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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):
APRIL 17, 1997
_____________
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7872 95-4062211
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
150 Allen Road 07938
Liberty Corner, NJ (Zip Code)
(Address of principal
executive offices)
(908) 903-1600
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 17, 1997, the registrant completed its acquisition of all of
the outstanding stock from Robert Bradley of TCR Corporation, a manufacturer of
externally threaded specialty fastening devices and other cold headed and
machined products for the automotive, heavy vehicle, marine and industrial
markets. TCR Corporation's facilities are located in Minneapolis, Minnesota.
The base purchase price was $32.6 million, subject to adjustment upon
completion of a closing balance sheet, with the possibility of performance
payments aggregating $3 million over a period of three calendar years. The
purchase terms were the result of arm's length negotiations between unrelated
parties. In order to fund this acquisition, the registrant amended its credit
facility with The National Bank of Boston.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired:
No financial statements are available at this time. The
registrant intends to file the financial statements within 60
days after the initial report on form 8-K was required to be
filed.
(b) Pro forma financial information
No proforma financial information is available at this time.
The registrant intends to file the required financial
information within 60 days after the initial report on form
8-K was required to be filed.
(c) Other Exhibits
(2.1) Stock Purchase Agreement dated as of April 14, 1997
between the registrant and Robert Bradley.
(2.2) Consent and Amendment Agreement No. 5, dated as of
March 31, 1997, to Revolving Credit and Term Loan
Agreement dated as of June 30, 1995, among the
registrant, various subsidiaries of the registrant, the
First National Bank of Boston, as Agent, and other
parties thereto as defined in said Agreement.
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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: April 29, 1997
TRANSTECHNOLOGY CORPORATION
/s/ Gerald C. Harvey
-------------------------------
Gerald C. Harvey
Vice President, Secretary
and General Counsel
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STOCK PURCHASE AGREEMENT
DATED AS OF APRIL ____, 1997
BETWEEN
ROBERT BRADLEY, an individual
AND
TRANSTECHNOLOGY CORPORATION
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Sale and Purchase of Stock and Assets . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Sales and Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . 3
4. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . 3
4.1 Organization and Good Standing; Capital Stock . . . . . . . . . . . . . . 3
4.2 Capacity of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Financial Statements: Changes . . . . . . . . . . . . . . . . . . . . . . 4
4.5 Tax Returns: Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Litigation: Claims: Contractual Obligations . . . . . . . . . . . . . . . 5
4.7 Operations in Accordance with Law . . . . . . . . . . . . . . . . . . . . 6
4.8 Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.9 Title to Assets: Assets Necessary for Business . . . . . . . . . . . . . . 6
4.10 Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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<TABLE>
<S> <C> <C>
4.12 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.13 Agreements Relating to Employment . . . . . . . . . . . . . . . . . . . . 8
4.14 Trademarks, Trade Names, etc. . . . . . . . . . . . . . . . . . . . . . . 8
4.15 Customer Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.17 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.19 Completeness of Statements . . . . . . . . . . . . . . . . . . . . . . . . 9
4.20 Exclusivity of Representations . . . . . . . . . . . . . . . . . . . . . . 9
4.21 Schedules and Amendments to Schedules . . . . . . . . . . . . . . . . . . 9
5. Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . 9
5.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Corporate Authorization; Binding Agreement . . . . . . . . . . . . . . . 10
5.3 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Completeness of Statements . . . . . . . . . . . . . . . . . . . . . . . 10
6. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Access to Records; Investigation by Purchaser . . . . . . . . . . . . . 10
6.2 No Inaccuracies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . . . . 11
6.4 Preservation of Goodwill . . . . . . . . . . . . . . . . . . . . . . . . 11
6.5 Consent to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.6 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.7 Amendments or Termination of Contracts . . . . . . . . . . . . . . . . . 11
6.8 Maintenance of Equipment . . . . . . . . . . . . . . . . . . . . . . . . 11
6.9 Covenants for Compliance with Laws . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
<S> <C> <C>
6.10 Employee Benefit Plan Responsibilities . . . . . . . . . . . . . . . . . 11
6.11 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Hart Scott Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11. Indemnification; Environmental Escrow . . . . . . . . . . . . . . . . . . . . . 13
11.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.2 Environmental, Health and Safety Escrow . . . . . . . . . . . . . . . . 15
12. Conditions Precedent To and Requirements At Closing . . . . . . . . . . . . . . 16
12.1 Conditions Precedent to Purchaser's Obligation . . . . . . . . . . . . . 16
12.2 Conditions Precedent to Seller's Obligations . . . . . . . . . . . . . . 18
13. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
13.1 Covenant Not To Compete . . . . . . . . . . . . . . . . . . . . . . . . 19
13.2 Reasonableness of Restraints . . . . . . . . . . . . . . . . . . . . . . 19
13.3 Transition Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.4 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . 20
13.5 Operation of the Company Following the Closing . . . . . . . . . . . . . 20
13.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.7 CFO's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.8 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.9 Non-public Information . . . . . . . . . . . . . . . . . . . . . . . . . 21
14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.1 Manner of Termination . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.2 Election to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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<TABLE>
<S> <C> <C>
14.3 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15.1 Option to Assign . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15.2 No Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16. Post-Closing Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.1 Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.7 Execution of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.8 Paragraph Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.10 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
18. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
19. Consent to Collateral Assignment of Stock Purchase Agreement . . . . . . . . . . 27
</TABLE>
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LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibits
--------
A Escrow Agreement
B Faegre & Benson LLP Opinion Letter
C Gerald C. Harvey Opinion Letter
D Dorsey & Whitney LLP Opinion Letter
Schedule
--------
1.1 Stock Ownership
4.1 Articles of Incorporation and By-Laws
4.3 Consents
4.4(a) Financial Statements
4.4(b) Material Contingent Liabilities, Guaranties, etc.
4.4(c) Transactions Outside the Ordinary Course of Business and Distributions
4.5(b) Taxes
4.6(a) Litigation
4.6(b) Material and Affiliate Contracts
4.8 Environmental
4.9 Liens
4.10 Material Adverse Change
4.11 Employee Benefit Plans
4.12 Employees
4.13 Employment Agreements
4.14 Trademarks, Tradenames
</TABLE>
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<TABLE>
<S> <C>
Schedule
--------
4.15 Insurance
4.19 Completeness of Statements
5.2 Purchaser's Consents
6.3 Activities Out of the Ordinary Course
6.11 Related Transactions to be Terminated
11.2 Environmental and OSHA Escrow
13.3 Personal Property to be Retained by Seller
18(a) Investments to be Stated at Fair Market Value
18(b) Pro Forma
</TABLE>
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STOCK PURCHASE AGREEMENT
AGREEMENT dated as of the ___ day of April, 1997, between Robert
Bradley, an individual ("Seller") and TransTechnology Corporation, a Delaware
corporation, ("Purchaser").
RECITALS:
A. Seller owns all of the issued and outstanding Stock (as
defined below) of TCR Corporation, a Minnesota corporation, (the "Company") in
the amounts set forth on Schedule 1.1 hereto. The term "Stock" as used in this
Agreement means the issued and outstanding capital stock of the Company.
B. Seller desires to sell and Purchaser desires to purchase from
Seller all of the Stock, all in the manner and subject to the terms and
conditions hereinafter set forth.
C. Definitions of capitalized terms are set out at paragraph 18.
NOW THEREFORE, in consideration of the recitals set out above and the
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1. Sale and Purchase of Stock. Seller hereby agrees to sell, convey,
transfer, assign and deliver to Purchaser at the Closing the number of shares
of Stock set opposite Seller's name on Schedule 1.1 hereto, and Purchaser
agrees to buy and accept as hereinafter provided, all (but not less than all)
of the Stock owned by the Seller as set out on Schedule 1.1.
2. Purchase Price and Payment.
2.1 Purchase Price. The aggregate purchase price (the "Purchase
Price") to be paid by Purchaser to the Seller for the Stock shall be the sum of
$35.6 million payable as $32.6 million, less the amount of Net Debt of the
Company on the Closing Date and the respective Escrows set out in paragraphs
2.2 and 11.2, to be paid in cash on the Closing Date and up to $3 million paid
as performance payments as follows: the amount of $1 million annually for three
(3) years where the Operating Income of the Company meets or exceeds $6.25
million in calendar year 1997, $7.5 million in calendar year 1998 and $7.5
million in calendar year 1999, or, in the alternative upon achieving cumulative
amounts of Operating Income over the same calendar years, i.e., $6.25 million
for the calendar year ending December 31, 1997, $13.75 million for the two
calendar years ending December 31, 1998, or $21.25 million for the three
calendar years ending December 31, 1999, the cumulative performance payment
would be paid up to the maximum of $3 million. As an example, if Operating
Income for calendar year 1997 is less than $6.25 million, but cumulative
Operating Income for the two calendar years ending December 31, 1998 equals or
exceeds $13.75 million, no payment would be made for calendar year 1997 but a
payment of $2 million would be paid following calendar year 1998. Performance
payments shall be paid in cash within ninety (90) days of the end of the
calendar year in which earned. Any dispute between the parties over the
determination of Operating Income shall be resolved pursuant to paragraph 17.10
below. Notwithstanding the foregoing, the Purchase Price shall be subject to
adjustment as set forth in paragraph 2.2 below.
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2.2 Adjustment. The Purchase Price shall be subject to a
dollar-for-dollar increase or decrease (the "Adjustment") to the extent the
book value of Net Operating Assets at the Closing Date as set out in the
Closing Balance Sheet is greater or less than $6.018 million. The Closing
Balance Sheet shall be prepared by the Purchaser in accordance with generally
accepted accounting principles consistent with those followed in preparation of
the Company's financial statements referred to in Paragraph 4.4 hereof and
shall be delivered to the Seller not more than forty-five (45) days after the
Closing Date. In the event that Seller disputes the accuracy of the Closing
Balance Sheet, he shall so notify the Purchaser in writing within twenty (20)
days of receipt and Seller and Purchaser shall thereupon promptly select a
mutually agreed independent firm of certified public accountants to resolve the
dispute, utilizing generally accepted accounting principles consistently
applied. Said accounting firm shall render its decision on the dispute within
forty- five (45) days of its selection and such decision shall be final and
binding upon Seller and Purchaser. The fees and expenses of said accountants
shall be shared equally by Seller and Purchaser. Withheld from the Purchase
Price paid on the Closing Date shall be the sum of $450,000 to be held in
escrow by an escrow agent mutually agreed by both parties (the "Adjustment
Escrow"). If the Adjustment results in a decrease in the Purchase Price, so
much of the Adjustment Escrow as is necessary to satisfy the Adjustment shall
be released to Purchaser, with the balance released to Seller, provided that if
the decrease in the Purchase Price exceeds the Adjustment Escrow, Seller shall
immediately remit the difference to Purchaser. If the Adjustment results in no
adjustment in the Purchase Price or in an increase in the Purchase Price, the
entire Adjustment Escrow shall be released to Seller, and the increase in the
Purchase Price, if any, shall be immediately remitted by Purchaser to Seller.
