lender's Term B
Note(s), an appropriate notation on such Lender's Term B Note Record(s)
reflecting such payment. The aggregate unpaid amount set forth on such Term B
Lender's Term Note Record shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Lender, but the failure to record, or any
error in so recording, any such amount on such Lender's Term B Note Record
shall not affect the obligations of TransTechnology hereunder or under any Term
Note to make payments of principal of and interest on any Term Note when due.
4B.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN B.
TransTechnology promises to pay to the Agent for the account of the Term B
Lenders the principal amount of Term Loan B in installments in accordance with
Column 6 of the chart attached hereto as Schedule 3, such installments to be
due and payable on the last day of June of each calendar year, in the amounts
set forth opposite such date or quarter ending in such chart, commencing on
June 30, 1996, with a final payment on the Term Loan B Maturity Date in an
amount equal to the unpaid balance of Term Loan B.
<PAGE> 46
-46-
4B.4. OPTIONAL PREPAYMENT OF TERM LOAN B.
4B.4.1. TRANSTECHNOLOGY'S RIGHT TO PREPAY. TransTechnology shall
have the right at any time to prepay the Term B Notes on or before
the Term Loan B Maturity Date, as a whole or in part, upon not less
than five (5) Business Days prior written notice to the Agent and
each of the Term B Lenders, without premium or penalty, provided that
(i) each partial prepayment shall be in the principal amount of
$1,000,000 or an integral multiple thereof, (ii) no portion of Term
Loan B bearing interest at a Eurocurrency Rate may be prepaid
pursuant to this Section 4B.4 except on the last day of the Interest
Period relating thereto, unless all costs in connection with such
prepayment are paid in full simultaneously with such prepayment
pursuant to Section 6.10, (iii) each partial prepayment of any
portion of the Term Loans made by TransTechnology shall be applied
pro rata against the scheduled installments of principal due on each
of the Tranches of Term Loan A and on Term Loan B, in the inverse
order of maturity, and (iv) subject to Section 4B.4.2 below, each
partial prepayment made with respect to Term Loan B shall be
allocated among the Term B Lenders, in proportion, as nearly as
practicable, to the respective outstanding amount of each Term B
Lender's Term B Note, with adjustments to the extent practicable to
equalize any prior prepayments not exactly in proportion. Any
prepayment of principal of Term Loan B shall include all interest
accrued to the date of prepayments. No amount repaid with respect
to Term Loan B may be reborrowed.
4B.4.2. TERM B LENDER'S RIGHT TO REFUSE PREPAYMENT.
Each Term B Lender shall have the right to refuse any prepayment of
the principal amount outstanding on such Term B Lenders's Term Note made or
proposed to be made pursuant to Section 4B.4.1 above or Section 4C.4 below,
provided that such Term B Lender shall (i) notify as soon as practicable the
Agent of its intention to refuse any such prepayment and (ii) immediately
return to the Agent any amounts received by it in respect of such prepayment.
Such returned amount shall be applied by the Agent pro rata against the
remaining scheduled installments of principal due on each of the Tranches of
Term Loan A and on Term Loan B, in the inverse order of maturity, and each such
partial prepayment made with respect to Term Loan B shall be allocated among
those Term B Lenders accepting the initial prepayment, in proportion, as nearly
as practicable, to the respective outstanding amount of each such Lender's Term
B Notes, with adjustments to the extent practicable to equalize any prior
prepayments not exactly in proportion.
4B.5. INTEREST ON TERM LOAN B.
4B.5.1. INTEREST RATES. Except as otherwise provided in
Section 6.11, Term Loan B shall bear interest during each Interest
Period relating to all or any portion of such Loan at the following
rates:
(a) to the extent that all or any portion of Term Loan B
bears interest during such Interest Period at the Dollar Base
Rate, Term
<PAGE> 47
-47-
Loan B or such portion shall bear interest during such Interest Period
at a rate per annum equal to the sum of (i) the Dollar Base Rate plus
(ii) the Applicable Margin with respect to Base Rate Loans as in
effect from time to time; and
(b) to the extent that all or any portion of Term Loan B bears
interest during such Interest Period at the Eurodollar Rate, Term Loan
B or such portion shall bear interest during such Interest Period at a
rate per annum equal to the sum of (i) the Eurodollar Rate determined
for such Interest Period plus (ii) the Applicable Margin with respect
to Eurocurrency Loans as in effect from time to time.
TransTechnology promises to pay interest on Term Loan B or any portion
thereof outstanding during each Interest Period in arrears on each Interest
Payment Date applicable to such Interest Period.
4B.5.2. NOTIFICATION BY TRANSTECHNOLOGY. TransTechnology shall notify
the Agent, such notice to be irrevocable, at least four (4) Eurocurrency
Business Days prior to the Drawdown Date thereof if all or any portion of
Term Loan B is to bear interest at the Eurodollar Rate. After such Drawdown
Date, the provisions of Section 2.7 (including the limitations set forth in
Section 2.7.3) shall apply mutatis mutandis with respect to all or any such
portion of Term Loan B so that TransTechnology may have the same interest
rate options with respect to all or any portion of Term Loan B as it would
be entitled to with respect to the Revolving Credit Loans.
4B.5.3. AMOUNTS, ETC. Amy portion of Term Loan B bearing interest at
the Eurodollar Rate relating to any Interest Period shall be in the amount
of $1,000,000 or an integral multiple thereof. No Interest Period relating
to Term Loan B or any portion thereof bearing interest at the Eurodollar
Rate shall extend beyond the date on which a regularly scheduled
installment payment of principal with respect to Term Loan B is to be made,
unless a portion of Term Loan B at least equal to such installment payment
has an Interest Period ending on such date or is then bearing interest at a
Base Rate.
4C. MANDATORY PREPAYMENT OF LOANS.
4C.1. MANDATORY PREPAYMENTS FROM ASSET SALES OR NEW DEBT. In the event that
any member of the TransTechnology Group shall either (a) incur any Indebtedness
after the Closing Date which is either permitted pursuant to Section 10.1(f) or
is incurred in an amount and on terms and conditions previously agreed in
writing by the Agent, or (b) sell any of its assets (other than inventory sold
in the ordinary course of business) or group of related assets, whether by sale
of such assets or sale of the stock of any member of the TransTechnology Group,
for consideration with a value in excess of $25,000, where such asset sale is
either permitted pursuant to Section 10.5.2 or is previously consented to in
writing by the Agent, then as soon as practicable and in any event within thirty
(30) days after the receipt by any member of the TransTechnology Group of the
Net Cash Proceeds of such new
<PAGE> 48
-48-
Indebtedness or such asset sale, as the case may be, TransTechnology shall, or
shall procure that a Subsidiary of TransTechnology shall, prepay the Loans in
an amount equal to the amount of the Net Cash Proceeds of such new Indebtedness
or asset sale, but only to the extent that the aggregate amount of such Net
Cash Proceeds received by TransTechnology and its Subsidiaries with respect to
all such new Indebtedness or asset sales during the fiscal year ending March
31, 1996 exceeds $1,000,000, and with respect to any fiscal year thereafter, to
the extent that the aggregate amount of such Net Cash Proceeds during such
fiscal year exceeds $250,000.
4C.2. MANDATORY PREPAYMENTS FROM NEW EQUITY.
In the event that any member of the TransTechnology Group shall after the
Closing Date sell or issue any shares of its stock, options (other than stock
options awarded to employees and directors pursuant to incentive compensation
plans operated by members of the TransTechnology Group) or warrants for the
purchase of its stock or other equity or equity instruments, then as soon as
practicable and in any event within thirty (30) days after the sale of such new
equity, TransTechnology shall, or shall procure that a Subsidiary of
TransTechnology shall, prepay the Loans in an amount equal to fifty percent
(50%) of the Net Cash Proceeds to the TransTechnology Group of such sale or
issuance of new equity.
4C.3. MANDATORY PREPAYMENTS FROM EXCESS CASH FLOW. For each fiscal year
ending on or after March 31, 1996, the Borrowers jointly and severally shall
make a prepayment of the principal of the Loans in an amount equal to 50% of
the Consolidated Excess Cash Flow for such fiscal year, such mandatory
prepayment to be due and payable ninety (90) days after the end of each such
fiscal year.
4C.4. APPLICATION OF PROCEEDS. All mandatory prepayments of the Loans
pursuant to Sections 4C.1-4C.3 shall be applied first to repayment of Revolving
Credit Loans and Unpaid Reimbursement Obligations, in such amount as may be
necessary to ensure that, immediately after such repayment, the aggregate of
(a) Revolving Credit Availability plus (b) the total amount of cash and cash
equivalents held by TransTechnology and its Subsidiaries shall exceed
$7,000,000 and shall thereafter be applied pro rata, based on the then
outstanding principal amounts of each Tranche of Term Loan A and Term Loan B,
against the scheduled installments of principal due on the Tranches of Term
Loan A outstanding at the time of such prepayment and on Term Loan B, in the
inverse order of maturity. No amount repaid with respect to the Term Loans may
be reborrowed.
<PAGE> 49
-49-
4C.5. LIMITATION ON REQUIREMENT TO PREPAY. Notwithstanding anything to
the contrary stated in this Section 4C, the Borrowers shall only be required to
make prepayments of the Loans under Sections 4C.1-4C.3 so long as the ratio of
Senior Funded Indebtedness to Consolidated EBITDA, calculated on the same basis
as Ratio 1 in the definition of "Applicable Margin," is greater than 2:00:1 for
the Reference Period ended on the last day of the fiscal quarter most recently
preceding the date on which such prepayment is made (or the last day on which
such prepayment is required to be made pursuant to Sections 4C.1-4C.3).
5. LETTERS OF CREDIT.
5.1. LETTER OF CREDIT COMMITMENTS.
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms
and conditions hereof and the execution and delivery by TransTechnology of
a letter of credit application on the Issuing Bank's customary form
(a "Letter of Credit Application"), the Issuing Bank on behalf of the Banks
and in reliance upon the agreement of the Banks set forth in Section 5.1.4
and upon the representations and warranties of TransTechnology contained
herein, agrees, in its individual capacity, to issue, extend and renew for
the account of TransTechnology one or more standby or documentary letters
of credit (individually, a "Letter of Credit"), in such form as may be
requested from time to time by TransTechnology and agreed to by the
Issuing Bank; provided, however, that, after giving effect to such
request, (a) the sum of the aggregate Maximum Drawing Amount and all
Unpaid Reimbursement Obligations shall not exceed $5,000,000 at any one
time and (b) the sum of (i) the Maximum Drawing Amount on all Letters of
Credit, (ii) all Unpaid Reimbursement Obligations, and (iii) the amount of
all Revolving Credit Loans outstanding shall not exceed the lesser of (A)
the Total Revolving Credit Commitment and (B) the Borrowing Base.
5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Issuing Bank. In
the event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the date
which is fourteen (14) days (or, if the Letter of Credit is confirmed by a
confirmer or otherwise provides for one or more nominated persons,
forty-five (45) days) prior to the Revolving Credit Loan Maturity Date.
Each Letter of Credit so issued, extended or renewed shall be subject to
the Uniform Customs.
<PAGE> 50
-50-
5.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Bank's Revolving Credit Commitment
Percentage, to reimburse the Issuing Bank on demand for the amount of each
draft paid by the Agent under each Letter of Credit to the extent that such
amount is not reimbursed by TransTechnology pursuant to Section 5.2 (such
agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
5.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest
in TransTechnology's Reimbursement Obligation under Section 5.2 in an
amount equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to Section
5.2.
5.2. REIMBURSEMENT OBLIGATION OF TRANSTECHNOLOGY.
In order to induce the Issuing Bank to issue, extend and renew each
Letter of Credit and the Banks to participate therein, TransTechnology hereby
agrees to reimburse or pay to the Agent, for the account of the Issuing Bank or
(as the case may be), the Agent or the Banks, with respect to each Letter of
Credit issued, extended or renewed by the Issuing Bank hereunder,
(a) except as otherwise expressly provided in Section 5.2(b) and (c),
on each date that any draft presented under such Letter of Credit is
honored by the Issuing Bank, or the Issuing Bank otherwise makes a
payment with respect thereto, (i) the amount paid by the Issuing Bank
under or with respect to such Letter of Credit, and (ii) the amount of
any taxes, fees, charges or other costs and expenses whatsoever incurred
by the Issuing Bank, the Agent or any Bank in connection with any payment
made by the Issuing Bank or any Bank under, or with respect to, such
Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Revolving Credit Commitment to an amount less than the Maximum Drawing
Amount, an amount equal to such difference, which amount shall be held by
the Issuing Bank for the benefit of the Banks, the Agent and the Issuing
Bank as cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Revolving Credit
Commitment, or the acceleration of the Reimbursement Obligations with
respect to all Letters of Credit in accordance with Section 14, an amount
equal to the then Maximum Drawing Amount on all Letters of Credit, which
amount shall be held by the Issuing Bank for the benefit of the Banks,
the Agent and the Issuing Bank as cash collateral for all Reimbursement
Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office (for
the account of the Issuing Bank or (as the case may be) the Agent or the Banks)
in
<PAGE> 51
-51-
immediately available funds. Interest on any and all amounts remaining unpaid
by TransTechnology under this Section 5.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 5.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent (for the account of the Issuing Bank or (as the case may
be) the Agent or the Banks) on demand at the rate specified in Section 6.11 for
overdue principal on the Revolving Credit Loans.
5.3. LETTER OF CREDIT PAYMENTS.
If any draft shall be presented or other demand for payment shall be made
under any Letter of Credit, the Issuing Bank shall notify TransTechnology of
the date and amount of the draft presented or demand for payment and of the
date and time when it expects to pay such draft or honor such demand for
payment. If TransTechnology fails to make payment to the Agent as provided in
Section 5.2 on or before the date that such draft is paid or other payment is
made by the Issuing Bank, the Issuing Bank may at any time thereafter notify
the Agent and the Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Issuing Bank, at its Head Office, in immediately available funds, such Bank's
Revolving Credit Commitment Percentage of such Unpaid Reimbursement Obligation,
together with an amount equal to the product of (i) the average, computed for
the period referred to in clause (iii) below, of the weighted average interest
rate paid by the Issuing Bank for federal funds acquired by the Issuing Bank
during each day included in such period, times (ii) the amount equal to such
Bank's Revolving Credit Commitment Percentage of such Unpaid Reimbursement
Obligation, times (iii) a fraction, the numerator of which is the number of
days that elapse from and including the date the Issuing Bank paid the draft
presented for honor or otherwise made payment to the date on which such Bank's
Revolving Credit Commitment Percentage of such Unpaid Reimbursement Obligation
shall become immediately available to the Issuing Bank, and the denominator of
which is 360. The responsibility of the Issuing Bank to TransTechnology and to
the Agent, and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in connection with
such presentment shall be in conformity in all material respects with such
Letter of Credit.
5.4. OBLIGATIONS ABSOLUTE.
TransTechnology's obligations under this Section 5 shall be absolute and
unconditional under any and all circumstances and irrespective of the
occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which
TransTechnology may have or have had against the Issuing Bank, the Agent, any
Bank or any beneficiary of a Letter of Credit. TransTechnology further agrees
with the Issuing Bank, the Agent and the Banks that the Issuing Bank, the Agent
and the Banks shall not be responsible for, and TransTechnology's Reimbursement
Obligations under Section 5.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any
<PAGE> 52
-52-
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
TransTechnology, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of TransTechnology against the beneficiary of
any Letter of Credit or any such transferee. The Issuing Bank, the Agent and
the Banks shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. TransTechnology agrees
that any action taken or omitted by any of the Issuing Bank, the Agent or any
Bank under or in connection with each Letter of Credit and the related drafts
and documents, if done in good faith, shall be binding upon TransTechnology and
shall not result in any liability on the part of the Issuing Bank, the Agent or
any Bank to TransTechnology.