2.3 Payment of Purchase Price. The portion of the Purchase Price
payable on the Closing Date shall be paid to the Seller by wire transfer to an
account or accounts, and in allocations amongst accounts, designated in writing
by Seller.
2.4 Allocation. One hundred thousand dollars ($100,000) of the
Purchase Price shall be allocated to the restrictive covenant set out in
paragraphs 13.1 and 13.2 below. Seller and Purchaser agree to file all returns
and reports in respect of the transactions herein contemplated, including but
not limited to all Federal and state tax returns, in a manner consistent with
such allocation.
3. The Closing
3.1 Time and Place of Closing. The closing of the transaction
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.
local time on April 17, 1997 or any other mutually agreed on date, at the
offices of Faegre & Benson, LLP, 2200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402-3901. The time and date of the Closing is referred
to in this Agreement as the "Closing Date".
3.2 Deliveries at Closing.
(a) At the Closing Seller shall deliver to Purchaser a
certificate or certificates representing the Stock being sold by Seller duly
endorsed for transfer, or accompanied by appropriate assignments for transfer
of stock duly executed, in favor of Purchaser, and bearing guaranteed
signatures; and Seller shall cause to be delivered those items required by
paragraph 12.1 hereof; and
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(b) At the Closing, Purchaser shall deliver to Seller the
items required by paragraph 12.2 hereof.
3.3 Further Assurances. Seller agrees that he shall, at any time
and from time to time after the Closing, upon request of Purchaser, do,
execute, acknowledge and deliver or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may in Purchaser's
reasonable opinion be necessary or advisable to confirm Purchaser's title to or
interest in, or to enable it to deal with and dispose of, the Stock, and/or any
of the business, assets and properties of the Company.
3.4 Sales and Transfer Taxes and Fees. All applicable sales, use
and similar taxes and fees that may be due or payable as a result of the
conveyance, assignment, transfer or delivery of the Stock to Purchaser shall be
borne by Seller.
4. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
4.1 Organization and Good Standing; Capital Stock
(a) The Company is a duly organized corporation, validly
existing and in good standing under the laws of the State of Minnesota, with
full power and authority to own or lease its properties and assets, and conduct
its business as now conducted. Complete and current copies of the Articles of
Incorporation and By-Laws of the Company are included herewith as Schedule 4.1;
(b) The authorized capital stock of the Company consists of
10,000 shares of Common Stock having a par value of $5.00 per share, of which
2,288 shares are now issued and outstanding. The Stock consists solely of such
2,288 issued and outstanding shares of Common Stock. Each of the shares of
Stock is fully paid and non-assessable and none of the Stock was issued in
violation of the Articles of Incorporation or By-Laws of the Company, or any
pre-emptive right of any stockholder. No pre-emptive, buy-sell or similar
rights exist with respect to any Stock of the Company. Seller is the only
holder of Stock of the Company, and the Stock represents each and every equity
interest in the Company, and no person or entity holds (or is entitled to
receive) any option, warrant, convertible instrument, call, or right to acquire
any of the Stock or any other equity interest in the Company;
(c) Each of the shares of Stock is owned free and clear by
Seller and none of the Stock is subject to any lien, pledge, charge or
encumbrance (other than restrictions imposed by securities laws applicable to
unregistered securities generally). Upon the delivery of and payment for such
Stock at the Closing as provided for in this Agreement, the Purchaser will
acquire good and valid title to all of the Stock of the Company, free and clear
of any liens, charges and encumbrances other than any lien, charge or
encumbrance created by the Purchaser and other than restrictions imposed by
securities laws applicable to unregistered securities generally; and
(d) Assuming the accuracy of the representation of Purchaser
set out in Paragraph 5.3 hereof, the sale and delivery of the shares of Stock
is and will be effected in accordance with all applicable Federal and state
statutes and regulations.
3
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4.2 Capacity of Seller. Seller has the full right, power, legal
capacity and authority to enter into this Agreement and to sell and to deliver
to Purchaser the shares of Stock to be sold and delivered by Seller hereunder.
4.3 Binding Agreement. This Agreement has been duly executed and
delivered by Seller and is a valid and binding obligation and agreement of
Seller, enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws from time to time in effect affecting creditors' rights
generally or by principles governing the availability of equitable remedies).
The execution, delivery and performance of this Agreement will not violate,
contravene, result in a breach of or constitute a default (with due notice or
lapse of time or both) under (a) the Articles of Incorporation or By-Laws of
the Company, (b) subject to obtaining the consents and approvals referred to in
Schedule 4.3 hereto, any note, mortgage, agreement or instrument to which
Seller or the Company is a party or by which Seller or the Company is bound or
(c) any judgment, law, rule, regulation or decree applicable to Seller or the
Company. Except as disclosed in Schedule 4.3, no consent, permit,
authorization, approval or action of any federal, state or local authority or
any other person not a party to this Agreement is required with respect to
Seller or the Company in connection with the transactions contemplated by this
Agreement.
4.4 Financial Statements; Changes
(a) Schedule 4.4 (a) hereto consists of the audited financial
statements of the Company and the auditor's report thereon, as of and for the
Company's fiscal years ended December 31, 1993, 1994, 1995 and 1996 and the
unaudited financial statements of the Company as of and for the two months
ended February 28, 1997 (collectively, the "Financial Statements"). The balance
sheet as of December 31, 1996, included in the Financial Statements is the
"Principal Balance Sheet" and December 31, 1996, is the "Balance Sheet Date".
(b) The Financial Statements fairly present, in all material
respects, the financial condition of the Company at their respective dates and
the results of operations of the Company for the periods covered thereby, in
conformity with generally accepted accounting principles consistently applied
("GAAP"), except as otherwise noted therein. Except as reflected in the
Financial Statements, in this Agreement or in Schedule 4.4(b), the Company has
no material contingent liabilities, guaranties, off-balance sheet leases or
similar obligations.
(c) Except as contemplated or permitted hereby, or as set out
in Schedule 4.4 (c), since the Balance Sheet Date, there has not been:
(i) any entry by the Company into any commitment or
transaction other than in the ordinary course of business, including (A) the
incurrence of any indebtedness for borrowed money, or (B) the sale, lease or
other disposition of, or entry into any agreement to sell, lease or otherwise
dispose of, any material assets, except for sales of inventory in the ordinary
course of business; or
(ii) any declaration, making or payment of any dividend
or other distribution with respect to the Stock of the Company to any
shareholder of the Company.
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<PAGE> 12
4.5 Tax Returns; Payment of Taxes
(a) The Company is a small business corporation as defined in
Section 1361(b) of the Internal Revenue Code of 1986, as amended (the "Code")
and has validly elected to be taxed as an S corporation. Such election became
effective on January 1, 1996 and remains in effect on the date hereof. The
Company has prepared and properly filed all tax returns and reports which the
Company has been required to file through the date hereof (including without
limitation all federal and state income tax returns and all information returns
and reports for all taxable periods of the Company). All taxes shown due on
such returns and reports have been paid (or are accrued and fully provided for
on the Financial Statements and the accounting records of the Company).
(b) Except as disclosed on Schedule 4.5 (b),
(i) the Company has received no notice of any claim
pending or threatened against the Company for taxes (other than any amounts
reflected in the Financial Statements),
(ii) the Company has received no notice of any tax
examination of the Company by taxing authorities, and
(iii) the Company has not waived any statute of
limitations in respect of taxes or agreed to an extension of time with respect
to the assessment of any tax deficiency (other than with respect to any amounts
reflected on the Financial Statements).
(c) The Company has withheld and paid all taxes and other
governmentally mandated withholdings required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, stockholder or
other third party.
4.6 Litigation; Claims; Contractual Obligations
(a) Except as disclosed in Schedule 4.6 (a), (i) there is no
litigation, proceeding, claim or investigation pending (or to Seller's
knowledge threatened) against or with respect to the Company which reasonably
would be expected to have a Material Adverse Effect and (ii) the Company is not
operating under, subject to, or in default with respect to, any order,
injunction or decree of any court or any federal, state, municipal or other
governmental agency or instrumentality, which has caused (or is likely to
cause) any Material Adverse Effect.
(b) The contracts, agreements and other arrangements listed in
Schedule 4.6 (b) hereto constitute all contracts, agreements and other
arrangements (including without limitation contracts relating to employment) to
which the Company is a party or by which it is bound which require payments to
or by the Company in excess of $25,000 per year or are with any Affiliate of
the Company.
Except as disclosed in Schedule 4.6 (b), the Company is not in default (nor is
there any event but which for notice or lapse of time could constitute a
default) with respect to any such contract, agreement or arrangement and has no
knowledge that any other party thereto is in default (or that there is any
event but for which notice or lapse of time will constitute a default) except
in each case for such instances of default as have not caused, and will not
cause, the Company to have any liability in excess of $50,000.
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<PAGE> 13
4.7 Operations in Accordance with Law. The Company is in
compliance in all material respects with all laws, rules, regulations,
ordinances and administrative orders applicable to the Company or its business,
including without limitation the Employee Retirement Income Security Act of
1974 as amended ("ERISA"), the Occupational Safety and Health Act, the Worker
Adjustment and Retraining Notification Act, and Environmental Laws as defined
in paragraph 4.8, except for such instances of non-compliance (if any) which
singly or in the aggregate have not caused (and are not likely to cause) any
Material Adverse Effect; provided, however, that the representation made in
this paragraph with respect to Environmental Laws is subject to the further
limitations set forth in paragraph 4.8.
4.8 Environmental Warranties. Except as disclosed on Schedule 4.8,
to the knowledge of the Company:
(a) the Company and all facilities and property (including
underlying non-native fill, soil and groundwater) now or previously owned or
leased by the Company are or, during the Company's occupancy, were (1) in
compliance in all respects with all of the laws, statutes, regulations, acts,
and guidelines of the United States and the State of Minnesota and political
subdivisions thereof relating to the generation, use, storage, processing,
release, transportation, and disposal of Hazardous Materials and waste,
non-hazardous commercial/industrial materials and wastes, and municipal solid
wastes and discharge thereof into the environment ("Environmental Laws"), (2)
not subject to any third party Environmental Claims, and (3) not subject to
Regulatory Actions or proceedings against the Company, except in the case of
each of clauses (1), (2) and (3), for such instances of non-compliance (if any)
which have not caused and are not likely to cause any Material Adverse Effect;
and
(b) there are no pending or threatened:
(i) claims, complaints, notices, notices of
violation, administrative orders, consent orders, memoranda of agreement, or
requests for information received or executed by the Company with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices, or inquiries to the Company
regarding potential liability under any Environmental Law.
4.9 Title to Assets; Assets Necessary for Business. The Company
has good title to all the assets reflected on the Principal Balance Sheet,
except for (a) assets sold or otherwise disposed of in the ordinary course of
business since the Balance Sheet Date and assets which in the aggregate are not
material, and (b) those assets disposed of since the Balance Sheet Date and
identified in Schedule 4.9, in each case free and clear of any material liens,
charges, claims or encumbrances of any nature, other than (i) exceptions listed
in Schedule 4.9, (ii) liens for taxes and special assessments not yet due and
payable, and (iii) such liens, charges, claims or encumbrances as will be
waived, satisfied or discharged on or prior to the Closing Date. Such assets,
together with those used by the Company under leases, licenses and other
agreements, constitute all assets that are necessary for conducting the
business of the Company as now conducted, and, with respect to machinery and
equipment, except as to machinery and equipment
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<PAGE> 14
purchased used and not yet put in service, are in good working order, subject
to wear and tear and to the Company's normal maintenance procedures, and with
respect to raw materials and finished goods inventories, are, with respect to
the former, in usable condition and, with respect to the latter, in saleable
condition.
4.10 Adverse Changes. Except as described in Schedule 4.10, there
has been no material adverse change in the financial condition of the Company
since December 31, 1996 other than (a) transactions and actions contemplated by
this Agreement and (b) changes in the ordinary course of business.
4.11 Employee Benefit Plans.
(a) The term "Plan" means every material plan, fund, contract,
program and arrangement (whether written or not) which is maintained or
contributed to by the Company for the benefit of present or former employees,
including those intended to provide: (i) medical, surgical, health care,
hospitalization, dental, vision, life insurance, death, disability, legal
services, severance, sickness or accident benefits (whether or not defined in
Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, retirement,
supplemental retirement or deferred compensation benefits (whether or not
tax-qualified and whether or not defined in Section 3(2) of ERISA), (iii)
bonus, incentive compensation, stock option, stock appreciation right, phantom
stock or stock purchase benefits, or (iv) salary continuation, supplemental
unemployment, termination pay, vacation or holiday benefits (whether or not
defined in Section 3(3) of ERISA).
(b) Schedule 4.11 sets forth each Plan by name.
(c) There are no Plans subject to Title IV of ERISA.
(d) There are no Plans which hold Company securities or which
promise or provide health or life benefits to retirees or former employees of
the Company other than those identified in Schedule 4.11 or those solely
providing coverage mandated by federal or Minnesota law.
(e) With respect to all Plans, to the extent that the
following documents exist, the Company has furnished Purchaser true and
complete copies of (i) the most recent determination letter, if any, received
by the Company from the Internal Revenue Service, (ii) all pending applications
for rulings, determinations, opinions, no action letters and the like filed
with any governmental agency (including the Department of Labor and the
Internal Revenue Service), (iii) the financial statements for the three (3)
most recent plan years (in audited form if required by ERISA) and Annual
Report/Return (Form 5500) with disclosure schedules, if any, and attachments,
and (iv) plan documents, summary plan descriptions, trust agreements, insurance
contracts, service agreements and all related contracts and documents
(including any employee summaries and material employee communications).
(f) Each Plan has at all times been operated in substantial
compliance with ERISA, the Code, any other applicable law (including all Plan
document, reporting and disclosure requirements thereunder) and the terms of
the Plan.
(g) No state of facts or conditions exist which reasonably
could be expected to
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<PAGE> 15
subject the Company to any material liability (other than routine claims for
benefits) under the terms of any Plan or applicable law.
(h) Schedule 4.11 sets forth the identity of each corporation,
trade or business (separately for each category below that applies): (i) which
is (or was during the preceding five years) under common control with the
Company within the meaning of Section 414(b) or (c) of the Code, (ii) which is
(or was during the preceding five years) in an affiliated service group with
the Company within the meaning of Section 414(m) of the Code, (iii) which is
(or was during the preceding five years) the legal employer of persons
providing services to the Company as leased employees within the meaning of
Section 414(n) of the Code, and (iv) with respect to which the Company is a
successor employer for purposes of group health or other welfare plan
continuation rights (including Section 601 et seq. of ERISA) or the Family and
Medical Leave Act. Except as set forth in Schedule 4.11, there is no actual or
potential material liability to the Company with respect to any employee
benefit plan of any such corporation, trade or business.
(i) No condition, agreement or plan provision limits the right
of the Company to amend, cut back or terminate any plan (except to the extent
such limitation arises under ERISA).
4.12 Employees. Schedule 4.12 hereto states the name, department
assignment and current rate of compensation of each person who, as of the date
hereof, is employed by the Company. Except as disclosed in Schedule 4.6 (a),
the Company has not received notice of any pending or threatened claim asserted
against the Company by any employee (other than such claims, if any, that have
been dismissed, settled or otherwise finally resolved).
4.13 Agreements Relating to Employment. Except as disclosed in
Schedule 4.13 or Schedule 4.6 (b), the Company is not a party to or bound by
(a) any agreement, contract or other commitment to employ or compensate any
person, or (b) any collective bargaining agreement, and the Company is not
aware of any threat of strike, work stoppage or asserted demand for collective
bargaining by any employee, union or organization.
4.14 Trademarks, Trade Names, etc. Except as listed in Schedule
4.14, the Company owns no trademarks, service marks, trade names or patents
currently used to any material extent in its business. The Company owns all
right, title and interest in each trademark, service mark, trade name and
patent listed in Schedule 4.14. To Seller's knowledge no trademark, service
mark, or trade name (registered or at common law), domain name, patent,
copyrighted material, know-how or proprietary information (collectively
"Intellectual Property") used by the Company in its business infringes upon any
right or claim of any person or entity other than the Company and the Company
has not received notice from any person or entity claiming infringement of a
right or interest in Intellectual Property.
4.15 Customer Relations. The Company has a good commercial
relationship with each customer which had placed orders with the Company during
calendar year 1996 in excess of $100,000, and, based upon the way the Company
is currently operated, other than customary requests for price reductions,
Seller has no knowledge that any of such relationships would not continue on
substantially the same basis following the change in control of the Company.
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<PAGE> 16
4.16 Insurance. The Company has in force property and casualty
insurance on all property owned or leased by it and general and product
liability insurance in the amounts set forth in the certificates of insurance
which have been provided by the Company to Purchaser. Set forth on Schedule 4
.16 attached hereto and made a part hereof is a true and correct schedule of
all policies of such insurance. All required premiums have been paid with
respect to such policies.
4.17 Product Liability. Except as disclosed in Schedule 4.6(a), to
Seller's knowledge, there exists no claim, threat of claim, or basis for a
claim against the Company which will or could have a Material Adverse Effect
and which arises from any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased or
delivered by the Company.
4.18 Brokers. Except for obligations to Piper Jaffray Inc.,
financial advisors to the Company ("Piper") that are to be satisfied by Seller,
and not by the Company, at Closing, neither the Company nor Seller has any
contract with, or obligation to, any broker, finder or other intermediary in
connection with sale of the Stock, which would cause Purchaser or the Company
to become liable for payment of any fee or expense with respect thereto.
4.19 Completeness of Statements. Subject to the provision set out
in Schedule 4.19, none of the information or documents furnished or to be
furnished to Purchaser by Seller, the Company, or any of their respective
agents, representatives or employees, is knowingly false or misleading or
knowingly misstates a material fact required to be stated therein in order to
make the statements therein not misleading.
4.20 Exclusivity of Representations. Each of Purchaser and Seller
acknowledges and agrees that (a) the representations and warranties made by
Seller in this Agreement are in lieu of (and are exclusive of) any other
representations and warranties by Seller, express or implied and (b) neither
Seller nor anyone representing Seller has made any other representation or
warranty. Subject to his representation set out in paragraph 4.19 above, Seller
hereby disclaims any such other representations or warranties (express or
implied), notwithstanding any delivery or disclosure of any documents or other
information to Purchaser, its officers, directors, employees, agents or
representatives or any other person.
4.21 Schedules and Amendments to Schedules. All information disclosed
in this Agreement or any Schedule hereto shall be deemed fully disclosed for
all purposes of this Agreement and all Schedules hereto. At or prior to the
Closing, Seller shall have the right to deliver amended Schedules for review
and either approval thereof or rejection thereof by Purchaser, which approval
or rejection shall not be unreasonably delayed by Purchaser. To the extent that
Purchaser approves and accepts in writing any amendment to any Schedule (but
only to such extent), such amendment shall be deemed included in such Schedule
for all purposes hereof and the indemnification provisions hereof shall not
apply to any loss, damage, liability, claim, fee, cost or expense arising out
of, based upon or resulting from any matters that have been disclosed in such
amended Schedule.
5. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller that:
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<PAGE> 17
5.1 Due Incorporation. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power to own or lease its properties and assets, to
acquire the Stock and to conduct its business.
5.2 Corporate Authorization; Binding Agreement. This Agreement, the
execution and delivery hereof by Purchaser, payment of the purchase price to
Seller and the performance by Purchaser of its obligations and undertakings
hereunder have been duly and validly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by the Purchaser
and is a valid and binding obligation and agreement of the Purchaser,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws from time to time in effect affecting creditors' rights
generally or by principles governing the availability of equitable remedies).
The execution, delivery and performance of this Agreement will not violate,
contravene, result in a breach of or constitute a default (with due notice or
lapse of time or both) under (a) the Certificate of Incorporation or By-Laws of
the Purchaser, (b) subject to obtaining the consents and approvals referred to
in Schedule 5.2 hereto, any note, mortgage, agreement or instrument to which
the Purchaser is a party or by which the Purchaser is bound or (c) any
judgment, law, rule, regulation or decree applicable to the Purchaser. Except
as set out in Schedule 5.2 hereto and for filing under the Hart-Scott-Rodino
Antitrust Improvements Act, no consent, permit, authorization, approval or
action of any federal, state or local authority or any other person not a party
to this Agreement is required with respect to the Purchaser in connection with
the transactions contemplated by this Agreement.
5.3 Securities Act. The Purchaser is not acquiring any of the
shares of Stock hereunder for the purpose of resale or disposition in any
manner as would require registration of the sale of the Stock hereunder
pursuant to Section 5 of the United States Securities Act of 1933 (the
"Securities Act"). The Purchaser acknowledges that the shares of Stock may not
be resold in the absence of registration, or the availability of an exception
from such registration, under the Securities Act.
5.4 Completeness of Statements. None of the information or
documents furnished or to be furnished by Purchaser or any of its
representatives to Seller is knowingly false or misleading or misstates a
material fact required to be stated therein in order to make the statements
therein not misleading.
6. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing:
6.1 Access to Records; Investigation by Purchaser. Seller shall
afford the officers and authorized representatives of the Purchaser such access
to the offices, properties, business and records of the Company as Purchaser
shall deem necessary or desirable in its reasonable discretion, and shall
furnish to Purchaser or such authorized representatives such additional
financial and operating data and any and all additional information, documents,
items, correspondence, agreements etc. as shall be reasonably requested by
Purchaser, including all such information and data as shall be necessary in
order to enable Purchaser or its representatives to investigate the business
and properties of the Company but no such investigation shall affect
Purchaser's reliance on the accuracy of the representations and warranties of
Seller hereunder.
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<PAGE> 18
6.2 No Inaccuracies. Seller shall refrain from knowingly taking
any action which would render any representation and/or warranty contained in
this Agreement inaccurate as of the Closing Date. Seller will promptly notify
Purchaser of losses, claims, proceedings or investigations against the Company,
its officers and directors, which would have been listed in Schedule 4.6 (a) if
such lawsuit, claim, proceeding or investigation had arisen prior to the date
hereof.