5.5. RELIANCE BY ISSUING BANK. To the extent not inconsistent with
Section 5.4, the Issuing Bank shall be entitled to rely, and shall be fully
protected in relying upon, any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Issuing Bank. The Issuing Bank
shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or concurrence of the
Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Issuing Bank shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
in accordance with a request of the Majority Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the Banks
and all future holders of the Revolving Credit Notes or of a Letter of Credit
Participation.
5.6. LETTER OF CREDIT FEE. TransTechnology shall pay a fee (in each case,
a "Letter of Credit Fee") to the Issuing Bank in respect of each Letter of
Credit, calculated as a percentage per annum of the face amount of such Letter
of Credit equal to the then Applicable Margin with respect to Eurocurrency Rate
Loans which are not portions of Term Loan B, plus the Agent's customary
issuance, amendment, negotiation or document examination fee. Such Letter of
Credit Fees, with the exception of (i) such issuance, amendment, negotiation or
document examination fees and (ii) an amount equal to one-quarter of one
percent (0.25%) of the face amount of the applicable Letter of Credit, which
shall be retained by the Issuing Bank for its own account, shall be for the
accounts of the Banks in accordance with their respective Revolving Credit
Commitment Percentages. Such Letter of Credit Fees shall be payable quarterly
in arrears, commencing on the date three months from the date of issuance of a
Letter of Credit, as well as at such other time or times as such charges are
customarily made by the Issuing Bank.
<PAGE> 53
-53-
5.7. RESIGNATION OF ISSUING BANK. The Issuing Bank may resign at any time
by giving sixty (60) days prior written notice thereof to the Banks and
TransTechnology. Upon any such resignation, the Majority Banks shall have the
right to appoint a successor Issuing Bank. Unless a Default or Event of
Default shall have occurred and be continuing, such successor Issuing Bank
shall be reasonably acceptable to TransTechnology. If no successor Issuing Bank
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Issuing Bank's giving of
notice of resignation, then the retiring Issuing Bank may, on behalf of the
Banks, appoint a successor Issuing Bank, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Issuing Bank hereunder
by a successor Issuing Bank, such successor Issuing Bank shall thereupon
succeed to and become vested with all the rights, powers, privileges, duties
and obligations of the retiring Issuing Bank, and, after arranging for the
replacement of, reissuance of or issuance of back-up Letters of Credit with
respect to all outstanding Letters of Credit in a manner satisfactory to the
Majority Banks, the retiring Issuing Bank shall be discharged from its duties
and obligations hereunder. After any retiring Issuing Bank's resignation, the
provisions of this Credit Agreement and the other Loan Documents shall continue
in effect for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Issuing Bank.
6. CERTAIN GENERAL PROVISIONS.
6.1. CLOSING FEE. The Borrowers jointly and severally agree to pay to the
Agent for the pro rata accounts of the Lenders on the Closing Date a closing
fee in the amount agreed in the Fee Letter.
6.2. AGENT'S FEE. The Borrowers jointly and severally (but, in the case
of GmbH, subject to Section 30 of the GmbH Act of Germany) agree to pay to the
Agent annually in advance, for the Agent's own account, on the Closing Date and
on each anniversary of the Closing Date, an Agent's fee in the amount agreed in
the Fee Letter.
6.3. PAYMENT PROVISIONS.
6.3.1. CURRENCY OF ACCOUNT. Dollars are the currency of account
and payment for each and every sum at any time due from the Borrowers
hereunder; provided that:
(i) each repayment of a Loan or a part thereof shall be
made in the currency in which such Loan is denominated at the time
of that repayment;
(ii) each payment in respect of a Letter of Credit shall,
except as otherwise provided herein, be made in the currency in
which such Letter of Credit is denominated;
<PAGE> 54
-54-
(iii) each payment of interest shall be made in the currency in which
the sum in respect of which such interest is payable is denominated;
(iv) each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred; and
(v) any amount expressed to be payable in a currency other than
Dollars shall be paid in that other currency.
6.3.2. APPLICATION OF INTEREST PAYMENTS. Interest and commissions payable
by the Borrowers shall be paid as follows:
(a) as to interest and commissions due with respect to Fronted
Loans to the Fronting Bank, for the account of the Fronting Bank, provided
that (i) to the extent that a Bank has paid to the Fronting Bank any
amount in respect of any Fronted Loan pursuant to Section 6.12, interest
or commissions to the extent as aforesaid on such amount of such Fronting
Loan shall thereafter accrue for the account of such Bank and (ii) the
Fronting Bank shall pay all amounts of interest received with respect to
the Applicable Margin to the Agent for the account of the Banks in the
proportion of their respective Revolving Credit Commitment Percentages
(with respect to interest and commission on International Facility Loans)
or in the proportion of their respective Term A Commitment Percentages
(with respect to interest on the German Tranche and UK Tranche of Term
Loan A);
(b) as to interest due with respect to Term Loan B, to the Agent
for the account of the Term B Lenders in the proportion of their
respective Term B Commitment Percentages for time to time;
(c) as to interest due with respect to Term Loan A (except to the
extent provided in clause (a) above), to the Agent for the account of the
Banks in the proportion of their respective Term A Commitment Percentages
from time to time; and
(d) as to interest due with respect to Revolving Credit Loans, to
the Agent for the account of the Banks in the proportion of their
respective Revolving Credit Commitment Percentages from time to time.
6.3.3. JUDGMENT CURRENCY. If any sum due from a Borrower under this Credit
Agreement or any order or judgment given or made in relation hereto has to be
converted from the currency (the "first currency") in which the same is payable
hereunder or under such order or judgment into another currency (the "second
currency") for the purpose of (i) making or filing a claim or proof against
such Borrower, (ii) obtaining an order or judgment in any court or other
tribunal or (iii) enforcing any order or judgment given or made
<PAGE> 55
-55-
in relation hereto, such Borrower shall indemnify and hold harmless each of the
Persons to whom such sum is due from and against any loss suffered as a result
of any discrepancy between (A) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second currency
and (B) the rate or rates of exchange at which such Person may in the ordinary
course of business purchase the first currency with the second currency upon
receipt of a sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof.
6.3.4. TIME OF PAYMENT. On each date on which this Credit Agreement
requires an amount to be paid by any of the Borrowers or any of the Lenders
hereunder, such Borrower or, as the case may be, such Lender shall make the same
available to the Agent or, as the case may be, the Fronting Bank to such account
as the Agent or the Fronting Bank shall have notified to any of the Borrowers or
to such Lender, as the case may be. Each such payment which is made for the
account of a Person other than the Agent shall be made in time to enable the
Agent to make available such other Person's portion thereof for value the same
day.
6.3.5. PAYMENTS BY AGENT. Where a sum is to be paid hereunder to the
Agent for the account of another Person, the Agent shall not be obliged to make
the same available to that other Person until the Agent has been able to
establish to its satisfaction that it has actually received such sum, but if the
Agent does so and it proves to be the case that the Agent has not actually
received the sum it paid out, then the Person to whom such sum was so made
available shall on request refund the same to the Agent, together with an amount
sufficient to reimburse the Agent for any amount it may have been required to
pay out by way of interest on moneys borrowed to fund the sum in question during
the period beginning on the due date for payment thereof and ending on the date
on which it receives the same.
6.3.6. NO OFFSET, ETC. All payments by the Borrowers hereunder and
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless any of the Borrowers is compelled by law to make
such deduction or withholding. If any such obligation is imposed upon a
Borrower with respect to any amount payable by it hereunder or under any of
the other Loan Documents, such Borrower will pay to the Agent, for the
account of the Lenders or (as the case may be), the Issuing Bank, the Fronting
Bank or the Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount as
shall be necessary to enable the Banks or the Agent to receive the same net
amount in the same currency which the Lenders, the Issuing Bank, the
Fronting Bank or the Agent would have received on such due date had no such
obligation been imposed upon such Borrower. Each Borrower so affected will
<PAGE> 56
-56-
deliver, within thirty (30) days of any such deduction or payment, to the
Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by such Borrower
hereunder or under such other Loan Document.
6.4. COMPUTATIONS. All computations of interest on the Loans denominated
in Dollars, the DM Loans and of commitment fees, Letter of Credit Fees or other
fees shall, unless otherwise expressly provided herein, be based on a 360-day
year and paid for the actual number of days elapsed. All computations of
interest on the Sterling Loans shall, unless otherwise expressly provided
herein, be based on a 365-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the term "Interest
Period" with respect to Eurocurrency Rate Loans, whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Revolving Credit Note
Records and the Term Note Records from time to time shall be considered correct
and binding on the applicable Borrower unless within five (5) Business Days
after receipt of any notice by the Agent or any of the Lenders of such
outstanding amount, the Lender or such Bank shall notify such Borrower to the
contrary.
6.5. INABILITY TO DETERMINE EUROCURRENCY RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurocurrency Rate Loan, the
Agent shall determine or be notified by the Fronting Bank, if such Loan is a
Fronted Loan, or the Majority Term B Lenders, if such Eurocurrency Rate Loan is
any portion of Term Loan B, or the Majority Banks, with respect to any other
Loan, that adequate and reasonable methods do not exist for ascertaining the
applicable Eurocurrency Rate that would otherwise determine the rate of
interest to be applicable to such Eurocurrency Rate Loan, the Agent shall
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrowers and the Lenders) to the applicable Borrower and to the
applicable Lender(s). In such event (i) any Loan, Request or Conversion Request
with respect to Eurocurrency Rate Loans shall be automatically withdrawn and
shall be deemed a request for Base Rate Loans, (ii) each Eurocurrency Rate Loan
will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (iii) the obligations of the
Banks or, as the case may be, the Fronting Bank to make Eurocurrency Rate Loans
shall be suspended until the Agent or, as the case may be, the Fronting Bank,
Majority Banks or Majority Term B Lenders determine that the circumstances
giving rise to such suspension no longer exist, whereupon the Agent or, as the
case may be, the Agent upon the instruction of the Fronting Bank, the Majority
Banks or Majority Term B Lenders, shall so notify the applicable Borrower and
the applicable Lender(s).
6.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Lender or the Fronting
Bank to make or maintain Eurocurrency Rate Loans, such Lender shall forthwith
give notice of such
<PAGE> 57
-57-
circumstances to TransTechnology and the other Lenders and the Fronting Bank,
if so affected, shall forthwith give notice of such circumstances to the
Borrowers and the Agent, and thereupon (i) the commitment of such Lender or the
Fronting Bank to make Eurocurrency Rate Loans or convert Loans of another Type
to Eurocurrency Rate Loans shall forthwith be suspended, and (ii) such Lender's
or Fronting Bank's Loans then outstanding as Eurocurrency Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurocurrency Rate Loans or within such
earlier period as may be required by law. The Borrowers hereby jointly and
severally agree promptly to pay the Agent for the account of such Lender or
Fronting Bank upon demand by such Lender or Fronting Bank, any additional
amounts necessary to compensate such Lender for any costs incurred by such
Lender or Fronting Bank in making any conversion in accordance with this
Section 6.6, including any interest or fees payable by such Lender or
Fronting Bank to lenders of funds obtained by it in order to make or maintain
its Eurocurrency Rate Loans hereunder.
6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Lender or the Agent by any central Lender or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:
(a) subject any Lender, the Issuing Bank, the Fronting Bank, or the
Agent to any tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature with respect to this Credit Agreement, the
other Loan Documents, any Letters of Credit, such Lender's Commitment or
the Loans (other than taxes based upon or measured by the income or
profits of such Lender, Issuing Bank, Fronting Bank or the Agent or bank
franchise taxes), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits or bank franchise taxes) of payments to any
Lender of the principal of or the interest on any Loans or any other
amounts payable to any Lender or the Agent under this Credit Agreement or
any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Lender, or
(d) impose on any Lender, the Issuing Bank, the Fronting Bank or
the Agent any other conditions or requirements with respect to this Credit
<PAGE> 58
-58-
Agreement, the other Loan Documents, any Letters of Credit, the Loans,
such Lender's Commitment, or any class of loans, letters of credit or
commitments of which any of the Loans or such Lender's Commitment forms
a part, and the result of any of the foregoing is
(i) to increase the cost to any Lender, the Issuing Bank or
the Fronting Bank, of making, funding, issuing, renewing,
extending or maintaining any of the Loans or such Lender's
Revolving Credit Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Lender,
the Issuing Bank or the Fronting Bank or the Agent hereunder on
account of such Lender's Commitment, any Letter of Credit or any of
the Loans, or
(iii) to require such Lender, the Issuing Bank or the
Fronting Bank or the Agent to make any payment or to forego any
interest or Reimbursement Obligation or other sum payable
hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference
to the gross amount of any sum receivable or deemed received by
such Lender, the Issuing Bank or the Fronting Bank or the Agent
from the Borrowers hereunder,
then, and in each such case, the Borrowers will, within fifteen (15) days after
demand made by such Lender or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise jointly and
severally pay to such Lender, the Issuing Bank or the Fronting Bank or the Agent
such additional amounts as will be sufficient to compensate such Lender or the
Agent for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum.
6.8. CAPITAL ADEQUACY. If after the date hereof any Lender, the Issuing
Bank or the Fronting Bank or the Agent determines that (i) the adoption of or
change in any law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) regarding capital
requirements for Lenders or Lender holding companies or any change in the
interpretation or application thereof by a court or governmental authority with
appropriate jurisdiction, or (ii) compliance by such Lender, the Issuing Bank
or the Fronting Bank or the Agent or any corporation controlling such Lender,
the Issuing Bank or the Fronting Bank or the Agent with any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) of any such entity regarding capital adequacy, has the effect of
reducing the return on such Lender's, the Issuing Bank, the Fronting Bank or
the Agent's commitment with respect to any Loans or Letters of Credit to a
level below that which such Lender, the Issuing Bank or the Fronting Bank or
the Agent could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's, the Issuing Bank, the Fronting Bank
or
<PAGE> 59
-59-
the Agent's then existing policies with respect to capital adequacy and
assuming full utilization of such entity's capital) by any amount deemed by
such Lender or (as the case may be) the Agent to be material, then such Lender
or the Agent may notify the Borrowers of such fact. To the extent that the
amount of such reduction in the return on capital is not reflected in the Base
Rate, TransTechnology agrees to pay such Lender, the Issuing Bank or the
Fronting Bank or (as the case may be) the Agent for the amount of such
reduction in the return on capital as and when such reduction is determined
upon presentation by such Lender, the Issuing Bank or the Fronting Bank or (as
the case may be) the Agent of a certificate in accordance with Section 6.9
hereof. Each Lender, the Issuing Bank, the Fronting Bank and the Agent shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
6.9. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Section 6.7 or 6.8 and a brief explanation of such amounts
which are due, submitted by any Lender, the Issuing Bank, the Fronting Bank or
the Agent to the Borrowers, shall be conclusive, absent manifest error, that
such amounts are due and owing.
6.10. INDEMNITY. The Borrowers jointly and severally (but, in the case of
GmbH, subject to Section 30 of the GmbH Act of Germany) agree to indemnify each
Lender and to hold each Lender harmless from and against any loss, cost or
expense (including loss of anticipated profits) that such Lender may sustain or
incur as a consequence of (i) default by any of the Borrowers in payment of the
principal amount of or any interest on any Eurocurrency Rate Loans as and when
due and payable, including any such loss or expense arising from interest or
fees payable by such Lender to lenders of funds obtained by it in order to
maintain its Eurocurrency Rate Loans, (ii) default by any of the Borrowers in
making a borrowing or conversion after such Borrower has given (or is deemed to
have given) a Loan Request, notice (in the case of all or any portion of Term
Loan A pursuant to Section 4A.5.2 or Term Loan B pursuant to Section 4B.5.2)
or a Conversion Request relating thereto or (iii) the making of any payment of a
Eurocurrency Rate Loan or the making of any conversion of any such Loan to a
Base Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto, including interest or fees payable by such Lender
to lenders of funds obtained by it in order to maintain any such Loans.