6.3 Maintenance of Business. Except as set out in Schedule 6.3,
Seller shall cause the Company to conduct its respective business, operations
and affairs in the same manner and with the same business policies as was the
case prior to the date hereof, including the maintaining of normal inventories
so as to supply the requirements of the customers and distributors of the
Company, and during such period Seller will not cause the Company to dispose of
any of its assets or properties or incur any obligation other than in
arms-length transactions in the usual and ordinary course of business practices
heretofore followed by the Company, or take any action which may adversely
affect the goodwill or the normal conduct of the business of the Company; or
take, or cause the Company to take, any action which would constitute a
fraudulent conveyance under any state or federal law or which would render the
Company insolvent under any state or federal standard of insolvency.
6.4 Preservation of Goodwill. Seller will use all commercially
reasonable efforts to maintain the business organization for the Company intact
and to preserve the goodwill of the suppliers, contractors, employees,
customers and others having business relations with the Company.
6.5 Consent to Assignment. With respect to all contracts,
agreements, understandings or commitments of the Company which require consent
of another party in order to remain in force after the Closing, Seller shall
use commercially reasonable efforts to obtain all such consents and deliver the
same to Purchaser.
6.6 Liens, Etc. Seller will not subject to any material lien,
encumbrance, charge, security interest or mortgage any of the assets of the
Company.
6.7 Amendments or Termination of Contracts. Seller will not amend
or terminate any material contract, commitment, understanding, lease, license
or instrument without obtaining the prior written consent of Purchaser.
6.8 Maintenance of Equipment. Seller will maintain the equipment
of the Company in good working order, subject to wear and tear and the
Company's normal maintenance procedures.
6.9 Covenants for Compliance with Laws. Seller shall comply in all
material respects with all laws applicable to the transactions contemplated in
this Agreement including, without limitation, the laws enumerated in Paragraph
4.7 and local certificate of occupancy laws. Seller shall promptly provide to
Purchaser all correspondence, reports, notices, orders, findings and other
materials pertinent to Seller's compliance with such laws.
6.10 Employee Benefit Plan Responsibilities. Seller shall, prior to
and as a condition of closing, cause the Company to take the following actions
concerning the employee benefit plans maintained by the Company:
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<PAGE> 19
(a) terminate the participation of Leawood Properties, Inc. and
all other employers (other than the Company) in any Plan, as defined in
paragraph 4.11 of this Agreement, maintained by the Company;
(b) commence and diligently proceed with the preparation and
filing of form 5500 returns for 1991, 1994 and 1995 with respect to the group
health insurance plan sponsored by the Company with the Department of Labor and
the Internal Revenue Service under the Delinquent Filer Voluntary Compliance
program along with payment of the applicable penalty amount for each return.
Seller shall (i) file all such forms and make all such payments on or before
May 17, 1997, and (ii) provide full indemnification to Purchaser pursuant to
paragraph 11.1(a), but without application of the Deductible Amount for the
benefit of Seller, for any and all penalties imposed by the Department of Labor
in connection with the late filing of such form 5500 returns;
(c) amend the TCR Corporation Retirement Plan to provide that the
account balance of the participant who is an employee of Leawood Properties,
Inc. shall be 100% vested and nonforfeitable. The TCR Corporation Retirement
Plan shall continue to hold the account balances of participants who are
employees of Leawood Properties, Inc. ; and
(d) amend the TCR Corporation Retirement Plan to facilitate daily
valuations, provided that an unqualified opinion is obtained from counsel to
the Seller of the Company that the amendment does not jeopardize the qualified
status of the Plan as to form.
6.11 Affiliate Transactions. Seller shall take all steps and shall,
up to the Closing, cause the Company to take all steps necessary to conclude
any transactions and/or obligations, including those identified on Schedule
6.11 but exclusive of the lease between the Company and Polo Investment Company
for the facilities occupied by the Company and exclusive of maintenance
performed by Leawood Properties, Inc. on an arms length basis on the property
which is the subject of said lease, between the Company and any Affiliate
(collectively "Related Transactions"). To the extent any of such transactions
and/or obligations have not been concluded on or prior to the Closing and do
not require that they be so concluded as constituting conditions precedent to
Purchaser's obligation to close under paragraph 12.1, Seller shall cooperate
fully and shall vigorously pursue all steps necessary to conclude such
transactions and/or obligations within ninety (90) days of the Closing Date.
7. Risk of Loss. In the event that prior to Closing there occurs loss or
damage to any of the assets of the Company by fire or other casualty which is
sufficiently extensive to impair substantially the continued conduct of the
business of the Company, Purchaser in its sole discretion may terminate this
Agreement.
8. Confidentiality. Seller and Purchaser agree to comply to the Closing
Date with their respective obligations under that certain confidentiality
agreement dated November 26, 1996.
9. Hart Scott Rodino. Seller and Purchaser mutually covenant to
diligently proceed with the preparation and filing of any required notification
under the Hart-Scott-Rodino Antitrust Improvements Act and the regulations for
same ("Hart-Scott"). From the date hereof until the Closing the parties will
cooperate in attempting to secure the expiration of the waiting period
prescribed under Hart-Scott at the earliest practicable date.
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<PAGE> 20
10. Survival. All representations, warranties, covenants and agreements
contained in this Agreement shall survive (and not be affected in any respect
by) Closing or any investigation conducted (or information received) by any
party hereto, until the last day of the eighteenth (18th) calendar month
following that which includes the Closing Date (the "18-Month Date"), whereupon
all such representations, warranties, covenants and agreements shall expire and
terminate and shall be of no further force or effect, except that
(a) all obligations under Article 2 (relating to consideration) and
all covenants set out in this Agreement shall survive until the date set forth
for expiration of such covenant (if an expiration date is specifically so
stated) or otherwise until fully satisfied;
(b) the representations under paragraph 4.1, paragraph 4.2, the first
sentence of paragraph 4.3 and paragraph 4.9 (relating to title to the Stock and
the assets of the Company) shall survive indefinitely;
(c) the representations under paragraph 4.5 shall survive until
expiration of the applicable statute of limitations or extensions thereof;
(d) the representations under paragraph 4.8 shall survive for five (5)
years from the Closing Date;
(e) the indemnification obligations under paragraph 11 below shall
survive without time limit, except that any claim for indemnification under
paragraph 11(a) or (c) will be void and of no effect (and there shall be no
obligation to provide indemnification with respect to such claim) unless such
claim is asserted in writing in accordance with paragraph 11(d) prior to the
18-Month Date (or, in the case of any obligation for which a longer survival
period is stated in this paragraph 10 or in the paragraph governing such
obligation, unless asserted during such longer survival period).
11. Indemnification; Environmental Escrow.
11.1 Indemnification. The parties shall indemnify each other as
follows:
(a) Seller shall defend, indemnify and hold harmless Purchaser and
its directors, officers, shareholders, agents, representatives and assignees
(on a net after-tax basis) from any and all losses, damages, liabilities and
claims, and all fees, costs and expenses of any kind related thereto
(including, without limitation, reasonable legal fees) arising out of or
resulting from
(i) the inaccuracy as of the Closing Date of any representation
or warranty of Seller contained in this Agreement, or
(ii) the breach of or failure by Seller to perform any of his
obligations contained in this Agreement (including without limitation, any
obligation set out in any covenant contained in this Agreement),
provided, however, that (A) Seller shall not be responsible for any such
losses, damages, liabilities and claims referred to in Paragraph 11(a) unless
and until the cumulative aggregate amount thereof exceeds $305,000 (the
"Deductible Amount"), in which case Seller shall then be liable for all such
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<PAGE> 21
losses, damages, liabilities and claims in excess of the Deductible Amount; and
(B) the cumulative aggregate indemnity obligation of Seller under or by virtue
of this Agreement and the transactions contemplated hereby, whether pursuant to
this paragraph 11(a) or otherwise, shall in no event exceed $3,050,000, except
with respect to the representations and warranties of Seller set out in
paragraph 4.1(c) as to which the indemnity obligation of the Seller shall not
exceed the Purchase Price.
(b) (i) Seller shall defend, indemnify and hold harmless Purchaser
from and against any and all liability, loss, damage, claim and expense
incurred by the Company and or Purchaser in connection with the acquisition,
operation or divestiture of Florida Diesel & Marine Service, Inc. or any
Affiliate of Seller or any act or omission of any Affiliate of Seller
(exclusive of any act or omission of the Company as Lessee under the Lease
after the Closing Date and acts or omissions of the Company under any
Environmental Law which are intended to be covered by the indemnification
obligations of Seller set forth in paragraph 11.1(a) of the Agreement). This
obligation to indemnify and hold harmless shall not be limited by the
deductible or cap on liability set out in paragraph 11.1(a).
(ii) Seller shall defend, indemnify and hold harmless Purchaser
from and against any and all liability, loss, damage, claim and expense
incurred by the Company and/or Purchaser in connection with the settlement or
other disposition of item no. 3 on Schedule 4.6(a) (the "Unassumed Claim")
provided that (A) Seller shall not be responsible for any such liabilities,
losses, damages, claims or expenses unless and until the cumulative aggregate
amount thereof exceeds $225,000, (B) Seller and Purchaser shall each be
responsible for one-half of all such liabilities, losses, damages, claims and
expenses for the next $300,000 (i.e. Purchaser and/or the Company shall not be
liable or otherwise responsible for any amount in excess of $150,000) and (c)
Seller shall be responsible for all such liabilities, losses, damages, claims
and expenses in excess of $525,000; provided however that (x) Seller's total
obligation under this subparagraph 11.1(b)(ii) shall be part of and subject to
the $3,050,000 cap on indemnification obligations set out in paragraph 11.1(a),
and (y) payment by the Company of all or any portion of the $225,000 toward
such item no.3 and any amount paid in excess of $225,000 but reimbursed by
Seller to the Company shall not be applied to or reduce the Deductible Amount.
Purchaser agrees that it will cooperate with Seller in good faith to resolve
the Unassumed Claim.
(c) Purchaser shall defend, indemnify and hold harmless Seller (on a net
after-tax basis) from any and all losses, damages, liabilities and claims and
all fees, costs and expenses of any kind related thereto (including, without
limitation, reasonable legal fees) arising out of or resulting from
(i) the inaccuracy as of the Closing Date of any representation
or warranty of Purchaser contained in this Agreement, or
(ii) the breach of or failure by Purchaser to perform any of its
obligations contained in this Agreement.
(d) As promptly as practicable after obtaining knowledge of any
breach, failure, claim or other matter with respect to which one party
hereunder is (or claims to be) entitled to indemnification hereunder (but in
any event after receipt of any notice of assertion of any third-party action,
suit, claim or proceeding and as long as practicable before the date for answer
or other
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<PAGE> 22
response thereto), the party seeking indemnification (an "Indemnified Party")
shall give written notice to each party from which indemnification is sought
(an "Indemnifying Party") describing in reasonable detail the basis of such
claim for indemnification. If the Indemnified Party does not so notify the
Indemnifying Party in accordance with the immediately preceding sentence, the
Indemnifying Party shall be relieved of all liability hereunder with respect to
such claim. If such claim involves the claim of any third party, the
Indemnifying Party shall be entitled to participate in, and assume sole control
over, the defense or settlement of such claim; provided, however, that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim and to employ counsel at its own expense to assist in
such defense; and
(ii) the Indemnifying Party shall obtain prior written approval
of the Indemnified Party (which shall not be unreasonably withheld or delayed)
before settling or ceasing to defend such claim, if as a result of such
settlement or cessation, injunctive or other equitable relief would be imposed
against the Indemnified Party.
If, by written notice to the Indemnified Party, the Indemnifying Party assumes
the defense and sole control of any such claim, the Indemnifying Party shall
not be liable to the Indemnified Party for any legal fees or other costs of
defense incurred by such Indemnified Party in connection with such claim. If
the Indemnifying Party does not assume the defense and sole control of such
claim, the Indemnified Party shall have the right to defend and settle the
claim in such manner as it may deem appropriate at the cost and expense of the
Indemnifying Party.
(e) In connection with any claim of any third party, the Indemnified
Party shall cooperate fully with the Indemnifying Party in the defense thereof
and in order to permit the Indemnifying Party to take full advantage of any
available insurance coverage and shall furnish to the Indemnifying Party such
documents and other evidence as may reasonably be requested by the Indemnifying
Party for purposes of such defense.
(f) With respect to any claim against which the Indemnifying Party is
obligated to indemnify the Indemnified Party, the Indemnifying Party shall be
subrogated to all rights of the Indemnified Party with respect to such claim.
The rights and remedies of Purchaser and Seller under this Paragraph 11 are
exclusive and in lieu of any and all other rights and remedies (whether
asserted as breach of contract, tort claims, actions in equity or otherwise)
which Purchaser or Seller may have under this Agreement or otherwise with
respect to the transactions contemplated hereby.
11.2 Environmental, Health and Safety Escrow. Notwithstanding
any other provision of this Agreement (including but not limited to the
provisions for a Deductible Amount in paragraph 11.1), to the extent that the
items identified on Schedule 11.2 have not been remediated or otherwise
addressed to the reasonable satisfaction of the Purchaser on or prior to the
Closing Date, there shall be withheld at Closing from the Purchase Price the
sum of $325,000, less the cost of those items remediated or otherwise addressed
to the reasonable satisfaction of the Purchaser on or prior to the Closing,
which sum shall be placed in escrow with First Trust National Association and
held in an interest bearing account, and said amount shall be used to defray
the cost of remediating or otherwise addressing the items identified in
Schedule 11.2. The escrow shall be held pursuant to an agreement substantially
in the form of Exhibit A.
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12. Conditions Precedent To and Requirements At Closing.
12.1 Conditions Precedent to Purchaser's Obligation. The obligation
of Purchaser to close the transactions contemplated by this Agreement is
subject to and conditioned upon the performance prior to or at the Closing Date
of each of the following:
(a) All the terms and conditions of this Agreement to be
complied with and performed by Seller on or before the Closing Date, including
the delivery to Purchaser of all documents and instruments referred to in this
Agreement, shall have been complied with and performed.
(b) Purchaser shall not have discovered any error,
misstatement or omission in the representations, warranties and agreements made
by Seller which alone is, or in the aggregate are, in the reasonable opinion of
Purchaser or its counsel, materially adverse to Purchaser;
(c) The delivery to Purchaser of a certificate signed by
Seller, dated the Closing Date, which states that all representations and
warranties of Seller contained in this Agreement or in any certificate,
schedule or instrument delivered pursuant hereto in connection with the
transaction contemplated hereby, are true and correct as of the Closing Date in
all material respects, and that the agreements and covenants of Seller
contained in this Agreement have been complied with in each and every respect
as of the Closing Date;
(d) The delivery to Purchaser of a certificate or certificates
representing all the shares of Stock of the Company;
(e) No suit, action or other proceeding to restrain, prohibit
or otherwise affect the consummation of the transactions contemplated by this
Agreement, which in the reasonable judgment of Purchaser or its counsel,
requires the delay of the Closing or the termination of this Agreement, shall
have been instituted or threatened;
(f) The validity or legality of all actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto and all other related legal documents shall be reasonably acceptable to
Purchaser's counsel;
(g) Seller shall have obtained consents, where required as a
result of the change of control arising from the sale of the Stock, for all
material contracts, agreements, commitments, understandings or instruments to
which the Company is a party or by which it is bound, which require the consent
of any other party or person in order to remain in force from and after the
Closing, either by the terms of the contract, agreement, commitment,
understanding or instrument, or as a matter of law;
(h) Any permit, approval or any action of any jurisdiction or
governmental authority required in the reasonable opinion of Purchaser's
counsel for the lawful consummation of the transactions contemplated by this
Agreement, including without limitation compliance with the Hart Scott Rodino
Antitrust Improvement Act as amended and the regulations implementing said act,
shall have been obtained;
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<PAGE> 24
(i) The delivery to Purchaser of the resignations of Seller as
an officer of the Company and of all directors of the Company, all dated as of
the Closing Date, as requested by Purchaser;
(j) The delivery to Purchaser of an opinion letter from Faegre
& Benson LLP, counsel to Seller, in the form of Exhibit B annexed hereto;
(k) No significant employee or supplier of the Company or
customer set out in Schedules 4.6 (b) and 4.12 shall have expressed to the
Company or Purchaser an unwillingness to maintain respectively an employment or
business relationship with the Company following the Closing;
(l) No material adverse change (whether or not in the ordinary
and usual course of business) shall have occurred in the business or the
financial condition of the Company and there shall not have been any damage,
destruction or loss (whether or not covered by insurance) materially affecting
the assets, properties or business of the Company taken as a whole;
(m) Evidence of submission of a response, in form and content
reasonably acceptable to the Purchaser and meeting the requirements of the
Minnesota Pollution Control Agency (MPCA), to the letter of the MPCA dated
March 20, 1997 with respect to the site bearing MPCA number LEAK00009984;
(n) Amendment of the lease between Polo Investment Company and
the Company dated January 1, 1992 to delineate an environmental baseline and
the respective obligations of landlord and tenant with respect to Environmental
Law as to periods predating and commencing the Closing Date and receipt of
evidence reasonably satisfactory to Purchaser and its counsel of the
appropriate doing business name filing of Polo Investment Company;
(o) The satisfaction of all outstanding obligations of the
Company arising with respect to the credit agreement with Norwest Bank
Minnesota NA ("Norwest") dated December 16, 1992 and all amendments thereto
(the "Credit Agreement") and the release by Norwest of all liens, pledges and
encumbrances arising in connection with the Credit Agreement or otherwise;
(p) The release of all obligations of the Company with respect
to the real property commonly known as New Ulm Holiday Inn;
(q) The payoff by Seller of the amount outstanding under the
promissory note payable to order of the Company dated August 17, 1995, net of
the amount due Seller by the Company under the promissory note dated January 4,
1996;
(r) The payoff by the Company of the amount outstanding under
the promissory note to order of Mary Bradley and receipt of evidence reasonably
satisfactory to Purchaser of such payoff; and
(s) Receipt of a non-disturbance agreement in favor of the
Company, in form and substance reasonably acceptable to Purchaser's counsel,
from each Person holding a mortgage on the real property described as Tract B,
Registered Land Survey No. 1382, Files of the Registrar of Titles, County of
Hennepin, Minnesota.
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12.2 Conditions Precedent to Seller's Obligations. The obligation
of Seller to close is subject to and conditioned upon the performance prior to
or at the Closing Date of each of the following:
(a) All the terms and conditions of this Agreement to be
complied with and performed by Purchaser on or before the Closing Date,
including the delivery to Seller of all documents and instruments referred to
in this Agreement, shall have been complied with and performed;
(b) Seller shall not have discovered any error, misstatement
or omission in any representations, warranties and agreements made by Purchaser
which alone is or in the aggregate are, in Seller's reasonable opinion,
materially adverse to Seller;
(c) The delivery to Seller of a certificate signed by
Purchaser's authorized officer, dated as of the Closing Date, which states that
all representations and warranties of Purchaser contained in this Agreement or
in any certificate, schedule or instrument delivered pursuant hereto in
connection with the transactions contemplated hereby are true and correct as of
the Closing Date with the same force and effect as if made on the Closing Date,
and that the agreements and covenants of Purchaser contained in this Agreement
have been complied with in each and every respect as of the Closing Date;
(d) The delivery to Seller of a resolution of the Board of
Directors of Purchaser, certified by its Secretary or other authorized officer,
authorizing execution by Purchaser of this Agreement and the consummation of
the transactions contemplated hereby;
(e) No suit, action or other proceeding to restrain, prohibit
or otherwise affect the consummation of the transactions contemplated by this
Agreement, which, in the reasonable judgment of Seller or Seller's counsel,
requires a delay of the Closing or termination of this Agreement, shall have
been instituted or threatened;
(f) The validity or legality of all actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto and all other related legal matters shall be reasonably acceptable to
Seller's counsel;
(g) Any permit, approval or any action of any jurisdiction or
governmental authority required in the reasonable opinion of the Seller's
counsel for the lawful consummation of the transactions contemplated by this
Agreement, including without limitation compliance with the Hart Scott Rodino
Antitrust Improvement Act as amended and the regulations implementing said act,
shall have been obtained;
(h) Seller shall have been released from all liability under
his guaranty of the indebtedness of the Company to Norwest Bank Minnesota N.A.;
(i) Seller shall have received an assignment of the life
insurance policy maintained on his life by the Company; and
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<PAGE> 26
(j) The delivery to Seller of opinion letters from each of
Gerald C. Harvey, Esq. and Dorsey & Whitney, LLP, counsel to the Purchaser, in
the form of Exhibit C and D annexed hereto.
13. Post-Closing Covenants.
13.1 Covenant Not To Compete. Seller hereby covenants and agrees
that from and after the Closing, he shall not:
(a) For a period of five (5) years, directly or indirectly,
solicit business from or perform any services for any person, company or
individual which, on the date hereof or the Closing Date, is a customer of the
Company, if such business or services are similar to those engaged in or
performed by the Company on the date hereof or at the Closing Date;
(b) For a period of five (5) years, directly or indirectly,
including, without limitation, as partner, lender, joint venturer, shareholder,
consultant, or otherwise, manage, operate, engage or participate in, loan money
for, act as guarantor of loans of, perform services for or otherwise carry on
or assist a business similar to that of the Company on the date hereof or on
the Closing Date in any state or foreign country in which the Company sold
goods or provided services within one (1) year prior to the Closing Date
hereof, except that Seller may own up to one percent (1%) of any outstanding
class of securities of any entity which conducts a business similar to that of
the Company on the date hereof if such class of securities is actively traded
on a United States national or regional stock exchange or in the United States
national over-the-counter market.
(c) For a period of five (5) years, solicit for any competitor
of the Company, any customers, suppliers or employees of the Company. Without
limiting any of the foregoing, the hiring of any employee of the Company,
directly or indirectly, during such five-year period shall be deemed to be a
violation of this covenant absent Purchaser's consent, which shall not be
unreasonably withheld.