6.11. INTEREST AFTER DEFAULT.
6.11.1. OVERDUE AMOUNTS. (a) Overdue principal and (to the extent
permitted by applicable law) interest on the Loans (other than the
Sterling Loans) and all other overdue amounts payable hereunder or under
any of the other Loan Documents shall bear interest compounded monthly
and payable on demand at a rate per annum equal to the sum of (i) two
percent (2%) per annum plus (ii) the Applicable Margin with respect to
Base Rate Loans applying to Term Loan B (if such overdue amounts are with
respect to Term Loan B), and otherwise the Applicable Margin with respect
to Base Rate
<PAGE> 60
-60-
Loans other than Term Loan B plus (iii) the Base Rate, until such amount
shall be paid in full (after as well as before judgment).
(b) Overdue principal and (to the extent permitted by applicable law)
interest on the Sterling Loans shall bear interest compounded monthly and
payable on demand at a rate per annum equal to the sum of (i) two percent
(2%) per annum plus (ii) the Applicable Margin with respect to Eurocurrency
Rate Loans other than Term Loan B plus (iii) the applicable Base Rate, until
such amount shall be paid in full (after as well as before judgment).
6.11.2. AMOUNTS NOT OVERDUE. During the continuance of a Default or an
Event of Default the principal of the Revolving Credit Loans, the
International Facility Loans and the Term Loans not overdue shall, until
such Default or Event of Default has been cured or remedied or such Default
or Event of Default has been waived by the Majority Lenders pursuant to
Section 27, bear interest at a rate per annum equal to the greater of
(i) two percent (2%) above the rate of interest otherwise applicable to
such Loans pursuant to Section 2.5, Section 3.5, Section 4A.5 or Section
4B.5 and (ii) the rate of interest applicable to overdue principal
pursuant to Section 6.11.1.
6.12. FRONTING BANK PROVISIONS.
6.12.1. FRONTING FEE. The Borrowers jointly and severally agree to pay to
the Fronting Bank for the account of the Fronting Bank a fronting fee
calculated at the rate of one-quarter of one percent (1/4%) per annum on
the average principal amount of Fronted Loans outstanding (including
amounts requested) during each calendar quarter or portion thereof from
the Closing Date to the later to occur of the Revolving Credit Loan
Maturity Date and the Term Loan A Maturity Date. The fronting fee shall be
payable quarterly in arrears on the first day of each calendar quarter for
the immediately preceding calendar quarter, commencing on the first such
date following the date hereof, with a final payment on the later to occur
of the Revolving Credit Loan Maturity Date and the Term Loan A Maturity
Date, or any earlier date on which the Fronting Bank's commitment to make
Fronted Loans shall terminate.
6.12.2. INDEMNITIES FROM THE BANKS. Each of the Banks severally
undertakes to keep the Fronting Bank indemnified as follows:
(a) Each Bank irrevocably and unconditionally undertakes to pay to
the Agent for the account of the Fronting Bank on demand made by the
Fronting Bank through the Agent:
(i) such Bank's Revolving Credit Commitment Percentage of each
amount which is expressed to be payable by any of the Borrowers
to or for the account of the Fronting Bank by way of the payment,
repayment or prepayment of any International Facility Loan and
<PAGE> 61
-61-
which such Borrower fails to pay together with interest which has accrued
with respect thereto;
(ii) such Bank's Term A Commitment Percentage of each amount which is
expressed to be payable by any of the Borrowers to or for the account of
the Fronting Bank by way of the payment, repayment or prepayment of any
Tranche of Term Loan A and which such Borrower fails to pay together with
interest which has accrued with respect thereto; and
(iii) such additional amount as shall be necessary to reimburse the
Fronting Bank for its cost of funding the amount payable by such Bank as
mentioned in sub-clauses (i) and (ii) above during the period beginning on
the date the amount was due from the applicable Borrower and ending on the
date demand is made on such Bank for payment of the same,
and agrees that neither the Fronting Bank nor the Agent shall be obliged to
make any demand on or take any proceedings against any of the Borrowers or any
other person before making demand on such Bank hereunder.
(b) Each Bank irrevocably and unconditionally undertakes to pay to the
Agent for the account of the Fronting Bank on demand made by the Fronting Bank
through the Agent at any time after an Event of Default has occurred and is
continuing and has not been waived, its Revolving Credit Commitment Percentage
of any outstanding International Facility Loan made by the Fronting Bank, and
any such payment shall be in satisfaction pro tanto of the undertakings of such
Bank contained in clause (a) above.
(c) Each Bank irrevocably and unconditionally undertakes to pay to the
Agent for the account of the Fronting Bank on demand made by the Fronting Bank
through the Agent at any time after an Event of Default has occurred and is
continuing and has not been waived, its Term A Commitment Percentage of any
outstanding Tranche of Term Loan A made by the Fronting Bank, and any such
payment shall be in satisfaction pro tanto of the undertakings of such Bank
contained in clause (a) above.
(d) If a Bank fails to make payment on the due date therefor of any
amount due from it for the account of the Fronting Bank pursuant to clauses
(a), (b) and (c) hereof (a "relevant amount") then (i) such Bank shall be
deemed to be Delinquent Lender pursuant to Section 16.5.3 and (ii) until the
Fronting Bank has received payment of the relevant amount in full (and without
prejudice to any other rights or remedies of the Agent or the Fronting Bank in
respect of such failure) the Fronting Bank shall be entitled to receive any
interest which such Delinquent Lender would otherwise have been entitled to
receive in respect of the Loan in respect of which the relevant amount is
payable and (iii) such Delinquent Lender shall have no right to vote
<PAGE> 62
-62-
as a Lender hereunder or under any of the other Loan Documents, and, for
so long as such Bank remains a Delinquent Lender under this Section 6.12.2,
the determination of the Majority Lenders, or, as the case may be, the
Majority Banks or Majority Term B Lenders shall for all purposes of this
Credit Agreement and the other Loan Documents be made without regard to
the interest of such Delinquent Lender in the Loans to the extent of such
participation.
(e) The Borrowers jointly and severally, irrevocably and
unconditionally, undertake to reimburse to each Bank any amount paid by
such Bank pursuant to this Section 6.12.2, and such amount shall be
immediately due from the Borrowers to such Bank on the day such amount is
paid by such Bank to the Agent and to indemnify and hold such Bank harmless
against all actions, proceedings, liabilities, claims, demands, costs and
expenses of whatsoever nature and howsoever occurring which such Bank may
properly incur, suffer or sustain by reason of its payment of such amount.
6.12.3. RESIGNATION OF FRONTING BANK. The Fronting Bank may resign
at any time by giving sixty (60) days prior written notice thereof to the
Banks and TransTechnology. Upon any such resignation, the Majority Banks
shall have the right to appoint a successor Fronting Bank. Unless a
Default or Event of Default shall have occurred and be continuing, such
successor Fronting Bank shall be reasonably acceptable to
TransTechnology. If no successor Fronting Bank shall have been so
appointed by the Majority Banks and shall have accepted such appointment
within thirty (30) days after the retiring Fronting Bank's giving of
notice of resignation, then the retiring Fronting Bank may, on behalf of
the Banks, appoint a successor Fronting Bank, which shall be a financial
institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation, and having the ability to fund the DM
Loans from a DM Lending Office located in Germany and the Sterling Loans
from a Sterling Lending Office located in England. Upon the acceptance
of any appointment as Fronting Bank hereunder by a successor Fronting
Bank, such successor Fronting Bank shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of
the retiring Fronting Bank, and the retiring Fronting Bank shall be
discharged from its duties and obligations hereunder. After any retiring
Fronting Bank's resignation, the provisions of this Credit Agreement and
the other Loan Documents shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as Fronting Bank.
6.13. LIMIT ON NUMBER OF SEPARATE EUROCURRENCY RATE LOANS.
No more than ten (10) separate Eurocurrency Rate Loans (whether outstanding
with respect to the Revolving Credit Loans, Term Loans or International Facility
Loans) may be outstanding under this Credit Agreement at any one time.
<PAGE> 63
-63-
7. COLLATERAL SECURITY AND GUARANTIES.
7.1. SECURITY OF BORROWERS. All of the Obligations shall be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in all of the assets of
TransTechnology, whether now owned or hereafter acquired, pursuant to the terms
of the Security Documents to which TransTechnology is a party. The Obligations
of GmbH shall be secured by a security interest (subject only to Permitted
Liens entitled to priority under applicable law) in all of the assets of GmbH,
whether now owned or hereafter acquired, pursuant to the terms of the German
Security Documents. The Obligations of Limited shall be secured by a first
priority fixed and floating charge over all of the assets of Limited, whether
now owned or hereafter acquired, pursuant to the terms of the Debenture.
7.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. The Obligations shall also
be guaranteed pursuant to the terms of the Guaranties. The obligations of each
of the Guarantors shall be in turn secured by a perfected first priority
security interest (subject only to Permitted Liens entitled to priority under
applicable law) in all of the assets of each such Guarantor, whether now owned
or hereafter acquired, pursuant to the terms of the Security Documents to which
such Guarantor is a party.
8. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to the Lenders
and the Agent, at the Closing Date and on the Acquisition Date after giving
effect to the Acquisition, as follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. Each of the Borrowers and its
respective Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (iii) is in good standing as a foreign corporation
and is duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or
financial condition of such Borrower or Subsidiary.
8.1.2. AUTHORIZATION. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which the Borrowers
or any of their Subsidiaries are or are to become a party and the
transactions contemplated hereby and thereby (i) are within the
corporate authority of such Person, (ii) have been duly authorized by
all necessary corporate proceedings, (iii) do not conflict with or
result in any breach or contravention of any provision of law,
statute, rule or
<PAGE> 64
-64-
regulation to which any of the Borrowers or their Subsidiaries, or
any of the assets of any of the Borrowers or their Subsidiaries, are
subject or any judgment, order, writ, injunction, license or permit
applicable to any of the Borrowers or their Subsidiaries and (iv) do
not conflict with any provision of the corporate charter, bylaws or
memorandum and articles of association of, or any agreement or other
instrument binding upon, any of the Borrowers or their Subsidiaries.
8.1.3. ENFORCEABILITY. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrowers or any
of their Subsidiaries are or are to become a party will result in
valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
8.2. GOVERNMENTAL APPROVALS.
The execution, delivery and performance by each of the Borrowers and
its respective Subsidiaries of this Credit Agreement, the other Loan Documents
and the Acquisition Documents to which any of the Borrowers or any of their
Subsidiaries are or are to become a party and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing with,
any governmental agency or authority other than those already obtained, except
that the Merger Documents will require registration with the local Commercial
Registrar to be effective.
8.3. TITLE TO PROPERTIES; LEASES.
Except as indicated on Schedule 8.3 hereto and also giving effect to the
transaction contemplated hereby, (a) TransTechnology and its respective
Subsidiaries own all of the assets reflected in the consolidated balance sheet
of TransTechnology and its Subsidiaries as at the Balance Sheet Date or
acquired since that date (except property and assets sold or otherwise disposed
of in the ordinary course of business since that date) and to be acquired
pursuant to the Acquisitions, subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens, and (b) all of
TransTechnology's and its respective Subsidiaries' assets are reflected in the
consolidated balance sheet as at the Balance Sheet Date described in Section
8.4.1.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
8.4.1. TRANSTECHNOLOGY FINANCIAL STATEMENTS. There has been
furnished to each of the Lenders a consolidated balance sheet of
<PAGE> 65
-65-
TransTechnology and its Subsidiaries as at the Balance Sheet Date, and a
consolidated statement of income of TransTechnology and its Subsidiaries for the
fiscal year then ended, certified by Deloitte & Touche. Such balance sheet and
statement of income have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of
TransTechnology as at the close of business on the date thereof and the results
of operations for the fiscal year then ended. There are no contingent
liabilities of TransTechnology or any of its Subsidiaries as of such date
involving material amounts, known to the officers of TransTechnology, which were
not disclosed in such balance sheet and the notes related thereto.
8.4.2. SEEGER-ORBIS FINANCIAL STATEMENTS. There has been furnished to each
of the Lenders financial statements of Seeger-Orbis and of each of its
Subsidiaries delivered to TransTechnology pursuant to the Acquisition Documents
(collectively, the "Seeger-Orbis Financial Statements"). Each of the
Seeger-Orbis Financial Statements has been prepared in accordance with
internationally generally accepted accounting principles guided by the SKF
Financial Manual, a complete and current copy of which has been furnished to the
Agent. To the best knowledge of TransTechnology, the Seeger-Orbis Financial
Statements (including any related notes) present a true and fair view of the
financial position and the results of operations of Seeger-Orbis and its
Subsidiaries and the fastener business of the Seeger division of SKF USA Inc.
8.4.3. PRO FORMA FINANCIAL STATEMENTS; PROJECTIONS. There has been
furnished to each of the Lenders (a) a pro forma consolidated balance sheet
(dated June 29, 1995) of the Borrowers and their Subsidiaries as at the
Acquisition Date, which properly gives effect to the Loans and the Acquisition
and which fairly presents the financial condition of the Borrowers and their
Subsidiaries as at the close of business on the Acquisition Date, but does not
include footnotes, reserves or year-end adjustments; and (b) projections (dated
the same date as the pro forma balance sheet referred to above) of the annual
operating budgets of TransTechnology and its Subsidiaries on a consolidated
basis after giving effect to the Loans and the Acquisition, balance sheets and
cash flow statements for the 1996 to 2001 fiscal years (the "Projections"),
which fairly disclose all assumptions made with respect to general economic,
financial and market conditions used in their formulation. To the knowledge of
TransTechnology and any of its Subsidiaries, no facts exist that (individually
or in the aggregate) would result in any material change in any of the
Projections. The Projections are based upon reasonable estimates and
assumptions, have been prepared on the basis of the assumptions stated therein
and reflect the reasonable estimates of TransTechnology and its Subsidiaries of
the results of operations and other information projected therein.
<PAGE> 66
-66-
8.5. NO MATERIAL CHANGES, ETC.
(a) Since the Balance Sheet Date there has occurred no materially
adverse change in the financial condition or business of TransTechnology or
any of its Subsidiaries or any material assets of TransTechnology or any of its
Subsidiaries as shown on or reflected in the consolidated balance sheet of
TransTechnology and its Subsidiaries as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of TransTechnology or any of its Subsidiaries or any
material assets of TransTechnology or any of its Subsidiaries. Since the
Balance Sheet Date, TransTechnology has not made any Distribution except for its
regular quarterly dividend of $341,891 paid on June 1, 1995 and certain stock
repurchases in an amount not in excess of $65,000 in aggregate.
(b) Each of the Borrowers and each of their Subsidiaries (before and
after giving effect to the transactions contemplated by this Credit Agreement
and the other Loan Documents) (i) is solvent, (ii) has assets having a fair
value in excess of its liabilities, (iii) has assets having a fair value in
excess of the amount required to pay its liabilities on existing debts as such
debts become absolute and matured, and (iv) has, and expects to continue to
have, access to adequate capital for the conduct of its business and the
ability to pay its debts from time to time incurred in connection with the
operation of its business as such debts mature.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrowers and each
of their Subsidiaries possesses all franchises, patents, copyrights,trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
8.7. LITIGATION. Except as set forth in Schedule 8.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against any of the Borrowers or their Subsidiaries before any court, tribunal
or administrative agency or board that, if adversely determined, might, either
in any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of any of the Borrowers or their
Subsidiaries or materially impair the right of any of the Borrowers or their
Subsidiaries to carry on business substantially as now conducted by them, or
result in any substantial liability not adequately covered by insurance, or for
which adequate reserves are not maintained on the consolidated balance sheet of
the Borrowers and their Subsidiaries, or which question the validity of this
Credit Agreement or any of the other Loan Documents, or any action taken or to
be taken pursuant hereto or thereto.