(d) Without limitation as to time, divulge to anyone, or use
any non-public information in Seller's possession with respect to the services,
operations or customer lists of the Company, except as otherwise required by
law; and
(e) Without limitation as to time, divulge, use, disclose or
furnish to anyone (except Purchaser) trade secrets, processes of manufacture,
product specifications, or any other non-public information of any nature
regarding the methods of conducting or operating the business of the Company,
except as otherwise provided by law.
(f) In the event Seller receives any judicial or
administrative order, subpoena, or other demand requiring the disclosure of any
trade secret, process of manufacture, product specifications or other
non-public information covered by subparagraphs (d) and (e) above, Seller shall
promptly notify the Purchaser of such demand prior to disclosure of such
non-public information in order to allow Purchaser the opportunity to seek to
quash such a demand or obtain a protective order or other appropriate remedy.
13.2 Reasonableness of Restraints. Seller hereby acknowledges that:
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<PAGE> 27
(a) The imposition of the restrictions, restraints and
limitations set out in paragraph 13.1 hereof are necessary for the reasonable
and adequate protection of the Stock purchased by Purchaser hereunder, and the
business of the Company;
(b) Each and every restriction, restraint and limitation set
out in paragraph 13.1 hereof is reasonable in respect to geographic area,
subject matter and length of time; and
(c) Monetary damages alone will not adequately compensate
Purchaser in the event of a breach by Seller of the restrictions, restraints
and limitations contained in Paragraph 13.1 hereof, and Seller agrees that in
addition to all remedies available to Purchaser, at law or in equity, Purchaser
shall be entitled to interim restraints and permanent injunctive relief for the
enforcement thereof.
13.3 Transition Period. For a period of ninety (90) days following
the Closing, the Purchaser shall permit Seller (i) to use his office at the
Company, and (ii) to remove Seller's personal property, including without
limitation the personal property described on Schedule 13.3 hereof, from the
Company's facilities. In addition, during such period the Purchaser shall
permit Seller to use the services of mutually agreed Company employees as
necessary to, and the Purchaser shall otherwise cooperate with Seller, in his
efforts to perform his obligations as set forth in paragraphs 6.10(b) and 6.11
hereof.
13.4 [intentionally deleted]
13.5 Operation of the Company Following the Closing. Following the
Closing and until such time as the performance payments payable pursuant to
paragraph 2.1 shall have been paid in full:
(a) Purchaser shall operate the Company as a separate
subsidiary and in a manner reasonably consistent with the manner in which the
Company was operated by Seller;
(b) The Company shall enter into transactions with any
Affiliates only on an arms-length basis;
(c) Purchaser shall not require payments by the Company
(whether by way of dividends or otherwise) that leave the Company with
inadequate capital for its operations;
(d) Purchaser shall not directly or indirectly divert any
material business opportunity relating to the business of the Company to the
Purchaser or any of its subsidiaries or Affiliates other than the Company;
(e) Purchaser shall not cause or permit revenue properly
allocable to the Company to be directed or diverted away from the Company to
other operations, entities or persons; or
(f) [intentionally deleted]
Nothing herein shall be deemed or construed to prevent or limit the Company
from entering into any guaranty or related security agreement required by the
Purchaser's lenders.
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13.6 Financial Statements. The Purchaser shall deliver to Seller:
(a) Simultaneously with delivery to its shareholders
generally, copies of the Purchaser's annual report, including its annual
financial statements;
(b) On or before March 31 of each year through and including
March 31, 2000, a written report on a physical inventory taken on or about the
immediately preceding December 31 and separate financial statements (including
a balance sheet and statements of earnings and cash flow) for the company as of
and for the fiscal year ended on the preceding December 31, all in reasonable
detail, prepared in accordance with generally accepted accounting principles
consistent with those used in preparing the Company's financial statements
referred to in Paragraph 4.4 hereof, and accompanied by a certificate of
Purchaser's Chief Financial Officer, which certificate shall state that such
financial statements present fairly, in all material respects, the financial
position of the Company and its results of operations and cash flows and have
been prepared in conformity with generally accepted accounting principles
consistent with those used in preparing the Company's financial statements
referred to in paragraph 4.4 hereof;
(c) Within forty-five (45) days after the end of each fiscal
quarter, separate financial statements (including a balance sheet and
statements of earnings and cash flow) for the Company as of and for such
quarter, all in reasonable detail, prepared in accordance with generally
accepted accounting principles applicable to quarterly financial statements
generally which are consistent with those used in preparing the Company's
financial statements for the two months ended February 28, 1997 referred to in
paragraph 4.4 hereof, and certified by a senior financial officer of the
Company and the Purchaser as fairly presenting, in all material respects, the
financial position of the Company and its results of operations and cash flows,
subject to changes resulting from year-end adjustments; and
(d) With reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company as from time to time may be reasonably
requested by Seller.
13.7 CFO's Certificate. Simultaneously with the delivery to Seller
of the Company's financial statements as required by paragraph 13.6, the
Purchaser shall deliver to Seller a certificate of the Purchaser's Chief
Financial Officer (i) setting forth the determination of Operating Income for
the fiscal year covered by such financial statements; (ii) stating that such
Operating Income was determined in accordance with the requirements of this
Agreement, and (iii) setting forth the information (including detailed
calculations) required in order to permit Seller to independently determine the
Operating Income for the fiscal year covered by such financial statements.
13.8 Inspection. The Purchaser shall permit Seller, at Seller's
expense and upon reasonable approval of the Purchaser, which shall not be
unreasonably withheld, to visit the principal executive office of the Company,
and to discuss the affairs, finances and accounts of the Company with the
Company's officers and independent accountants.
13.9 Non-public Information. Seller acknowledges (a) that upon the
Closing the Company will be a subsidiary of Purchaser and that the Purchaser is
listed on the New York Stock Exchange
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<PAGE> 29
and that its shares are publicly traded; (b) that information received pursuant
to the operation of paragraphs 13.6, 13.7 and 13.8 will include material,
non-public information at the time of receipt; and (c) that the securities laws
of the United States prohibit any person who has received material, non-public
information associated with a company listed on an exchange or which is an
issuer under said securities laws from purchasing or selling securities of such
issuer, in this case the Purchaser, or from communicating such information to
any other Person under circumstances in which it is reasonably foreseeable that
such other person is likely to purchase or sell such securities.
14. Termination.
14.1 Manner of Termination. This Agreement may be terminated and
the transactions contemplated by this Agreement may be abandoned on or before
the Closing Date:
(a) As provided in Article 7 in the event of a loss as
contemplated therein;
(b) By mutual agreement of Seller and Purchaser;
(c) By Purchaser, if any of the conditions of paragraph 12.1
of this Agreement have not been met by April 30, 1997 and have not been waived
in writing by Purchaser and provided that Purchaser is not then in breach of
its obligations hereunder; or
(d) By Seller, if any of the conditions of paragraph 12.2 of
this Agreement have not been met by April 30, 1997 and have not been waived in
writing by Seller and provided that Seller is not then in breach of its
obligations hereunder.
14.2 Election to Terminate. Any election to terminate this
Agreement under paragraph 14.1(b), any assent to amendments to this Agreement
and any election to waive any provision of this Agreement shall be exercised in
writing signed by the Seller and a duly authorized officer of Purchaser.
14.3 No Liability. In the event of the termination and abandonment
of this Agreement pursuant to the provisions of this Article 14, this Agreement
shall become null and void and have no effect, without any liability on the
part of any party or the directors, officers, stockholders or employees of any
party in respect of this Agreement, other than the liability on the part of
each party for its own expenses incurred in connection with the transactions
contemplated by this Agreement.
15. Assignment
15.1 Option to Assign. Prior to the Closing Date, Purchaser may,
without the consent of Seller, assign all of its right, title and interest in
and to this Agreement and its obligations hereunder to a majority-owned
subsidiary of Purchaser or to an entity formed by Purchaser in which Purchaser
owns a majority of the stock, in the event that such entity is a corporation,
or owns a majority partnership interest, in the event that such entity is a
partnership. Any such subsidiary established by the Purchaser shall perform all
of the terms, covenants and conditions to be performed by the Purchaser
hereunder, including, without limitation, the payment of the Purchase Price
pursuant to Article 2 hereof.
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<PAGE> 30
15.2 No Release. Upon the Purchaser's making an assignment to a
subsidiary pursuant to paragraph 15.1 hereof, for all purposes of this
Agreement, Purchaser's assignee shall be considered the "Purchaser" hereunder
entitled to all rights and benefits inuring to Purchaser hereunder; however,
Purchaser named hereinabove shall not be released or discharged from any of the
obligations of "Purchaser" under this Agreement and any transactions
accompanying or related to this Agreement.
16. Post-Closing Commitments. In addition to any other requirement to be
observed by any party hereto after the Closing:
(a) Seller shall be responsible for the preparation and timely filing
of the short period returns for the Company as an S corporation and any
payments due from any taxpayer in respect thereof; and
(b) Purchaser shall give Seller and his agents or representatives full
access to the Company's books and records and permit Company personnel to
assist Seller for the purpose of allowing Seller to fulfill his commitment
pursuant to subparagraph (a) of this paragraph 16 and for the purpose of
allowing Seller to respond to any tax audit of Seller's income tax returns
which involves questions concerning the income of the Company.
(c) Seller shall refrain from all use of the trade names "TCR" and
Twin City Automatic after the Closing and shall not contest any use of said
trade names by Purchaser, and/or the Company.
17. Miscellaneous.
17.1 Entire Understanding. This Agreement represents the entire
understanding of the parties hereto with respect to the subject matter hereof
and may not be amended or modified except by a writing executed by all of the
parties hereto.
17.2 Fees and Expenses. Each party shall bear his or its own fees
and expenses incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby.
17.3 Publicity. No press release, public announcement or other
communication relating to the transactions contemplated herein shall be made by
Purchaser without the prior approval of Seller or by Seller without the prior
approval of Purchaser; provided however, that Seller or the Purchaser, as the
case may be, shall not have the right to approve any such announcement or
communication which counsel for the other party reasonably believes to be
required by law or, as to Purchaser, by reason of its status as a listed
company on the New York Stock Exchange, but the party making such announcement
or communication shall in any event make reasonable efforts to send a copy of
such proposed announcement or communication to the other party hereto before it
is sent to any other person. All such approvals shall not be unreasonably
withheld.
17.4 Entire Agreement. This Agreement supersedes all prior and
contemporaneous negotiations, understandings and agreements, written or oral,
between the parties hereto with
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<PAGE> 31
respect to the subject matter hereof, all of which prior agreements and
understandings are hereby rendered null and void.
17.5 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, and their respective heirs,
successors, executors, administrators and assigns.
17.6 Waiver. No waiver of any provision hereof shall be effective
unless set out by a written instrument signed by all of the parties hereto.
17.7 Execution of Agreement. This Agreement may be signed in
counterparts, all of which shall be considered an original and together they
shall constitute one agreement.
17.8 Paragraph Headings. Paragraph headings contained in this
Agreement are for convenience of reference only and shall not be deemed part of
this Agreement.
17.9 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
Minnesota applicable to agreements made and to be performed wholly within such
State. If any legal action should be filed by any of the parties against any
other party, the venue and forum of such action shall be the Minnesota state or
federal court in St. Paul and all parties hereto consent and submit to the
jurisdiction of such court.