<PAGE> 67
-67-
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers nor any
of their Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of any of the Borrowers or their Subsidiaries.
None of the Borrowers nor any of their Subsidiaries is a party to any contract
or agreement that is in default or has or is expected, in the judgment of the
Borrowers' officers, to have any materially adverse effect on the business of
any of the Borrowers or their Subsidiaries.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the Borrowers
nor any of their Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, act, statute, license, rule, regulation or other law, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition,
properties or business of any of the Borrowers or their Subsidiaries.
8.10. TAX STATUS.
Except as disclosed on Schedule 8.10 hereto, each of the Borrowers and
its Subsidiaries (i) has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which any of them is subject, (ii) has paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (iii) has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrowers know of no basis for any such claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS.
None of the Borrowers nor any of their Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor are any of the Borrowers or their Subsidiaries
an "investment company", or an "affiliated company" or a "principal underwriter"
of an "investment company", as such terms are defined in the Investment Company
Act of 1940.
<PAGE> 68
-68-
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage, lease or
other document filed or recorded with any filing records, registry or other
public office, or otherwise, that purports to cover, affect or give notice of
any present or possible future lien on, or security interest in, any assets or
property of any of the Borrowers or their Subsidiaries or any rights relating
thereto, except (i) with respect to Permitted Liens, and (ii) certain financing
statements in favor of NCFC and listed on Schedule 8.13, as to each of which the
Agent has prior to the Closing Date received termination statements on Form
UCC-3 duly completed to the Agent's satisfaction.
8.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable, under applicable law, to
establish and perfect the Agent's security interests in and charges over the
Collateral. The Collateral and the Agent's rights with respect to the
Collateral are not subject to any material setoff, claims, withholdings or
other defenses. The Borrowers or their Subsidiaries, as specified in the
Security Documents, are the owners of the Collateral free from any lien,
security interest, encumbrance and any other claim or demand, except for
Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except for arm's length transactions pursuant
to which any of the Borrowers or their Subsidiaries or any officer, director or
employee of such Borrower or Subsidiary makes payments in the ordinary course
of business upon terms no less favorable than such Borrowers, Subsidiaries,
officers, directors or employees could obtain from third parties, none of the
officers, directors, or employees of any of the Borrowers or their Subsidiaries
is presently a party to any transaction with any of the Borrowers or their
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of any Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been maintained
and operated in compliance in all material respects with the provisions
of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions.
TransTechnology has heretofore delivered to the Agent the most recently
completed annual report, Form 5500, with all required attachments, and
actuarial statement required to be submitted under Section 103(d) of
ERISA, with respect to each Guaranteed Pension Plan.
<PAGE> 69
-69-
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee Benefit Plan
which is an employee welfare benefit plan within the meaning of Section 3(1) or
Section 3(2)(B) of ERISA, no benefits are due unless the event giving rise to
the benefit entitlement occurs prior to plan termination (except as required by
Title I, Part 6 of ERISA). TransTechnology or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
TransTechnology or such ERISA Affiliate without liability to any Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required to be made
to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by TransTechnology or any ERISA Affiliate with respect to any
Guaranteed Pension Plan and there has not been any ERISA Reportable Event, or
any other event or condition which presents a material risk of termination of
any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months of the
date of this representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of Section 4001 of ERISA did not
exceed the aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
8.16.4. MULTIEMPLOYER PLANS. Other than (a) the Electronics Local
431 Pension Fund relating to employees of WTI and (b) the Western Pennsylvania
Teamster and Employers Pension Fund relating to employees of TransTechnology's
Breeze-Industrial division, neither TransTechnology nor any ERISA Affiliate is
a member of any Multiemployer Plan. Neither TransTechnoIogy nor any ERISA
Affiliate has incurred any material liability (including secondary liability)
to any Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of
assets described in Section 4204 of ERISA. Neither TransTechnology nor any
ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of Section 4241 or
Section 4245 of ERISA or that any Multiemployer Plan intends to terminate or
has been terminated under Section 4041A of ERISA.
8.16.5. COMPLIANCE WITH EMPLOYMENT BENEFIT LAWS. Except as set forth in
Schedule 8.16.5 hereto, none of the Borrowers nor any of their Subsidiaries is
in violation of any material provision of any applicable pension, retirement
funding or employee benefit legislation in any jurisdiction.
<PAGE> 70
-70-
8.17. REGULATIONS U AND X. The proceeds of the Loans shall be used to
refinance certain Indebtedness of TransTechnology and certain of its
Subsidiaries to NCFC, to fund the Acquisition, the Approved Acquisition and for
working capital and general corporate purposes of the Borrowers. TransTechnology
will obtain Letters of Credit solely for working capital and general corporate
purposes. No portion of any Loan is to be used, and no portion of any Letter of
Credit is to be obtained, for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8.18. ENVIRONMENTAL COMPLIANCE. Each of the Borrowers and its
Subsidiaries has taken all necessary steps to investigate the past and present
condition and usage of the Real Estate and the operations conducted thereon
and, based upon such diligent investigation, has determined that, except as set
forth on Schedule 8.18 attached hereto:
(a) none of the Borrowers, their Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any European
Union, national, federal, state or local statute, regulation, ordinance,
order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws"), which violation would have a material
adverse effect or the business, assets or financial condition of any of
the Borrowers or their Subsidiaries or the consummation of the
transactions referred to in this Agreement;
(b) the Borrowers and their Subsidiaries have conducted all
business operations on the Real Estate and continue to operate and
maintain their businesses in compliance in all material respects with all
applicable Environmental Laws and any other European Union, national
federal, state and local laws, rules and regulation relating to air
emissions, water discharge, noise emissions, solid, or liquid waste
disposal, hazardous waste, or materials, or other environmental, health
or safety matters and there are no outstanding citations, notices, or
order of non-compliance issued to any of the Borrowers or their
Subsidiaries, or relating to the respective businesses, assets, Real
Estate, other property, leaseholds, or equipment of any of the Borrowers
or their Subsidiaries under any such laws, rules or regulations; and
(c) None of the Borrowers and their Subsidiaries, any Mortgaged
Property and any of the other Real Estate is subject to any applicable
environmental law requiring the performance of Hazardous Substances site
assessments, or the removal or remediation of Hazardous Substances, or the
<PAGE> 71
-71-
giving of notice to any governmental agency or the recording or delivery
to other Persons of an environmental disclosure document or statement by
virtue of the transactions set forth herein and contemplated hereby, or
as a condition to the recording of any Mortgage or to the effectiveness
of any other transactions contemplated hereby.
8.19. SUBSIDIARIES, ETC. A complete and correct list of the Subsidiaries
of each of the Borrowers and the jurisdictions of their incorporation as of the
Closing Date is set forth on Schedule 8.19 hereto. Except as set forth on
Schedule 8.19 hereto, none of the Borrowers nor any of their Subsidiaries is
engaged in any joint venture or partnership with any other Person.
8.20. BANK ACCOUNTS. Schedule 8.20 sets forth the account numbers and
location of all bank accounts of each of the Borrowers and their Subsidiaries.
9. AFFIRMATIVE, COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Issuing Bank has any
obligation to issue, extend or renew any Letters of Credit:
9.1. PUNCTUAL PAYMENT. Each of the Borrowers will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Agent's fee, the fronting fee and all other amounts provided for in this Credit
Agreement and the other Loan Documents to which any of the Borrowers or their
Subsidiaries is a party, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.
9.2. MAINTENANCE OF OFFICES.
(a) TransTechnology and each of the Borrowing Base Subsidiaries will
maintain its chief executive office in Union, New Jersey, or at such other
place in the United States of America as TransTechnology shall designate upon
written notice to the Agent, where notices, presentations and demands to or
upon TransTechnology or such Subsidiary in respect of the Loan Documents to
which TransTechnology or such Subsidiary is a party may be given or made.
(b) GmbH will within thirty (30) days of the completion of the
Acquisition transfer its chief executive office to, and shall thereafter
maintain its chief executive office in, Konigstein, Germany, or at such other
place in Germany as GmbH shall designate upon written notice to the Agent,
where notices, presentations and demands to or upon GmbH in respect of the Loan
Documents to which GmbH is a party may be given or made.
(c) Limited will maintain its registered office in Bingley, Yorkshire,
or at such other place in England as Limited shall designate upon written
notice to the
<PAGE> 72
-72-
Agent, where notices, presentations and demands to or upon Limited in respect
of the Loan Documents to which Limited is a party may be given or made.
9.3. RECORDS AND ACCOUNTS. Each of the Borrowers will, and will cause
each of its Subsidiaries to, (a) if such Borrower or Subsidiary is located in
the United States, keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) if such Borrower or Subsidiary is located
outside the United States, keep true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles in the country in which such Borrower
or Subsidiary, as the case may be, is located. Each of the Borrowers will
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. TransTechnology
will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than one
hundred (100) days after the end of each fiscal year of TransTechnology,
the consolidated balance sheet of TransTechnology and its Subsidiaries
and the consolidating balance sheet of TransTechnology and its
Subsidiaries, each as at the end of such year, and the related
consolidated statement of income and consolidated statement of cash flow
and consolidating statement of income and consolidating statement of
cash flow for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such consolidated and
consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and certified
(as to the consolidated statements) without qualification by Deloitte &
Touche or by other independent certified public accountants satisfactory
to the Agent, together with a written statement from such accountants to
the effect that they have read a copy of this Credit Agreement, and
that, in making the examination necessary to said certification, they
have obtained no knowledge of any Default or Event of Default, or, if
such accountants shall have obtained knowledge of any then existing
Default or Event of Default they shall disclose in such statement any
such Default or Event of Default; provided that such accountants shall
not be liable to the Lenders for failure to obtain knowledge of any
Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
TransTechnology, copies of the unaudited consolidated balance sheet of
TransTechnology and its Subsidiaries and the unaudited consolidating
balance sheet of TransTechnology and its Subsidiaries, each as at the
end of such quarter, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for the portion of
TransTechnology's fiscal year then
<PAGE> 73
-73-
elapsed, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, together with a certification
by the principal financial or accounting officer of TransTechnology that
the information contained in such financial statements fairly presents
the financial position of TransTechnology and its Subsidiaries on the
date thereof (subject to year- end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days
after the end of each month in each fiscal year of TransTechnology,
unaudited monthly consolidated financial statements of TransTechnology
and its Subsidiaries for such month, each prepared in accordance with
generally accepted accounting principles;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by
the principal financial or accounting officer of TransTechnology in
substantially the form of Exhibit E hereto and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in Section 11 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance
Sheet Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of TransTechnology;
(f) within twenty-one (21) days after the end of each calendar month
or at such earlier time as the Agent may reasonably request, a Borrowing
Base Report setting forth the Borrowing Base as at the end of such
calendar month or other date so requested by the Agent;
(g) within fifteen (15) days after reasonable request therefor
from the Agent, and in any event no more than once in each calendar
month, an Accounts Receivable aging report;
(h) by April 30 of each year, the annual budget of TransTechnology
and its Subsidiaries for the next fiscal year; and
(i) from time to time such other financial data and information
(including accountants' management letters) as the Agent or any Lender
may reasonably request.
9.5. NOTICES.
9.5.1. DEFAULTS. Each of the Borrowers will promptly notify the
Agent and each of the Lenders in writing of the occurrence of any
Default or Event of Default. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any
other note, evidence of
<PAGE> 74
-74-
indebtedness, indenture or other obligation to which or with respect to
which any of the Borrowers or their Subsidiaries is a party or obligor,
whether as principal, guarantor, surety or otherwise, each of the
Borrowers shall forthwith give written notice thereof to the Agent and
each of the Lenders, describing the notice or action and the nature of
the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. Each of the Borrowers will promptly
give notice to the Agent and each of the Lenders (i) of any violation
of any Environmental Law that any of the Borrowers or their
Subsidiaries reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially
affect the assets, liabilities, financial conditions or operations of
any of the Borrowers or their Subsidiaries, or the Agent's mortgages,
deeds of trust or security interests pursuant to the Security
Documents.
9.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. Each of the
Borrowers will, immediately upon becoming aware thereof, notify the
Agent and each of the Lenders in writing of any setoff, claims
(including, with respect to the Real Estate, environmental claims),
withholdings or other defenses to which any of the Collateral, or the
Agent's rights with respect to the Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. Each of the Borrowers
will, and will cause each of its Subsidiaries to, give notice to the
Agent and each of the Lenders in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting any of the
Borrowers or their Subsidiaries or to which any of the Borrowers or
their Subsidiaries is or becomes a party involving an uninsured claim
against any of the Borrowers or their Subsidiaries that could
reasonably be expected to have a materially adverse effect on any of
the Borrowers or their Subsidiaries and stating the nature and status
of such litigation or proceedings. Each of the Borrowers will, and will
cause each of its Subsidiaries to, give notice to the Agent and each of
the Lenders, in writing, in form and detail satisfactory to the Agent,
within ten (10) days of any judgment not covered by insurance, final or
otherwise, against such Borrower or any of its Subsidiaries in an
amount in excess of $250,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. Each of the
Borrowers will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and franchises and
those of its Subsidiaries. Each of the Borrowers (i) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(ii) will cause to be made all necessary
<PAGE> 75
-75-
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of such Borrower may be necessary so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times, and (iii) will, and will cause each of its Subsidiaries to, continue to
engage primarily in the businesses now conducted by them and in related
businesses; provided that nothing in this Section 9.6 shall prevent any Borrower
from discontinuing the operation and maintenance of any of its properties or
any of those of its Subsidiaries if such discontinuance is, in the judgment of
such Borrower, desirable in the conduct of its or their business and that do
not in the aggregate materially adversely affect the business of any of the
Borrowers and their Subsidiaries on a consolidated basis.
9.7. INSURANCE.
Each of the Borrowers will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with respect
to its properties and business against such casualties and contingencies as
shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent and
in accordance with the terms of the Security Agreements, including provisions
naming the Agent as additional loss payee and providing for a minimum thirty
(30) days' notice to the Agent prior to cancellation. Each of the Borrowers
will, and will cause each of its Subsidiaries to, maintain insurance on the
Mortgaged Properties in accordance with the terms of the Mortgages. Upon
reasonable request from the Agent, the Borrowers shall furnish the Agent from
time to time with information concerning the Borrowers' and their Subsidiaries'
insurance, including (when requested) copies of the certificates of insurance
evidencing such insurance.
9.8. TAXES. Each of the Borrowers will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by
law become a lien or charge upon any of its property; provided that any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if such contesting Borrower or Subsidiary shall have set aside
on its books adequate reserves with respect thereto; and provided further that
each of the Borrowers and its Subsidiaries will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.9.1. GENERAL. Each of the Borrowers shall permit the Lenders,
through the Agent or any of the Lenders' other designated
representatives, to visit and inspect any of the properties of such
Borrower and any of its Subsidiaries, to examine the books of account of
such Borrower and its
<PAGE> 76
-76-
Subsidiaries (and to make copies thereof and extracts therefrom), and
to discuss the affairs, finances and accounts of such Borrower and its
Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or
any Lender may reasonably request.
9.9.2. COLLATERAL REPORTS. Twice each calendar year (or more
frequently as determined by the Agent), upon the request of the Agent,
TransTechnology will obtain and deliver to the Agent a report of an
independent collateral auditor satisfactory to the Agent (which may be
affiliated with one of the Lenders) with respect to the Accounts
Receivable and inventory components included in the Borrowing Base,
which report shall indicate whether or not the information set forth
in the Borrowing Base Report most recently delivered is accurate and
complete in all material respects based upon a review by such auditors
of the Accounts Receivable (including verification with respect to the
amount, aging, identity and credit of the respective account debtors
and the billing practices of TransTechnology or its applicable
Subsidiary) and inventory (including verification as to the value,
location and respective types). All such collateral value reports
shall be conducted and made at the expense of TransTechnology.
9.9.3. APPRAISALS. If an Event of Default shall have occurred
and be continuing, each of the Borrowers upon the request of the Agent,
will obtain and deliver to the Agent appraisal reports in form and
substance and from appraisers satisfactory to the Agent, stating (i)
the then current fair market, orderly liquidation and forced liquidation
values of all or any portion of the equipment or real estate owned by
such Borrower or any of its Subsidiaries and (ii) the then current
business value of such Borrower and its Subsidiaries. All such
appraisals shall be conducted and made at the expense of the Borrower
obtaining and delivering such appraisal reports.
9.9.4. ENVIRONMENTAL ASSESSMENTS. Whether or not an Event of
Default shall have occurred, the Agent may, from time to time, in its
discretion for the purpose of assessing and ensuring the value of any
Mortgaged Property, obtain one or more environmental assessments or
audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved
by the Agent to evaluate or confirm (i) whether any Hazardous Materials
are present in the soil or water at such Mortgaged Property and (ii)
whether the use and operation of such Mortgaged Property complies with
all Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Mortgaged Property
including any and all storage areas, storage tanks, drains, dry wells and
leaching areas, and the taking of soil samples, surface water samples
and ground water samples, as well as such other investigations or
analyses as the Agent deems appropriate. All such environmental
assessments shall be conducted at the expense of TransTechnology.
<PAGE> 77
-77-
9.9.5. COMMUNICATIONS WITH ACCOUNTANTS. Each of the Borrowers
authorizes the Agent and, if accompanied by the Agent, the Lenders to
communicate directly with such Borrower's independent certified public
accountants, provided that TransTechnology shall have received advance
notice of any such communications, and authorizes such accountants to
disclose to the Agent and the Lenders any and all financial statements
and other supporting financial documents and schedules including copies
of any management letter with respect to the business, financial
condition and other affairs of such Borrower or any of its Subsidiaries.
At the request of the Agent, each of the Borrowers shall deliver a
letter addressed to such accountants instructing them to comply with the
provisions of this Section 9.9.5.
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. Each of
the Borrowers will, and will cause each of its Subsidiaries to, comply in all
material respects with (i) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its charter documents and, in the event such by-laws exist, its by-laws, (iii)
all agreements and instruments by which it or any of its properties may be
bound and (iv) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any of the Borrowers or their Subsidiaries may fulfill any of its
obligations hereunder or any of the other Loan Documents to which such Borrower
or Subsidiary is a party, such Borrower will, or (as the case may be) will
cause such Subsidiary to, immediately take or cause to be taken all reasonable
steps within the power of such Borrower or Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agent and
the Lenders with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. TransTechnology will (i) promptly upon
filing the same with the United States Department of Labor or Internal Revenue
Service, upon request of the Agent, furnish to the Agent a copy of the most
recent actuarial statement required to be submitted under Section 103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in respect
of each Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch,
furnish to the Agent any notice, report or demand sent or received in respect
of a Guaranteed Pension Plan under Sections 302, 4041, 4042, 4043, 4063,
4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under
Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA. Each of the
Borrowers and each of their Subsidiaries shall comply with all applicable
pension, retirement funding or employee benefit legislation in any
jurisdiction.
9.12. USE OF PROCEEDS. The proceeds of the Loans shall be used to
refinance certain Indebtedness of TransTechnology and certain of its
Subsidiaries to NCFC, to fund the Acquisition and the Approved Acquisition and
for working capital and general corporate purposes of the Borrowers.
TransTechnology will obtain Letters of Credit solely for working capital and
general corporate purposes.
9.13. ADDITIONAL MORTGAGED PROPERTY. If, after the Closing Date, any of
the Borrowers or their Subsidiaries acquires or leases for a term in excess of
five (5)
<PAGE> 78
-78-
years real estate used as manufacturing or warehouse facility such borrow shall,
or shall, upon the request of the Agent or the Majority Lenders, cause such
Subsidiary to, forthwith deliver to the Agent a fully executed mortgage or deed
of trust over such real estate, in form and substance satisfactory to the Agent,
together with title insurance policies, surveys, evidences of insurances with
the Agent named as loss payee and additional insured, legal opinions and other
documents and certificates with respect to such real estate as was required for
Real Estate of such Borrower or Subsidiary as of the Closing Date. Each of the
Borrowers further agrees that, following the taking of such actions with respect
to such real estate, the Agent shall have for the benefit of the Lenders and the
Agent a valid and enforceable first priority mortgage or deed of trust over such
real estate, free and clear of all defects and encumbrances except for Permitted
Liens.
9.14. BANK ACCOUNTS. Each of the Borrowers will, and will cause its
Subsidiaries to, together with the employees, agents and other Persons acting
on behalf of such Borrower or Subsidiary, receive and hold in trust for the
Agent and the Lenders all payments constituting proceeds of Accounts Receivable
or other Collateral which come into their possession or under their control
and, immediately upon receipt thereof, deposit such payments in the form
received, with any appropriate endorsements, in one of the accounts designated
as a lockbox or central depository account on Schedule 8.20.
9.15. INTEREST RATE PROTECTION. With effect from a date no later than
thirty (30) days after the Closing Date, TransTechnology will maintain interest
rate protection arrangements on terms and conditions satisfactory to the Agent
with respect to a principal amount of at least $25,000,000 for a period of
three (3) years from the date of implementation of such arrangements.
9.16. GERMAN MERGER. TransTechnology, GmbH and, following the
Acquisition Date, Seeger-Orbis shall use their respective best efforts to
pursue the completion of the German Merger pursuant to and in accordance with
the Merger Documents, and shall submit or file all documents required to be
submitted or filed with any governmental agency or regulatory authority in
connection therewith by August 31, 1995, or such later date as maybe agreed in
writing by the Agent. Each such submission or filing shall be true, accurate
and complete, and TransTechnology shall as soon as practicable send, or procure
the sending of, a copy of each such submission or filing to the Agent at its
address specified in Section 21. GmbH and Seeger-Orbis shall deliver to the
Agent, immediately following the submission or filing of the documents refered
to in the first sentence of this Section 9.16, such documents, instruments as
the Agent may request in order to facilitate the completion by or on behalf of
the Agent of the German Merger following the occurrence and during the
continuance of any Event of Default.
9.17. ENGLISH ASSET TRANSFER. Limited shall only enter into any
hive-down of Limited into Anderton (any such transaction, the "English Asset
Transfer") if the Agent shall have received such documentary evidence
satisfactory to it of:
<PAGE> 79
-79-
(a) Anderton's assumption of all of Limited's duties,
obligations and liabilities (including Limited's liabilities hereunder),
such evidence to include without limitation the Anderton Assumption
Agreement duly executed by Limited and Anderton;
(b) compliance of the English Asset Transfer and Anderton's
assumption of Limited's liabilities hereunder with sections 151-158 of
the Companies Act 1985 of the United Kingdom, including certified copies
of any auditors' reports and statutory declarations required to be
delivered under such sections of the Companies Act, and such opinions of
English solicitors as to such compliance as the Agent may require; and
(c) the corporate capacity of Limited and Anderton to enter
into the English Asset Transfer and related transactions, including such
opinions of English solicitors on such subject as the Agent may require.
9.18. FURTHER ASSURANCES. Each of the Borrowers will, and will cause each
of its Subsidiaries to, cooperate with the Lenders and the Agent and execute
such further instruments and documents as the Lenders or the Agent shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Credit Agreement and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Issuing Bank has any
obligations to issue, extend or renew any Letters of Credit:
10.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers will not, and will not
permit any of their Subsidiaries to, create, incur, assume, guarantee, or be or
remain liable, contingently or otherwise, with respect to, any Indebtedness
other than:
(a) Indebtedness to the Lenders and the Agent arising under any of
the Loan Documents;
(b) current liabilities of any of the Borrowers or their
Subsidiaries incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 9.8;
<PAGE> 80
-80-
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which any of the
Borrowers or Subsidiary shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Subordinated Debt;
(g) obligations under Capitalized Leases not exceeding $4,000,000
in aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with the acquisition after
the date hereof of any real or personal property by any of the Borrowers
or their Subsidiaries, provided that the aggregate principal amount of
such Indebtedness of TransTechnology and its Subsidiaries shall not
exceed the aggregate amount of $2,500,000 at any one time;
(i) Indebtedness existing on the date hereof and listed and
described on Schedule 10.1 hereto; and
(j) Indebtedness of any Subsidiary of TransTechnology to
TransTechnology; provided that such Indebtedness shall be evidenced by
promissory notes duly executed by the obligor, and all such intercompany
notes shall be pledged and delivered to the Agent and be in form and
substance satisfactory to the Agent.
10.2. RESTRICTIONS ON LIENS. The Borrowers will not, and will not permit
any of their Subsidiaries to, (i) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or
the income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (v) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrowers and their
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:
<PAGE> 81
-81-
(a) liens in favor of a Borrower on all or part of the assets of
Subsidiaries of such Borrower securing Indebtedness owing by such
Subsidiaries to such Borrower;
(b) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties other than
Mortgaged Properties to secure claims for labor, material or supplies in
respect of obligations not overdue or delinquent;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties other than Mortgaged Properties in respect
of judgments or awards, the Indebtedness with respect to which is
permitted by Section 10.1(d);
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties other than Mortgaged Properties, in
existence less than 120 days from the date of creation thereof in respect
of obligations not overdue or delinquent;
(f) encumbrances on Real Estate other than the Mortgaged Property
consisting of easements, rights of way, zoning restrictions, restrictions
on the use of real property and defects and irregularities in the title
thereto, landlord's or lessor's liens under leases to which a Borrower or
a Subsidiary of a Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of the Borrowers interferes
materially with the use of the property affected in the ordinary conduct
of the business of the Borrowers and their Subsidiaries, which defects do
not individually or in the aggregate have a materially adverse effect on
the business of any Borrower individually or of TransTechnology and its
Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 10.2
hereto;
(h) purchase money security interests in or purchase money
mortgages on real or personal property other than Mortgaged Properties
acquired after the date hereof to secure purchase money Indebtedness of
the type and amount permitted by Section 10.1(h), incurred in connection
with the acquisition of such property, which security interests or
mortgages cover only the real or personal property so acquired (or
comparable security interests, such as collateral assignments or retention
of title agreements entered into in the ordinary course of business);
(i) liens and encumbrances on each Mortgaged Property as and to the
extent permitted by the Mortgage applicable thereto; and
<PAGE> 82
-82-
(j) liens in favor of the Agent for the benefit of the Lenders and
the Agent under the Loan Documents.
10.3. RESTRICTIONS ON INVESTMENTS. The Borrowers will not, and will not
permit any of their Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America, the Federal Republic of Germany or the United Kingdom that
mature within one (1) year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets in excess of
$1,000,000,000 or, with respect to Subsidiaries of TransTechnology
located outside the United States, deposit accounts with local banks
having total assets in excess of $1,000,000,000 or the local currency
equivalent thereof;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States
of America or any state thereof that at the time of purchase have been
rated and the ratings for which are not less than "P 1" if rated by
Moody's Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's;
(d) Investments existing on the date hereof and listed on Schedule
10.3 hereto;
(e) Investments with respect to Indebtedness permitted by Section
10.1(j) so long as such entities remain Subsidiaries of TransTechnology;
(f) Investments consisting of the Guaranty or Investments by
TransTechnology in Subsidiaries of TransTechnology existing on the
Closing Date;
(g) Investments consisting of promissory notes received as proceeds
of asset dispositions permitted by Section 10.5.2;
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $250,000 in the aggregate at any time
outstanding; and (i) other Investments in an aggregate amount not in
excess of $100,000;
provided, however, that, with the exception of demand deposits referred to in
Section 10.3(b) and loans and advances referred to in Section 10.3(h), such
Investments will be considered Investments permitted by this Section 10.3 only
if all actions have been taken to the satisfaction of the Agent to provide to
the Agent, for the benefit of the Banks
<PAGE> 83
-83-
and the Agent, a first priority perfected security interest in all of such
Investments free of all encumbrances other than Permitted Encumbrances.
10.4. DISTRIBUTIONS. TransTechnology will not make, or permit any of its
Subsidiaries to make, any Distributions except that, so long as no Default or
Event of Default has occurred and is continuing or would result therefrom:
(a) TransTechnology may make Distributions on or prior to
September 1, 1995 in an aggregate amount not to exceed $375,000 with
respect to the fiscal quarter ended June 30, 1995; and
(b) TransTechnology may make Distributions with respect to each
fiscal quarter commencing on or after July 1, 1995 within ninety (90) days
following the end of such fiscal quarter, provided that:
(i) the aggregate amount of all Distributions declared
and/or paid pursuant to this Section 10.4(b) with respect to each
of the periods of one, two and three consecutive fiscal quarters
commencing on July 1, 1995, and thereafter for each of the periods
of four consecutive fiscal quarters most recently ended, shall not
exceed twenty-five percent (25%) of Consolidated Net Income for
such period, provided however, that for purposes of this section
only, with respect to the fiscal quarter ended December 31, 1994,
Consolidated Net Income shall include an additional amount of
$1,080,000, and with respect to the fiscal quarter ended March 31,
1995 it shall include an additional amount of $2,275,000, in each
case reflecting charges for discontinued operations; and
(ii) the aggregate amount of all Distributions declared
and/or paid pursuant to this Section 10.4(b) with respect to each
of the periods of one, two and three consecutive fiscal quarters
commencing on July 1, 1995, and thereafter for each of the periods
of four consecutive fiscal quarters most recently ended, may not
exceed $1,500,000, unless the ratio of Senior Funded Indebtedness
to Consolidated EBITDA, calculated on the same basis as Ratio 1 in
the definition of "Applicable Margin", is less than 2:00:1 as of
the end of such period, in which case the only applicable limit on
the amount of such Distributions shall be as set forth in
sub-clause (a) above:
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1. MERGERS AND ACQUISITIONS. The Borrowers will not, and will
not permit any of their Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock
acquisition, other than:
(a) the acquisition of assets (other than assets which
constitutes all or a substantial part of a business or division)
in the
<PAGE> 84
-84-
ordinary course of business consistent with the past practices of
the TransTechnology Group;
(b) the Approved Acquisition, subject to fulfillment of the
conditions set forth in the definition thereof and in Section
4A.1.4;
(c) the merger or consolidation of one or more of the
Subsidiaries of TransTechnology with and into TransTechnology; or
(d) the merger or consolidation of two or more Subsidiaries
of TransTechnology, including without limitation the German Merger
and the English Asset Transfer.
10.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will not
permit any of their Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than:
(a) the disposition of assets (other than assets which
constitutes all or a substantial part of a business or division) in
the ordinary course of business, consistent with the past practices
of the TransTechnology Group;
(b) the disposition of the assets listed in Schedule
10.5.2, provided that (i) such disposition is for consideration
equal to or greater than the fair market value of such assets, as
determined by the management of the selling member of the
TransTechnology Group in its reasonable discretion and (ii) the
proceeds of any such disposition shall be paid to the Agent for the
account of the Lenders, to be applied against the Loans in
accordance with Section 4C.4; and
(c) the disposition of the assets identified on the most
recent balance sheet of TransTechnology and its Subsidiaries as
belonging to or employed in operations identified in such balance
sheet as discontinued operations of the TransTechnology Group
provided that the proceeds of any such disposition shall be paid
to the Agent for the account of the Lenders, to be applied against
the Term Loans in accordance with Section 4C.4.