17.10 Dispute Resolution. In the event that the Seller disputes the
accuracy of the determination of Operating Income made by the Purchaser, he
shall so notify the Purchaser in writing within twenty (20) days of receipt of
such determination and Seller and Purchaser shall thereupon promptly select a
mutually agreed independent firm of certified public accountants to resolve the
dispute, following the requirements for such determination set forth in this
Agreement. Said accounting firm shall render its decision on the dispute within
forty-five (45) days of its selection and such decision shall be final and
binding upon Seller and Purchaser. The fees and expenses of said accountants
shall be shared equally by Seller and Purchaser.
17.11 Notices. Any and all notices or other communications or
deliveries required or permitted to be given pursuant to any of the provisions
of this Agreement shall be deemed to have been duly given for all purposes if
sent by certified or registered mail, return receipt requested and postage
prepaid, hand delivered, sent by overnight delivery service or sent by
facsimile (confirmed by mail) as follows:
If to Seller: Mr. Robert Bradley
HC 3669
Jackson, Wyoming 83001
With a copy to: Susan Jacobson, Esq.
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Fax: 612-336-3026
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<PAGE> 32
If to Purchaser: Gerald C. Harvey, Esq.
Vice President, Secretary and General
Counsel
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07938
Fax: 908-903-0209
With a copy to: William B. Payne, Esq.
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Fax: 612-340-8738
or at such other address as any party may specify by notice given to the other
party in accordance with this paragraph. The date of giving of any such notice
shall be the (a) date of hand delivery, (b) the date following the posting of
the mail or the date when sent by overnight delivery service or (c) the date
when sent by facsimile.
18. Definitions. The following terms shall have the following meanings:
"Adjustment Escrow": as defined in paragraph 2.2 hereof.
"Affiliate": shall mean and include any Person controlling, controlled
by, or under common control with such Person, and, in the case
of an individual, shall mean his or her spouse, siblings,
ascendants and descendants.
"Agreement": means this Stock Purchase Agreement, together with the
Schedules hereto.
"Applicable Laws": means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations,
ordinances or orders of any Federal, state or local governing
authority, (ii) governmental approvals and (iii) orders,
decisions, judgments, awards and decrees of all courts,
administrative boards or other Federal, state or local
governmental authorities.
"Balance Sheet Date": as defined in paragraph 4.4(a) hereof.
"Benefit Plan(s)": as defined in paragraph 4.11 hereof.
"Closing": as defined in paragraph 3.1 hereof.
"Closing Date": as defined in paragraph 3.1 hereof.
"Code": the Internal Revenue Code of 1986, as amended.
"Company: TCR Corporation.
"Environmental Laws" and "Environmental Law": as defined in paragraph
4.8 hereof.
"Environmental Claims": means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability),
costs and expenses, which arise at any time as a result of (a)
Hazardous Materials upon, about or beneath, or migrating or
threatening to migrate to or from, any property at any time
owned, leased or occupied by the Company or any affiliate of
the Company, or (b) the violation of any Environmental Law.
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"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements": as defined in paragraph 4.4(a) hereof.
"GAAP": as defined in paragraph 4.4(b) hereof.
"Hazardous Materials": means any pollutants, contaminants, toxic
substances, hazardous waste or hazardous substances defined in
or regulated under any Environmental Law.
"Indemnified Party": as defined in paragraph 11(d) hereof.
"Indemnifying Party": as defined in paragraph 11(d) hereof.
"Investments": as identified on Schedule 18(a) hereto.
"Lease": as defined in paragraph 12.1(n) hereof.
"Loss": as defined in Article 11 hereof.
"Material Adverse Effect": shall mean any state of facts, event, act
or omission which would result in an adjustment to the Closing
Balance Sheet, or to an item of income or expense, in excess
of $305,000 or which would have a substantive adverse effect
on the Company or its business or properties considered as a
whole.
"Net Debt": The difference between (i) all indebtedness for borrowed
money of the Company minus (ii) all cash and cash equivalents
of the Company.
"Net Operating Assets" means the difference between (a) the value of
all the assets of the Company (total current assets, plus
gross plant, property, and equipment less accumulated
depreciation, plus other assets) excluding cash, less (b)
trade accounts payable and accrued expenses; all being
determined in a manner consistent with the balance sheets as
of December 31, 1996 and 1995, previously delivered to
Purchaser, except Investments described in Schedule 18(a)
which will be stated at fair market value at the Closing Date.
"Operating Income": shall be calculated in a manner consistent with
Operating Income and Income Before Interest shown on the pro
formas attached as Schedule 18(b) and shall exclude (i)
charges or items of income for which the Purchaser is
reimbursed under indemnification provisions of this Agreement,
(ii) any corporate fees or additional charges of Purchaser or
its Affiliates, (iii) any income or franchise taxes (or
payments under tax-sharing arrangements or amounts paid to
Seller for payment of income taxes), (iv) interest expense,
(v) depreciation and/or any amortization charges arising from
any step up in basis of assets or goodwill recorded as a
result of the transaction contemplated by this Agreement, (vi)
customary compensation paid in the ordinary course to Mr.
Bradley for the period from January 1, 1997, to the Closing
Date, (vii) management compensation, in any form, which is
paid to the management team (currently including John Funk,
Dick Seifert, Gerry Fisher, Jeff Keller, Tom Luther, and Bob
Romfo, or any person performing the functions now or hereafter
performed by any such person) and which exceeds compensation
commensurate with the normal compensation practices for the
management teams of the Purchaser's existing divisions and
subsidiaries, and (viii) other charges, credits or items of
income or expense incurred directly in connection with this
Agreement or this transaction including but not limited to
severance costs, the management bonus identified in item 1 of
Schedule 4.4(b), and changes in accounting methods or
estimates.
"Person": means any natural person, firm, partnership, association,
corporation, trust or Federal, state or local governmental
authority.
"Principal Balance Sheet": as defined in paragraph 4.4(a) hereof.
"Purchase Price": as defined in paragraph 2.1 hereof.
"Purchaser": TransTechnology Corporation, a Delaware corporation, or
as provided in paragraph 15 hereof.
26
<PAGE> 34
"Regulatory Action": means any action taken by any instrumentality of
the United States, the State of Minnesota, or any subdivision
thereof, to enforce any Environmental Law or any regulation
promulgated pursuant to any Environmental Law.
"Seller": as defined in the opening paragraph of this Agreement.
"Stock": as defined in Recital A of this Agreement.
19. Consent to Collateral Assignment of Stock Purchase Agreement. Seller
hereby consents to the execution and delivery of the Collateral Assignment of
Stock Purchase Agreement in favor of the First National Bank of Boston in
substantially the form of the draft delivered to Seller on the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: TRANSTECHNOLOGY CORPORATION
By:
- ----------------------------- ---------------------------------
Michael J. Berthelot
Chairman and Chief Executive
Officer
WITNESS:
By: (L.S.)
- ----------------------------- ---------------------------------
Robert Bradley
Individually
27
<PAGE> 1
CONSENT AND
AMENDMENT AGREEMENT NO. 5
dated as of March 31, 1997
to a
REVOLVING CREDIT AND
TERM LOAN AGREEMENT
AND TO CERTAIN OTHER LOAN DOCUMENTS
AS REFERRED TO AND DEFINED THEREIN
This CONSENT AND AMENDMENT AGREEMENT NO. 5 (this "Amendment"), dated
as of March 31, 1997, is by and among TRANSTECHNOLOGY CORPORATION
("TransTechnology"), TRANSTECHNOLOGY SEEGER-ORBIS GMBH ("GmbH"), ANDERTON
INTERNATIONAL LIMITED (formerly known as TTUK Acquisition Co. Limited)
("Limited" and, together with TransTechnology and GmbH, the "Borrowers"), THE
FIRST NATIONAL BANK OF BOSTON ("FNBB"), the other lending institutions listed
on Schedule 1 (the "Banks") and Schedule 2 (the "Term B Lenders") to the Credit
Agreement (as defined below), 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 together with the Banks, the Term B
Lenders and the Fronting Bank, the "Lenders") and THE FIRST NATIONAL BANK OF
BOSTON, as Agent (in such capacity, the "Agent"). Capitalized terms used herein
unless otherwise defined shall have the respective meanings set forth in the
Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Revolving Credit and Term Loan Agreement dated as of June 30, 1995, as
amended by Amendment Agreement No. 1 dated as of August 29, 1995, Consent and
Amendment Agreement No. 2 dated as of October 27, 1995, Amendment Agreement No.
3 dated as of March 29, 1996, and Amendment Agreement No. 4 dated as of
December 31, 1996 (as so amended, the "Credit Agreement");
WHEREAS, TransTechnology has agreed, pursuant to a Letter of Intent
dated February 25, 1997, to purchase all of the issued and outstanding capital
stock of TCR Corporation, a Minnesota corporation ("TCR");
WHEREAS, in connection with the acquisition of TCR, the Borrowers have
requested certain other amendments to the Credit Agreement and upon the terms
and conditions hereinafter set forth, the Agent and the Lenders have agreed to
such amendments;
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the
parties hereto hereby agree as follows:
<PAGE> 2
-2-
Section 1. AMENDMENTS TO CREDIT AGREEMENT. Upon satisfaction of
the conditions precedent set forth in Section 8 hereof, the Credit Agreement is
hereby amended as follows, with such amendments to take effect from and as of
March 31, 1997 (the "Effective Date" of such amendments):
Section 1.1. The definition of "Applicable Margin" is amended by
deleting the Pricing Grid contained therein and the second and third paragraphs
thereof, and substituting therefor the following:
<TABLE>
<CAPTION>
Applicable Margin
-----------------
Performance Ratio Base Rate Eurocurrency Commitment
----------------- Loans Rate Loans Fee Rate
----- ---------- --------
<S> <C> <C> <C>
2.25:1 or lower 0% 1.0% .25%
2.75:1 or lower, but higher than 2.25:1 0% 1.5% .375%
3.25:1 or lower, but higher than 2.75:1 0.5% 2.0% .375%
3.75:1 or lower, but higher than 3.25:1 1.0% 2.5% .5%
Higher than 3.75:1 1.5% 3.0% .5%
</TABLE>
The Performance Ratio 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 TCR
Closing Date included in any such Reference Period, Consolidated EBITDA shall
include amounts for each fiscal quarter prior to the TCR Closing Date
representing the EBITDA of TCR (mutatis mutandis to reflect such amounts'
reference to TCR) for each such quarter, as notified by TransTechnology to the
Agent and each of the Lenders, by written notice in form and substance
satisfactory to the Agent, at least five (5) Business Days prior to June 30,
1997.
Section 1.2. The definition of "Approved Acquisition" is amended
by deleting "six (6)" on line 4 of paragraph (a) thereof, and substituting
therefor "six and one-half (6.5)".
Section 1.3. The definition of "Banks" is amended by deleting "on"
in the first line thereof and substituting therefor "in Part I of".
Section 1.4. The definition of "Borrowing Base Subsidiary" is
amended by deleting "and WTI" on the last line thereof and substituting
therefor "WTI and TCR".