10.6. SALE AND LEASEBACK. The Borrowers will not, and will not permit any
of their Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby any Borrower or Subsidiary of a Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or
lease other property that any member of the TransTechnology Group intends to
use for substantially the same purpose as the property being sold or
transferred.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrowers will not, and
will not permit any of their Subsidiaries to, (i) construct or install on any
of the Real Estate any underground tank or other underground storage receptacle
for
<PAGE> 85
-85-
Hazardous Substances (ii) conduct any activity at any Real Estate or use any
Real Estate in any manner so as to cause any material release (i.e. releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping) of Hazardous Substances on, upon or
into the Real Estate, or (iii) otherwise conduct any activity at any Real
Estate or use any Real Estate in any manner that would be in material violation
of any Environmental Law or bring such Real Estate in material violation of any
Environmental Law.
10.8. SUBORDINATED DEBT. TransTechnology will not, and will not permit
any of its Subsidiaries to, amend, supplement or otherwise modify the terms of
any Subordinated Debt or prepay, redeem or repurchase any Subordinated Debt.
10.9. EMPLOYEE BENEFIT PLANS. Neither TransTechnology nor any ERISA
Affiliate will
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result in a
material liability for TransTechnology or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of
TransTechnology or any of its Subsidiaries pursuant to Section 302(f) or
Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
10.10. Bank Accounts. TransTechnology will not, and will not permit any
of its Subsidiaries to, (i) establish any bank accounts other than those listed
on Schedule 8.20 without the Agent's prior written consent, (ii) violate
directly or indirectly any bank agency or lock box agreement in favor of the
Agent for the benefit of the Lenders and the Agent with respect to such
account, or (iii) deposit into any of the payroll accounts listed on Schedule
8.20 any amounts in excess of amounts necessary to pay current payroll
obligations from such accounts.
10.11. Operating Leases. The Borrowers will not, and will not permit any
of their Subsidiaries to, create, incur, assume, guarantee or remain liable
for, contingently or otherwise, any Rental Obligations with respect to
Operating Leases
<PAGE> 86
-86-
in excess of an aggregate amount of $4,500,000 scheduled to become due and
payable in any fiscal year.
11. FINANCIAL COVENANTS OF THE BORROWERS.
The Borrowers jointly and severally covenant and agree that, so long as
any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is
outstanding or any Lender has any obligation to make any Loans or the Issuing
Bank has any obligation to issue, extend or renew any Letters of Credit:
11.1. CONSOLIDATED EBITDA TO CONSOLIDATED TOTAL INTEREST EXPENSE.
TransTechnology will not permit the ratio of Consolidated EBITDA to
Consolidated Total Interest Expense for any fiscal period described in the
table set forth below to be less than the ratio set forth opposite such period
in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
For the period commencing on the Closing 2.50: 1
Date and ending on September 30, 1995
For the period of two consecutive fiscal 2.75: 1
quarters ending on December 31, 1995
For the period of three consecutive fiscal 3.00: 1
quarters ending on March 31, 1996
For the Reference Period ending on June 3.25: 1
30, 1996
For the Reference Period ending on 3.50: 1
September 30, 1996
For the Reference Period ending on 3.75: 1
December 31, 1996
For each Reference Period ending at the 4.00: 1
end of each fiscal quarter after January 1,
1997
</TABLE>
11.2. FIXED CHARGE COVERAGE. TransTechnology will not, during any fiscal
period described in the table set forth below, permit the ratio of (i) the
difference of (A) Consolidated EBITDA for such period, minus (B) Capital
Expenditures made during such period to the extent permitted by Section 11.6, to
(ii) the sum of (Y) Consolidated Total Interest Expense for such period, plus
(Z) any scheduled repayments of principal on any Indebtedness of
TransTechnology or any of its Subsidiaries paid or which becomes due and
payable during such period, to be less than the ratio set forth opposite such
period in such table:
<PAGE> 87
-87-
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
For the period commencing on the Closing 1.30: 1
Date and ending on September 30, 1995
For the period of two consecutive fiscal 1.30: 1
quarters ending on December 31, 1995
For the period of three consecutive fiscal 1.30: 1
quarters ending on March 31, 1996
For each Reference Period ending on or 1.50: 1
after June 30, 1996
</TABLE>
11.3. LEVERAGE. TransTechnology will not permit the ratio of Senior
Funded Indebtedness to Consolidated EBITDA, calculated on the same basis as
Ratio 1 in the definition of "Applicable Margin," for any Reference Period
ending during any period described in the table set forth below to exceed the
ratio set forth opposite such period in such table:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Closing Date through March 4.00: 1
30, 1996
From March 31, 1996 through 3.50: 1
September 30, 1996
From October 1, 1996 through March 3.00: 1
30, 1997
From March 31, 1997 through March 2.50: 1
30, 1998
From March 31, 1998 and thereafter 2.00: 1
</TABLE>
11.4. MINIMUM NET WORTH. TransTechnology will not permit Consolidated
Net Worth at any time during any period described in the table set forth below
to be less than the amount set forth opposite such period in such table:
<PAGE> 88
-88-
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From the Closing Date through $60,000,000
March 30, 1996
From March 31, 1996 through $65,000,000
March 30, 1997
From March 31, 1997 and $70,000,000, as such
thereafter amount may be increased at
the end of each fiscal
quarter (commencing with
the first fiscal quarter of
fiscal year 1998), for the
fiscal quarter thereafter, by
the addition of seventy-five
percent (75%) of
Consolidated Net Income
earned after March 31,
1997.
</TABLE>
11.5. CURRENT RATIO. TransTechnology will not permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
2.25 to 1 at any time.
11.6. CAPITAL EXPENDITURES. TransTechnology will not make, or permit any
Subsidiary of TransTechnology to make, Capital Expenditures (a) in the period
from the Closing Date through March 31, 1996, that exceed $6,500,000 in the
aggregate, or (b) in any fiscal year beginning on or after April 1, 1996, that
exceed $7,000,000 in the aggregate for such fiscal year, provided that, if
during any fiscal year the amount of Capital Expenditures permitted for that
fiscal year is not so utilized, such unutilized amount may be utilized in any
subsequent fiscal year, and provided further that the aggregate amount of (i)
the unutilized portion from any one fiscal year, plus (ii) any unutilized
portion previously carried forward and which remains unutilized, which may be
carried forward from one fiscal year to the subsequent fiscal year shall not
exceed $2,000,000. For the purposes of this Section 11.6, Capital Expenditures
shall not include any amounts in respect of leases in effect on the Closing
Date and classified at such time as Operating Leases which, subsequent to the
Closing Date, shall have been reclassified as Capitalized Leases.
12. CLOSING CONDITIONS.
The obligations of the Banks and the Fronting Bank, as the case may be,
to make the initial Revolving Credit Loans, International Facility Loans and
Tranches
<PAGE> 89
-89-
of Term Loan A, of the Term B Lenders to make the Term B Loan, and of the
Issuing Bank to issue any initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:
12.1. LOAN DOCUMENTS, ETC.
12.1.1. LOAN DOCUMENTS. Each of the Loan Documents (other than
the Anderton Assumption Agreement and the Interest Rate Protection
Documents) shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form
and substance satisfactory to each of the Lenders. The Agent shall have
received a fully executed copy of each such document.
12.1.2. ACQUISITION DOCUMENTS. Each of the Acquisition Documents
(other than the Merger Documents) shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to each of the
Lenders. The Agent shall have received a fully executed copy of each
such document.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Lenders shall
have received from TransTechnology and each of its Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete
on the Closing Date, of each of (i) its charter or other incorporation
documents as in effect on such date of certification, and (ii) its by-laws as
in effect on such date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by TransTechnology and each of its
Subsidiaries of this Credit Agreement and the other Loan Documents to which it
is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Lenders shall have been provided to each
of the Lenders.
12.4. INCUMBENCY CERTIFICATE. Each of the Lenders shall have received
from TransTechnology and each of its Subsidiaries an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of
TransTechnology or such Subsidiary, and giving the name and bearing a specimen
signature of each individual who shall be authorized: (i) to sign, in the name
and on behalf of each of TransTechnology of such Subsidiary, each of the Loan
Documents and Acquisition Documents to which TransTechnology and such
Subsidiary is or is to become a party; (ii) in the case of the Borrowers, to
make Loan Requests and Conversion Requests and to apply for Letters of Credit;
and (iii) to give notices and to take other action on its behalf of the
Borrowers under the Loan Documents.
12.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Agent to protect and preserve such
<PAGE> 90
-90-
security interests shall have been duly effected. The Agent shall have received
evidence thereof in form and substance satisfactory to the Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
have received from each of TransTechnology and its Subsidiaries a completed and
fully executed Perfection Certificate and the results of UCC searches or
searches of any other relevant register of charges or commercial register with
respect to the Collateral, indicating no liens other than Permitted Liens and
otherwise in form and substance satisfactory to the Agent.
12.7. SURVEYS. The Agent shall have received a Survey of each Mortgaged
Property as to which a survey has been conducted on or prior to the date
hereof.
12.8. TITLE INSURANCE. The Agent shall have received a Title Policy
covering each Mortgaged Property located in the United States (or commitments
to issue such policies, with all conditions to issuance of the Title Policy
deleted by an authorized agent of the Title Insurance Company) together with
proof of payment of all fees and premiums for such policies, from the Title
Insurance Company and in amounts satisfactory to the Agent, insuring the
interest of the Agent and each of the Lenders as mortgagee under the Mortgages.
12.9. LANDLORD CONSENTS. TransTechnology and its Subsidiaries shall have
delivered to the Agent all consents required for the Agent to receive, as part
of the Security Documents, a collateral assignment of each material leasehold
of personal property, together in each case with such estoppel certificates as
the Agent may request.
12.10. CERTIFICATES OF INSURANCE. The Agent shall have received (i) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance
with the provisions of the Security Agreements and (ii) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).
12.11. BANK AGENCY AGREEMENTS. The Agent shall have received an
agreement, in form and substance satisfactory to the Agent, from each bank at
which TransTechnology or any of its Subsidiaries maintains depository accounts
(including bank agency or lock box agreements) concerning the Agent's interest
for the benefit of the Lenders and the Agent in such accounts.
12.12. BORROWING BASE REPORT. The Agent shall have received from
TransTechnology an initial Borrowing Base Report dated as of the Closing Date
and regarding balances on May 28, 1995.
12.13. ACCOUNTS RECEIVABLE AGING REPORT. The Agent shall have received
from TransTechnology the most recent Accounts Receivable aging report of
TransTechnology and its Subsidiaries dated as of a date which shall be no more
<PAGE> 91
-91-
than fifteen (15) days prior to the Closing Date and TransTechnology shall have
notified the Agent in writing on the Closing Date of any material deviation
from the Accounts Receivable values reflected in such Accounts Receivable aging
report and shall have provided the Agent with such supplementary documentation
as the Agent may reasonably request.
12.14. HAZARDOUS WASTE ASSESSMENTS. The Agent shall have received
hazardous waste site assessments from environmental engineers or other
documentation in form and substance satisfactory to the Agent, covering all
Mortgaged Property and all other real property in respect of which
TransTechnology or any of its Subsidiaries may have material liability, whether
contingent or otherwise, for dumping or disposal of Hazardous Substances.
12.15. SOLVENCY CERTIFICATE. Each of the Lenders shall have received an
officer's certificate of TransTechnology dated as of the Closing Date as to the
solvency of TransTechnology and its Subsidiaries following the consummation of
the transactions contemplated herein and in form and substance satisfactory to
the Lenders.
12.16. OPINION OF COUNSEL. Each of the Lenders and the Agent shall have
received a favorable legal opinion addressed to the Lenders and the Agent,
dated as of the Closing Date, in form and substance satisfactory to the Lenders
and the Agent, from:
(a) Pfaltz & Woller, P.A., counsel to TransTechnology and its
Subsidiaries in the United States;
(b) Jones, Day, Reavis & Pogue, counsel to TransTechnology and its
Subsidiaries in the Federal Republic of Germany;
(c) Eversheds, solicitors to Limited; and
(d) if requested by the Agent such other local counsel to
TransTechnology in any Jurisdiction where any Collateral (including but
not the limited to Mortgaged Property, is located.
12.17. PAYMENT OF FEES. TransTechnology shall have paid to the Agent
the closing fee and Agent's fee pursuant to Sections 6.1 and 6.2.
12.18. PAYOFF LETTER.
The Agent shall have received a payoff letter from NCFC, indicating the
amount of the loan obligations of TransTechnology and certain of its
Subsidiaries to NCFC to be discharged on the Closing Date and an acknowledgment
by NCFC that upon receipt of such funds it will forthwith execute and deliver
to the Agent for filing all termination statements and take such other actions
as may be necessary to discharge all mortgages, deeds of trust and security
interests granted by TransTechnology or any of its Subsidiaries in favor of
NCFC.
<PAGE> 92
-92-
12.19. OUTSTANDING LETTERS OF CREDIT.
Arrangements satisfactory to the Lenders and the Agent shall be in place
with respect to certain letters of credit issued for the account of
TransTechnology or certain Subsidiaries of TransTechnology by NCFC.
12.20. DISBURSEMENT INSTRUCTIONS. The Agent shall have received
disbursement instructions from TransTechnology, indicating (a) that the
proceeds of the First US Tranche of Term Loan A and the Term Loan B are to be
paid to NCFC, in repayment of the aggregate loan obligations of TransTechnology
and its Subsidiaries to NCFC outstanding on the Closing Date, and (b) that a
portion of the proceeds of the initial Revolving Credit Loans to
TransTechnology and all of the proceeds of the German Tranche and the UK
Tranche of Term Loan A shall be made available to TransTechnology, GmbH and
Limited, respectively, for payment by GmbH to SKF GmbH to fund the SO
Acquisition, and (c) that a portion of the proceeds of the initial Revolving
Credit Loans shall be made available to TransTechnology to fund the acquisition
by WTI pursuant to the Asset Purchase Agreement.
12.21. COLLATERAL NOTES.
In addition to its Term Notes and the Revolving Credit Notes,
TransTechnology agrees that with respect to any or all of the Mortgaged
Property located in Florida, TransTechnology shall have executed and delivered
or caused to be executed and delivered to the Agent such collateral notes (the
"Collateral Notes") as the Agent and TransTechnology may agree upon, it being
understood, however, that (a) the aggregate of all payments or recoveries on
such Collateral Notes shall not exceed the amount of the Obligations (exclusive
of the Collateral Notes), and (b) any payments or recoveries on such Collateral
Notes shall be credited to the unpaid amount of the Obligations in such order
of application as the Majority Lenders may determine. All Collateral Notes
shall be payable to the order of the Agent, on demand.
13. CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Loan, including Revolving
Credit Loans and the Term Loans, and of the Issuing Bank to issue, extend or
renew any Letter of Credit, in each case whether on or after the Closing Date,
shall also be subject to the satisfaction of the following conditions
precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of TransTechnology and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan or the issuance, extension or
renewal of such Letter of Credit, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by
<PAGE> 93
-93-
this Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such individual representations and warranties
relate expressly to an earlier date) and no Default or Event of Default shall
have occurred and be continuing. Upon the request of the Agent, TransTechnology
shall have delivered to the Agent a certificate of TransTechnology signed by an
authorized officer of TransTechnology to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable
opinion of any Lender would make it illegal for such Lender to make such Loan
pursuant to the provisions of this Credit Agreement, or to participate in the
issuance, extension or renewal of such Letter of Credit or in the reasonable
opinion of the Issuing Bank would make it illegal for the Issuing Bank to
issue, extend or renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System or any other applicable regulatory or supervisory body.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents,
the Acquisition Documents and all other documents incident thereto shall be
satisfactory in substance and in form to the Lenders and to the Agent and the
Agent's Special Counsel, and the Lenders, the Agent and such counsel shall have
received all information and such counterpart originals or certified or other
copies of such documents as the Agent may reasonably request.
13.5. BORROWING BASE REPORT. The Agent shall have received the most
recent Borrowing Base Report required to be delivered to the Agent in
accordance with Section 9.4(f) and, if requested by the Agent, a Borrowing Base
Report dated within five (5) days of the Drawdown Date of such Loan or of the
date of issuance, extension or renewal of such Letter of Credit.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults")
shall occur:
(a) any of the Borrowers shall fail to pay any principal of the
Loans or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
<PAGE> 94
-94-
(b) any of the Borrowers or their Subsidiaries shall fail to pay any
interest on the Loans, the commitment fee, any Letter of Credit Fee, the
Agent's fee, the fronting fee, or other sums due hereunder or under any
of the other Loan Documents, when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(c) any of the Borrowers or their Subsidiaries shall fail to comply
with any of its covenants contained in Section 9, 10 or 11 or any of the
covenants contained in any of the Mortgages or in the Debenture;
(d) any of the Borrowers or their Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this Section
14.1 or those which by their terms expressly exclude any grace period
for any non- compliance therewith) for fifteen (15) days after written
notice of such failure has been given to TransTechnology by the Agent;
(e) any representation or warranty of or any of the Borrowers or
their Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) any of the Borrowers or their Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized
Leases, or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received or in respect of any
Capitalized Leases for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof
or of any obligations issued thereunder to accelerate the maturity
thereof;
(g) any of the Borrowers or their Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of such Borrower or
Subsidiary or of any substantial part of the assets of such Borrower or
Subsidiary or shall commence any case or other proceeding relating to
any of the Borrowers or their Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against or any of the Borrowers or their Subsidiaries and any
of the
<PAGE> 95
-95-
Borrowers or their Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such petition or application
shall not have been dismissed within forty-five (45) days following the
filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Borrowers
or their Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of any of the Borrowers or their Subsidiaries in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against any of the Borrowers or their Subsidiaries
that, with other outstanding final judgments, undischarged, against the
Borrowers and their Subsidiaries exceeds in the aggregate $250,000;
(j) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or
liens in a substantial portion of the Collateral shall cease to be
perfected, or shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Lenders, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of any of the Borrowers or
their Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of TransTechnology or any of
its Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $250,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee
to administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan;
or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan;
(l) any of the Borrowers or their Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its
<PAGE> 96
-96-
business and such order has a material adverse effect on the business or
financial condition of such Borrower or Subsidiary;
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment
of revenue producing activities at any facility of any of the Borrowers
or their Subsidiaries if such event or circumstance is not covered by
business interruption insurance and would have a material adverse effect
on the business or financial condition of such Borrower or Subsidiary;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired
by any of the Borrowers or their Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on
the business or financial condition of such Borrower or Subsidiary;
(o) Any of the Borrowers or their Subsidiaries shall be indicted
for a state or federal crime, or any civil or criminal action shall
otherwise have been brought against any of the Borrowers or their
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of such Borrower or Subsidiary included in the
Borrowing Base or any assets of such Borrower or Subsidiary not included
in the Borrowing Base but having a fair market value in excess of
$250,000;
(p) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of
25% or more of the outstanding shares of common stock of
TransTechnology; or, during any period of twelve consecutive calendar
months, individuals who were directors of TransTechnology on the first
day of such period shall cease to constitute a majority of the board of
directors of TransTechnology; or
(q) the German Merger shall not be effective, as contemplated by
the Merger Documents (or any variation thereof approved by the Agent),
by December 31, 1995 or such later date as may have been agreed in
writing by the Agent.
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Lenders shall, by notice in writing
to the Borrowers declare all amounts owing with respect to this Credit
Agreement, the Loans, the Notes and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each of the
Borrowers; provided that in the
<PAGE> 97
-97-
event of any Event of Default specified in Section 14.1(g) or 14.1(h), all such
amounts shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Lender.
14.2. TERMINATION OF REVOLVING CREDIT COMMITMENTS. If any one or more of
the Events of Default specified in Section 14.1(g), Section 14.1(h) or Section
14.1(j) shall occur, any unused portion of the credit hereunder shall
forthwith terminate and each of the Lenders shall be relieved of all further
obligations to make Loans to any of the Borrowers and the Issuing Bank shall be
relieved of all further obligations to issue, extend or renew Letters of
Credit. If any other Event of Default shall have occurred and be continuing, or
if on any Drawdown Date or other date for issuing, extending or renewing any
Letter of Credit the conditions precedent to the making of the Loans to be made
on such Drawdown Date or (as the case may be) to issuing, extending or renewing
such Letter of Credit on such other date are not satisfied the Agent may and,
upon the request of the Majority Lenders, shall, by notice to the Borrowers,
terminate the unused portion of the credit hereunder, and upon such notice
being given such unused portion of the credit hereunder shall terminate
immediately and each of the Lenders shall be relieved of all further
obligations to make Loans and the Issuing Bank shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No termination of the
credit hereunder shall relieve any of the Borrowers or their Subsidiaries of
any of the Obligations.
14.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Agent or the Majority
Lenders shall have accelerated the maturity of the Loans pursuant to Section
14.1, each Lender, if owed any amount with respect to the Loans or the
Reimbursement Obligations, may, with the consent of the Majority Lenders but
not otherwise, proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement and
the other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the ex parte appointment of a receiver, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of such Lender. No remedy herein
conferred upon any Lender or the Agent or the holder of any Note or purchaser
of any Letter of Credit Participation is intended to be exclusive of any other
remedy herein or in any of the other Loan Documents and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or under any of the other Loan Documents or now or hereafter existing
at law or in equity or by statute or any other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default,
the Agent or any Lender, as the case may be, receives any monies in connection
with the enforcement of any the Security Documents, or otherwise with respect to
the realization upon any of the Collateral, such monies shall be distributed for
application as follows:
<PAGE> 98
-98-
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent of
all or any of the rights, remedies, powers and privileges of the Agent
under this Credit Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as
the Majority Lenders may determine; provided, however, that distributions
in respect of such obligations shall be made (i) pari passu among
Obligations with respect to the Agent's fee payable pursuant to Section
6.2 and all other Obligations and (ii) Obligations owing to the Lenders
with respect to each type of Obligation such as interest, principal, fees
and expenses, shall be made among the Lenders pro rata; and provided,
further, that the Agent may in its discretion make proper allowance to
take into account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the Agent
of all of the Obligations, to the payment of any obligations required to
be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code of
the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Lenders to any of the Borrowers and any securities or other property of the
Borrowers in the possession of such Lender may be applied to or set off by such
Lender against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrowers to such Lender. Each of the Lenders
agrees with each other Lender that (i) if an amount to be set off is to be
applied to Indebtedness of a Borrower to such Lender, other than Indebtedness
evidenced by the Notes held by such Lender or constituting Reimbursement
Obligations owed to such Lender, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes held by
such Lender or constituting Reimbursement Obligations owed to such Lender, and
(ii) if such Lender shall receive from any of the Borrowers, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or constituting
Reimbursement Obligations owed to, such Lender by proceedings
<PAGE> 99
-99-
against any of the Borrowers at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Note or Notes
held by, or Reimbursement Obligations owed to, such Lender any amount in excess
of its ratable portion of the payments received by all of the Lenders with
respect to the Notes held by, and Reimbursement Obligations owed to, all of the
Lenders, such Lender will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Lender
receiving in respect of the Notes held by it or Reimbursement Obligations owed
it, its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter recovered
from such Lender, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
16. THE AGENT.
16.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of each
of the Lenders and to exercise all such powers as are hereunder and under
any of the other Loan Documents and any related documents delegated to
the Agent, together with such powers as are reasonably incident thereto,
provided that no duties or responsibilities not expressly assumed herein
or therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Lenders is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Lenders. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless a
"representative" of the Lenders, as that term is defined in Article 1 of
the Uniform Commercial Code, for purposes of actions for the benefit of
the Lenders and the Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Agent as "secured party", "mortgagee" or the like on
all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust in
collateral security intended to secure the payment or performance of any
of the Obligations, all for the benefit of the Lenders and the Agent.
<PAGE> 100
-100-
16.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Credit Agreement and the other Loan Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion
may reasonably determine, and all reasonable fees and expenses of any such
Persons shall be paid by the Borrowers.
16.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes,
the Letters of Credit, any of the other Loan Documents or any instrument at any
time constituting, or intended to constitute, collateral security for the
Notes, or for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of the Borrowers or any of
their Subsidiaries, or be bound to ascertain or inquire as to the performance
or observance of any of the terms, conditions, covenants or agreements herein
or in any instrument at any time constituting, or intended to constitute,
collateral security for the Notes or to inspect any of the properties, books or
records of the Borrowers or any of its Subsidiaries. The Agent shall not be
bound to ascertain whether any notice, consent, waiver or request delivered to
it by any of the Borrowers or any holder of any of the Notes shall have been
duly authorized or is true, accurate and complete. The Agent has not made nor
does it now make any representations or warranties, express or implied, nor
does it assume any liability to the Lenders, with respect to the credit
worthiness or financial conditions of the Borrowers or any of their
Subsidiaries. Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender, and based upon such information
and documents as it has deemed appropriate, made its own credit analysis and
decision to enter into this Credit Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO AGENT. A payment by any of the Borrowers to
the Agent hereunder or any of the other Loan Documents for the account of
any Lender shall constitute a payment to such Lender. The Agent agrees
promptly to distribute to each Lender such Lender's pro rata share of
<PAGE> 101
-101-
payments received by the Agent for the account of the Lenders except as
otherwise expressly provided herein or in any of the other Loan Documents.
16.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve it
in liability, it may refrain from making distribution until its right to
make distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons
as shall be determined by such court.
16.5.3. DELINQUENT LENDERS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Lender that fails (i) to make available to the Agent its
pro rata share of any Loan or to purchase any Letter of Credit
Participation, (ii) to make payment on the due date therefor of any
amount due to the Fronting Bank under Section 6.12.2, or (iii) to comply
with the provisions of Section 15 with respect to making dispositions and
arrangements with the other Lenders, where such Lender's share of any
payment received, whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of the Lenders, in
each case as, when and to the full extent required by the provisions of
this Credit Agreement, shall be deemed delinquent (a "Delinquent
Lender") and shall be deemed a Delinquent Lender until such time as such
delinquency is satisfied. A Delinquent Lender shall be deemed to have
assigned any and all payments due to it from the Borrowers, whether on
account of outstanding Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Lenders for application
to, and reduction of, their respective pro rata shares of all outstanding
Loans and Unpaid Reimbursement Obligations. The Delinquent Lender
hereby authorizes the Agent to distribute such payments to the
nondelinquent Lenders in proportion to their respective pro rata shares
of all outstanding Loans and Unpaid Reimbursement Obligations. A
Delinquent Lender shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
outstanding Loans and Unpaid Reimbursement Obligations of the
nondelinquent Lenders, the Lenders' respective pro rata shares of all
outstanding Loans and Unpaid Reimbursement Obligations have returned
to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
16.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in
<PAGE> 102
-102-
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
16.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrowers as
required by Section 17), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Notes, or any of the other Loan
Documents or the transactions contemplated or evidenced hereby or thereby, or
the Agent's actions taken hereunder or thereunder, except to the extent that
any of the same shall be directly caused by the Agent's willful misconduct or
gross negligence.
16.8. AGENT AS LENDER. In its individual capacity, FNBB shall have the
same obligations and the same rights, powers and privileges in respect to its
Revolving Credit Commitment, Term A Commitment, Term B Commitment and the Loans
made by it, and as the holder of any of the Notes and as the purchaser of any
Letter of Credit Participations, as it would have were it not also the Agent.
16.9. RESIGNATION OF AGENT. The Agent may resign at any time by giving
sixty (60) days prior written notice thereof to the Lenders and
TransTechnology. Upon any such resignation, the Majority Lenders shall have
the right to appoint a successor Agent. Unless a Default or Event of Default
shall have occurred and be continuing, such successor Agent shall be
reasonably acceptable to TransTechnology. If no successor Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Credit Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
17. EXPENSES.
The Borrowers jointly and severally agree to pay (i) the reasonable costs
of producing and reproducing this Credit Agreement, the other Loan Documents
and the other agreements and instruments mentioned herein, (ii) any taxes
(including any interest and penalties in respect thereto) payable by the Agent
or any of the Lenders (other than taxes based upon the Agent's or any Lender's
net income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrowers hereby agreeing to indemnify the Agent and each Lender
with respect thereto), (iii) the reasonable fees, expenses and disbursements
of the Agent's Special Counsel or any local counsel to the Agent incurred in
connection with the
<PAGE> 103
-103-
preparation, administration or interpretation of the Loan Documents and other
instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (iv) the
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums, asset and/or collateral examiners' and commercial finance examiners'
fees and surveyor, engineering and appraisal charges, (v) any fees, costs,
expenses and bank charges, including bank charges for returned checks, incurred
by the Agent in establishing, maintaining or handling agency accounts, lock box
accounts and other accounts for the collection of any of the Collateral; (vi)
all reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, which attorneys may be employees of any Lender or
the Agent, and reasonable consulting, accounting, appraisal, investment banking
and similar professional fees and charges) incurred by any Lender or the Agent
in connection with (A) the enforcement of or preservation of rights under any
of the Loan Documents against any of the Borrowers or their Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default
and (B) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Lender's or the Agent's relationship with
any of the Borrowers or their Subsidiaries and (vii) all reasonable fees,
expenses and disbursements of any Lender or the Agent incurred in connection
with UCC searches, searches of registers of charges and commercial or companies
registers, UCC filings, mortgage recordings or other filings on recordings of
security documents evidencing the Agent's lien on the Collateral. The covenants
of this Section 17 shall survive payment or satisfaction of all other
Obligations.
18. INDEMNIFICATION.
The Borrowers jointly and severally agree to indemnify and hold harmless
the Agent and the Lenders from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby including, without limitation, (i) any actual or proposed
use by any of the Borrowers or their Subsidiaries of the proceeds of any of the
Loans or Letters of Credit, (ii) the reversal or withdrawal of any provisional
credits granted by the Agent or any Lender upon the transfer of funds from bank
agency or lock box accounts or in connection with the provisional honoring of
checks or other items, (iii) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of any of the Borrowers or
their Subsidiaries comprised in the Collateral, (iv) any of the Borrowers or
their Subsidiaries entering into or performing this Credit Agreement or any of
the other Loan Documents or (v) with respect to the Borrowers and their
Subsidiaries and their respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to,
<PAGE> 104
-104-
claims with respect to wrongful death, personal injury or damage to property),
in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Lenders and the Agent shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrowers jointly and severally agree to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrowers under this Section 18 are unenforceable for any
reason, the Borrowers hereby jointly and severally agree to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this Section 18
shall survive payment or satisfaction in full of all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of any of the Borrowers or their Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by any of the Lenders of any of the Loans
and the issuance, extension or renewal of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or any amount due under this Credit Agreement or the Notes or any of
the other Loan Documents remains outstanding or any Lender has any obligation
to make any Loans or the Issuing Bank has any obligation to issue, extend or
renew any Letter of Credit, and for such further time as may be otherwise
expressly specified in this Credit Agreement. All statements contained in any
certificate or other paper delivered to any Lender or the Agent at any time by
or on behalf of TransTechnology or any of its Subsidiaries pursuant hereto
or in connection with the transactions contemplated hereby shall constitute
representations and warranties by TransTechnology or such
Subsidiary hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT.
20.1.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided
herein, each Bank may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations as a Bank under this
Credit Agreement (including all or a portion of its Revolving Credit
Commitment Percentage and Revolving Credit Commitment and the same
portion of the Revolving Credit Loans at the time owing to it, the same
portion of its Term A Commitment Percentage, Term A Commitment and the
Term A Loans at the time owing to it, the Term A Notes and Revolving
Credit Notes held by it and the same portion of its participating
interest in the risk relating to any Letters of Credit or Fronted Loans);
provided that (i) the Agent shall have given its prior written consent to
such assignment, (ii) each such assignment shall be of
<PAGE> 105
-105-
a constant, and not a varying, percentage of all the assigning Bank's
rights and obligations as a Bank under this Credit Agreement, (iii) each
assignment shall be in an amount that is a whole multiple of $5,000,000,
(iv) each Bank which is a Bank on the date hereof shall retain, free of
any such assignment, an amount of its Revolving Credit Commitment plus
Term A Commitment of not less than $10,000,000, and (v) the parties to
such assignment shall execute and deliver to the Agent, for recording in
the Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit F-1 hereto (an "Assignment and
Acceptance"), together with any Term A Notes and Revolving Credit Notes
subject to such assignment. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in any such
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank
hereunder, and (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee
referred to in Section 20.3, be released from its obligations under this
Credit Agreement.
20.1.2. CONDITIONS TO ASSIGNMENT BY TERM B LENDERS. Except as
provided herein, each Term B Lender may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations as a
Term B Lender under this Credit Agreement (including all or a portion of
the Term B Loans at the time owing to it and the same portion of the Term
B Notes held by it); provided that (i) the Agent shall have given its
prior written consent to such assignment, (ii) each such assignment shall
be of a constant, and not a varying, percentage of all the assigning Term
B Lender's rights and obligations as a Term B Lender under this Credit
Agreement, (iii) each such assignment shall be in an amount that is a
whole multiple of $5,000,000 and (iv) the parties to such assignment
shall execute and deliver to the Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit F-2 hereto (also being referred to herein as an
"Assignment and Acceptance"), together with any Term B Notes subject to
such assignment. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in any such Assignment and
Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Term B Lender hereunder, and (ii)
the assigning Term B Lender shall, to the extent provided in such
assignment and upon payment to the Agent of the registration fee referred
to in Section 20.3, be released from its obligations under this Credit
Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES: LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
<PAGE> 106
-106-
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Lender makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage,
(b) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
TransTechnology and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by any of the Borrowers and their Subsidiaries
or any other Person primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this Credit Agreement
or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Lender, the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank or Term B Lender,
as the case may be;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
<PAGE> 107
-107-
(i) if such assignment is pursuant to Section 20.1.1. such
assignee acknowledges that it has made arrangements with the assigning
Bank satisfactory to such assignee with respect to its pro rata share of
Letter of Credit Fees in respect of outstanding Letters of Credit.
20.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of (a) the names and addresses of the Banks and the Term B
Lenders, (b) Revolving Credit Commitment Percentages and Term Loan A
Percentages of, and principal amounts of the Revolving Credit Loans and the
Tranches of Term Loan A owing to, and Letter of Credit Participations and
participations in the risk related to the Fronted Loans purchased by, the Banks
from time to time, and (c) the principal amount of Term Loan B owing to each of
the Term B Lenders from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Bank or Term B Lender, as the case may be hereunder for all purposes of this
Credit Agreement. The Register shall be available for inspection by the
Borrowers and the Lenders at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Lender
agrees to pay to the Agent a registration fee in the sum of $2,500.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (i) record the information contained therein
in the Register, and (ii) give prompt notice thereof to TransTechnology and the
Lenders (other than the assigning Lender). Within five (5) Business Days after
receipt of such notice, TransTechnology, at its own expense, shall execute and
deliver to the Agent and/or (in the case of any Note of GmbH or Limited),
procure the execution and delivery to the Agent of, in exchange for each
surrendered Note, a new Note to the order of such Eligible Assignee in an
amount equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank or Term B Lender, as the
case may be, has retained some portion of its obligations hereunder, a new Note
or Notes to the order of the assigning Bank or Term B Lender in an amount equal
to the amount retained by it hereunder as a Bank or Term B Lender. Such new
Notes shall provide that they are replacements for the surrendered Notes, shall
be in an aggregate principal amount equal to the aggregate principal amount of
the surrendered Notes, shall be dated the effective date of such in Assignment
and Acceptance and shall otherwise be substantially the form of the assigned
Notes. Upon the request of the recipient of new Notes or the Agent, within five
(5) days of issuance of such new Notes pursuant to this Section 20.4,
TransTechnology shall deliver an opinion of counsel, which may be the general
counsel of TransTechnology addressed to the recipients of the new Notes and the
Agent, relating to the due authorization, execution and delivery of such new
Notes and the legality, validity and binding effect thereof, in form and
substance satisfactory to the recipients of the new Notes, the Agent and the
Agent's Special Counsel. The surrendered Notes shall be cancelled and
returned to TransTechnology.
<PAGE> 108
-108-
20.5. PARTICIPATIONS. Each Lender may sell participations to one or more
banks or other entities in all or a portion of such Lender's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (i) each such participation shall be in an amount of not less than
$5,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers and (iii) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Loan Documents
shall be the rights to approve waivers, amendments or modifications that would
reduce the principal of or the interest rate on any Loans, extend the term or
increase the amount of any of the Commitments of such Lender as it relates to
such participant, reduce the amount of any commitment fees or Letter of Credit
Fees to which such participant is entitled or extend any regularly scheduled
payment date for principal or interest.
20.6. DISCLOSURE. The Borrowers agree that in addition to disclosures
made in accordance with standard and customary banking practices any Lender may
disclose information obtained by such Lender pursuant to this Credit Agreement
to assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless
such information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH TRANSTECHNOLOGY.
If any assignee Lender is an Affiliate of TransTechnology, then any such
assignee Lender shall have no right to vote as a Lender hereunder or under any
of the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to Section
14.1 or Section 14.2, and the determination of the Majority Lenders, or, as the
case may be, the Majority Banks or Majority Term B Lenders, shall for all
purposes of this Credit Agreement and the other Loan Documents be made without
regard to such assignee Lender's interest in any of the Loans. If any Lender
sells a participating interest in any of the Loans or Reimbursement Obligations
to a participant, and such participant is TransTechnology or an Affiliate of
TransTechnology, then such transferor Lender shall promptly notify the Agent of
the sale of such participation. A transferor Lender shall have no right to
vote as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to Section 14.1 or Section 14.2 to the
extent that such participation is beneficially owned by TransTechnology or any
Affiliate of TransTechnology, and the determination of the Majority Lenders,
or, as the case may be, the Majority Banks or Majority Term B Lenders, shall
for all purposes of this Credit Agreement and the other Loan Documents be made
without
<PAGE> 109
-109-
regard to the interest of such transferor Lender in the Loans to the extent of
such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender shall
retain its rights to be indemnified pursuant to Section 17 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Lender is not incorporated under the laws of the United States of America or
any state thereof, it shall, prior to the date on which any interest or fees
are payable hereunder or under any of the other Loan Documents for its account,
deliver to TransTechnology and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. If the
Reference Bank transfers all of its interest, rights and obligations under this
Credit Agreement, the Agent shall, in consultation with TransTechnology and
with the consent of TransTechnology and the Majority Lenders, appoint another
Bank to act as the Reference Bank hereunder, and in the absence of such consent
shall act as Reference Bank. Anything contained in this Section 20 to the
contrary notwithstanding, any Lender may at any time pledge all or any portion
of its interest and rights under this Credit Agreement (including all or any
portion of its Notes) to any of the twelve Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or the enforcement thereof shall release the pledgor Lender from its
obligations hereunder or under any of the other Loan Documents.
20.9. ASSIGNMENT BY THE BORROWERS. None of the Borrowers shall assign
or transfer any of its rights or obligations under any of the Loan Documents,
including pursuant to the English Asset Transfer and the Anderton Assumption
Agreement, without the prior written consent of each of the Lenders.
21. NOTICES ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail or, if either the Person giving the notice or the
Person being notified is outside the United States, by registered or
recorded-delivery air mail, in each case postage prepaid, sent by overnight
courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to any of the Borrowers, at TransTechnology Corporation,
700 Liberty Avenue, Union, New Jersey 07083-8198, U.S.A., Attention:
Valentina Doss, Vice President, General Counsel and Secretary, or at such
other address for notice as TransTechnology shall last have furnished in
writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Maura C. Wadlinger, Assistant Vice President, or
such other address for notice as the Agent shall last have furnished in
writing to the Person giving the notice;
<PAGE> 110
-110-
(c) if to any Bank, at such Bank's address set forth on Schedule 1
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice; and
(d) if to any Term B Lender, at such Term B Lender's address set
forth on Schedule 2 hereto, or such other address for notice as such Term
B Lender shall have last furnished in writing to the Person giving the
notice;
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile,
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof, and (iii) if sent by
registered or recorded-delivery air mail, on the fifth Business Day following
the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
BORROWERS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND EACH OF
THE BORROWERS CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON IT BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 21. IN ADDITION, ANY SUIT OR OTHER REMEDY UNDER SECURITY
DOCUMENT MAY BE BROUGHT IN THE JURISDICTION IN WHICH THE RESPECTIVE
COLLATERAL OR MORTGAGED PROPERTY THEREUNDER IS LOCATED. EACH OF GMBH AND
LIMITED HEREBY EXPRESSLY APPOINTS TRANSTECHNOLOGY AT THE ADDRESS SPECIFIED IN
SECTION 21 AS ITS AGENT FOR SERVICE OF PROCESS. EACH OF THE BORROWERS HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
<PAGE> 111
-111-
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
25. ENTIRE AGREEMENT ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
26. WAIVER OF JURY TRIAL.
Each of the Borrowers hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Credit Agreement, the Notes or any of the other Loan Documents, any rights
or obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, each of the Borrowers hereby waives
any right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Each of the
Borrowers (i) certifies that no representative, agent or attorney of any Lender
or the Agent has represented, expressly or otherwise, that such Lender or the
Agent would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that each of the Agent and the Lenders has been
induced to enter into this Credit Agreement, the other Loan Documents to which
it is a party by, among other things, the waivers and certifications contained
herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
27.1. VOTING PROCEDURES.
(a) Except as set forth in clauses (b)-(g) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents may be
amended or waived and any departure therefrom may be consented to by the
Majority Lenders if, but only if, such amendment, waiver or consent is in
writing signed by the Majority Lenders and, in the case of an amendment (other
than an amendment described in Section 27.2), by the Borrowers and, in any such
event, the failure to observe, perform or discharge any such term, covenant,
agreement or condition (whether such amendment is executed or such waiver or
consent is given before or after such failure) shall not be construed as a
breach of such term, covenant, agreement or condition or as a Default or an
Event of Default. Unless otherwise
<PAGE> 112
-112-
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given. Anything herein to the contrary notwithstanding, the Majority
Lenders shall have the right to waive any Default or Event of Default and the
consequences hereunder of such Default or Event of Default and shall have the
right to enter into an agreement with the Borrowers providing for the
forbearance from the exercise of any remedies provided hereunder or under the
other Loan Documents without waiving any Default or Event of Default. The
making of Loans hereunder by the Lenders during the existence of a Default or
Event of Default shall not be deemed to constitute a waiver of such Default or
Event of Default.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Banks, no amendment, consent or waiver shall
affect the amount or extend the time of the obligation of the Banks to make
Revolving Credit Loans or the First US Tranche and Second US Tranche of Term
Loan A or extend the originally scheduled time or times of payment of the
principal of any such Loan or alter the time or times of payment of interest on
any such Loan or the amount of the principal thereof or the rate of interest
thereon or the amount of any revolving credit or Term Loan A commitment fee
payable hereunder or permit any subordination of the principal or interest on
any such Loan, or amend the definition of "Borrowing Base" so as to increase
availability thereunder. Without the prior written consent of the Majority
Banks, no amendment, consent or waiver shall alter the apportionment of any
repayments or prepayment of any Loans to which the Banks are entitled.
(c) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Banks and the Fronting Bank, no amendment,
consent or waiver shall affect the amount or extend the time of the obligation
of the Fronting Bank to make International Facility Loans or the German Tranche
and UK Tranche of Term Loan A or extend the originally scheduled time or times
of payment of the principal of any such Loan or alter the time or times of
payment of interest on any such Loan or the amount of the principal thereof or
the rate of interest thereon or the amount of the fronting fee referred to in
Section 6.13.1 or permit any subordination of the principal or interest on any
such Loan or alter the apportionment of any repayments or prepayment of any such
Loans to which the Fronting Bank is entitled.
(d) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Term B Lenders, no amendment, consent or
waiver shall affect the amount or extend the time of the obligation of the Term
B Lenders to make Term Loan B or extend the originally scheduled time or times
of payment of the principal of Term Loan B or alter the time or times of
payment of interest on such Loan or the amount of the principal thereof or the
rate of interest thereon or permit any subordination of the principal or
interest on such Loan or alter the apportionment of any repayments or
prepayment of any such Loans to which the Term B Lenders (as a class) are
entitled. Without the prior written consent of the Majority Term B Lenders, no
amendment, consent or waiver shall
<PAGE> 113
-113-
alter the apportionment of any repayments or prepayment of any Loans to which
the Term B Lenders are entitled.
(e) Except as otherwise set forth in this Agreement, (i) without the
prior written consent of the Issuing Bank, no amendment, consent or waiver
shall affect the rights or duties of the Issuing Bank, including without
limitation the amount of any Letter of Credit Fees payable hereunder, (ii)
without the prior written consent of the Fronting Bank, no amendment, consent
or waiver shall affect the rights or duties of the Fronting Bank, including
without limitation the amount of any fronting fees payable hereunder and (iii)
without the prior written consent of the Agent, no amendment, consent or waiver
shall affect the right or duties of the Agent, including without limitation the
amount of any Agent's fees payable hereunder or the provisions of Section 16.
(f) No material Collateral shall be released by the Agent, other than
as specifically permitted by this Agreement or in the other Loan Documents,
without the prior unanimous written consent of the Lenders.
(g) The definition of Majority Banks may not be amended without the
written consent of all of the Banks; the definition of Majority Term B Lenders
may not be amended without the written consent of all of the Term B Lenders;
and the definition of Majority Lenders may not be amended without the written
consent of all of the Lenders.
27.2. BORROWERS' CONSENT NOT REQUIRED FOR CERTAIN AMENDMENTS.
Notwithstanding any provision of this Agreement or the other Loan Documents to
the contrary, no consent, written or otherwise, of the Borrowers shall be
necessary or required in connection with any amendment to Section 6.12.2 or
Section 16 and any amendment to such provisions shall be effected solely by and
among the Agent, the Fronting Bank and the Banks (with respect to any amendment
to Section 6.12.2) or the Agent and the Lenders (with respect to any amendment
of Section 16), provided that no such amendment shall impose any obligation on
the Borrowers.
27.3. COURSE OF DEALING. No course of dealing or delay or omission on the
part of the Agent or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
any of the Borrowers shall entitle any of the Borrowers to other or further
notice or demand in similar or other circumstances.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Credit Agreement in any
jurisdiction.
<PAGE> 114
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By:/s/ CHANDLER J. MOISEN
--------------------------------------
Chandler J. Moisen
Senior Vice President
TRANSTECHNOLOGY SEEGER-ORBIS
GmbH (in the process of changing its name
from Kimo Buroservice GmbH)
By:/s/ CHANDLER J. MOISEN
--------------------------------------
Name: Chandler J. Moisen
Title: Attorney-in-fact
TTUK ACQUISITION CO. LIMITED
By:/s/ CHANDLER J. MOISEN
--------------------------------------
Name: Chandler J. Moisen
Title: Attorney
By:/s/ VALENTINA DOSS
--------------------------------------
Name: Valentina Doss
Title: Attorney
THE FIRST NATIONAL BANK OF
BOSTON, individually and as Agent,
Issuing Bank and Fronting Bank
By:/s/ J. PETER MITCHELL
--------------------------------------
J. Peter Mitchell
Director