Section 1.5. The definition of "Commitment" is amended by deleting
such definition in its entirety and substituting therefor the following:
"Commitment. As to any Lender, such Lender's Revolving Credit
Commitment, Term A Commitment, Third Tranche Commitment, Term B Commitment or
commitment to participate in the International Facility Loans, as the case may
be."
<PAGE> 3
-3-
Section 1.6. The definition of "Eligible Assignee" is amended by
deleting "and (vi)" on line 17 thereof and substituting therefor "(vi) a
Lender; and (vii)".
Section 1.7. The definition of "Lender" is amended by inserting ",
the Third Tranche Lenders" between the words "The Banks" and "and the Term B
Lenders" on the first line thereof.
Section 1.8. The definitions of "Majority Banks", "Majority
Lenders" and "Majority Term B Lenders" are amended by deleting such definitions
in their entirety and substituting therefor the following:
"Majority Banks. As of any date, so long as there is only one Bank or
Third Tranche Lender, such Bank or Third Tranche Lender, and so long as there
are at least two Banks and/or Third Tranche Lenders, two or more Banks and/or
Third Tranche Lenders 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 date; and if no such principal
is outstanding, the Banks and Third Tranche Lenders whose aggregate Revolving
Credit Commitments, Term A Commitments and Third Tranche Commitments constitute
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 or more Lenders
whose aggregate Commitments constitute at least sixty-six and two-thirds
percent (66 2/3%) of the aggregate of the Commitments of all of the Lenders.
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 or more 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."
Section 1.9. The definition of "Revolving Credit Loan Maturity
Date" is amended by deleting the date "December 31, 2000" and substituting
therefor "[March 31], 2002."
Section 1.10. The definition of "Second US Tranche" is amended by
deleting the date "March 31, 1997" on line 3 thereof and substituting therefor
"May 31, 1997".
Section 1.11. The definition of "Security Documents" is amended by
inserting the words "the Collateral Assignment of TCR Stock Purchase
Agreement," between the words "Acquisition Documents" and "and the Stock Pledge
Agreement" on line 4 thereof.
Section 1.12. The definition of "Term Loan A" is amended by
deleting such definition in its entirety and substituting therefor the
following:
"Term Loan A. The term loan facilities made available (a) by the Banks
and the Fronting Bank to the Borrowers on the Closing Date, and (b) with
respect to the Second US Tranche and the Third US Tranche, by the Banks and the
Third Tranche Lenders on the
<PAGE> 4
-4-
TCR Closing Date, in an aggregate principal amount of up to $61,600,000, as
described in Section 4A.1."
Section 1.13. The definition of "Term Loan A Maturity Date" is
amended by deleting the date "December 31, 2000' and substituting therefor
"[March 31], 2002".
Section 1.14. The definition of "Tranche" is amended by inserting
the words ", the Third US Tranche" between the words "the Second US Tranche"
and ", the UK Tranche" on line 2 thereof.
Section 1.15. Section 1.1 of the Credit Agreement is further
amended by inserting the following new definitions therein in alphabetical
order:
Collateral Assignment of TCR Stock Purchase Agreement. The Collateral
Assignment in favor of the Agent, to be dated on or prior to the TCR Closing
Date, of all of TransTechnology's right, title and interest in, to and under
the TCR Stock Purchase Agreement, including (without limitation) the consent
thereto from Robert H. Bradley, in form and substance satisfactory to the
Lenders and the Agent.
TCR. TCR Corporation, a Minnesota corporation.
TCR Acquisition. The acquisition by TransTechnology of all of the
issued and outstanding capital stock of TCR pursuant to and in accordance with
the TCR Stock Purchase Agreement.
TCR Closing. The "Closing" of the TCR Acquisition, as defined in the
TCR Stock Purchase Agreement.
TCR Closing Date. The date of the "Closing" of the TCR Acquisition, as
defined in the TCR Stock Purchase Agreement.
TCR Stock Purchase Agreement. The Stock Purchase Agreement dated as of
April 3, 1997, between TransTechnology and Robert H. Bradley.
Third Tranche Commitment. With respect to each Third Tranche Lender,
the amount set forth in Part II of Schedule 1 hereto as the amount of such
Third Tranche Lender's commitment to make the Third US Tranche of Term Loan A
to TransTechnology, or if such commitment is terminated pursuant to the
provisions hereof, zero.
Third Tranche Commitment Percentage. With respect to each Third
Tranche Lender the percentage set forth in Part II of Schedule 1 hereto as such
Third Tranche Lender's percentage of the aggregate Third Tranche Commitments of
the Third Tranche Lenders.
Third Tranche Lenders. FNBB and the other lending institutions
identified in Part II of Schedule 1 hereto as Third Tranche Lenders, and any
other Person who becomes an assignee of any rights and obligations of a Third
Tranche Lender pursuant to Section 20.
<PAGE> 5
-5-
Third US Tranche. With respect to Term Loan A, the Tranche made or to
be made by the Third Tranche Lenders on the TCR Closing Date, in an aggregate
principal amount of up to $20,000,000, pursuant to Section 4A.1.4.
US Tranche. Any of the First US Tranche of Term Loan A, the Second US
Tranche of Term A or the Third US Tranche of Term Loan A.
Section 1.16. Section 4A ("Term Loan A") of the Credit Agreement is
amended by deleting such section in its entirety and substituting therefor the
following new Section 4A.:
"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 June 30, 1995, 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 June 30,
1995, 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 June 30,
1995, in Sterling, the principal amount of the Sterling Equivalent of
$8,000,000.
4A.1.4. SECOND AND THIRD US TRANCHES. In addition to the other terms
and conditions set forth in this Credit Agreement, the availability of the
Second US Tranche and Third US Tranche of Term Loan A is subject to the
fulfillment of the additional conditions that the proceeds of such Loans shall
be used by TransTechnology to finance the TCR Acquisition, which the Majority
Banks shall, as at the TCR Closing Date, be satisfied meets all of the
requirements set forth in the definition of "Approved Acquisition", and no less
than three (3) Business Days prior to the proposed TCR Closing Date,
TransTechnology shall have delivered (i) to the Agent a written notice
substantially in the form of Exhibit C hereto (the "Second US Tranche Request")
specifying (A) the principal amount of Loans requested up to the maximum
principal amount of $35,000,000, (B) the proposed Drawdown Date of such Loan,
which shall in no event be later than May 31, 1997, (C) the proposed Interest
Period or Interest Periods to apply to such Loans or portions of such Loans and
(D) the proposed Type or Types of such Loans or portions of such Loans, (ii) to
the Agent and each of the Banks and Third Tranche Lenders, a copy of the
proposed TCR Stock Purchase Agreement, and (iii) to the Agent and each of the
Banks and Third Tranche Lenders, a certificate of TransTechnology certifying
that the TCR Acquisition meets the requirements set forth in paragraphs (a)
through (c) of the definition of "Approved Acquisition", and that the documents
referred to in paragraphs (d) and (e) of such definition have been delivered in
accordance with the provisions set forth therein. Subject to fulfillment of
all of the conditions referred to in the preceding sentence, each Bank agrees
to lend to TransTechnology on the TCR Closing Date the amount of such Bank's
Term A Commitment Percentage of the Second US Tranche of Term Loan A, and each
of the Third Tranche
<PAGE> 6
-6-
Lenders agrees to lend to TransTechnology on the TCR Closing Date the amount of
such Third Tranche Lender's Third Tranche Commitment Percentage of the Third US
Tranche of Term Loan A.
4A.2. THE TERM A NOTES.
4A.2.1. TERM A US TRANCHE NOTES. Each of the US Tranches 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"), and completed with appropriate insertions. One Term A US Tranche Note
shall be payable to the order of each Bank, with respect to 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 such Tranches, representing the
obligation of TransTechnology to pay to such Bank such principal amounts or, if
less, the outstanding amount of such Bank's Term A Commitment Percentage of
such Tranches, plus interest accrued thereon, and one Term A US Tranche Note
shall be payable to the order of each Third Tranche Lender, with respect to the
Third US Tranche of Term Loan A, in a principal amount equal to such Third
Tranche Lender's Third Tranche Commitment Percentage of such Tranche,
representing the obligation of TransTechnology to pay to such Third Tranche
Lender such principal amount or, if less, the outstanding amount of such Third
Tranche Lender's Third Tranche Commitment Percentage of such Tranche, plus
interest accrued thereon. TransTechnology irrevocably authorizes each Bank and
Third Tranche Lender 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 or Third Tranche
Lender reflecting the original principal amount of such Bank's Term A
Commitment Percentage, or such Third Tranche Lender's Third Tranche Commitment
Percentage, as the case may be, of the applicable Tranches of Term Loan A, and,
at or about the time of such Bank's or Third Tranche Lender's receipt of any
principal payment on its Term A Note(s), an appropriate notation on the
applicable 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 or Third Tranche Lender, as the case may
be, 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
<PAGE> 7
-7-
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 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. US TRANCHES. TransTechnology promises to pay to the Agent for
the account of the Banks and the Third Tranche Lenders the principal amount of
the US Tranches of Term Loan A in installments in accordance with the column
headed "US Tranches" 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 with the first calendar quarter ending following the TCR
Closing Date, with a final payment on the Term Loan A Maturity Date in an
amount equal to the unpaid balance of the US Tranches 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
<PAGE> 8
-8-
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 Maturity Date in an amount equal to the
Sterling Equivalent of the unpaid balance of the UK Tranche of Term Loan A.
4A.4. OPTIONAL PREPAYMENT OF TERM LOAN A. Each of Trans-Technology,
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 any of the US Tranches) 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, (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, and (v) each partial prepayment made
with respect to the Third US Tranche shall be allocated among the Third Tranche
Lenders, in proportion as nearly as practicable to the respective outstanding
amount of each Third Tranche Lender's Term A US Tranche Note, 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.
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 any of the US
Tranches 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
<PAGE> 9
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(c) to the extent that all or any portion of any of the US
Tranches 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 US Tranches 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
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 each of the US Tranches 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. Any 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 (a) 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
<PAGE> 10
-10-
average daily amount during each calendar quarter or portion thereof from the
Closing Date to the first to occur of the TCR Closing Date and May 31, 1997 by
which the aggregate amount of the Banks' Term A Commitments exceeds the
outstanding principal amount of the First US Tranche, Second US Tranche, German
Tranche and UK Tranche of Term Loan A, plus all repayments or prepayments of
the principal of such Tranches of Term Loan A, during such calendar quarter,
(b) for the accounts of the Third Tranche Lenders in accordance with their
respective Third Tranche Commitment Percentages, a Commitment Fee calculated at
the Commitment Fee Rate per annum on the average daily amount during the period
from March 31, 1997 to the first to occur of the TCR Closing Date and May 31,
1997 by which $20,000,000 exceeds the outstanding principal amount of the Third
US Tranche of Term Loan A, plus all repayments or prepayments of the principal
of such Tranche of Term Loan A, during such period. The commitment fees
described in this Section 4A.6 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 TCR Closing Date and May 31, 1997,
or any earlier date on which the Term A Commitments or the Third Tranche
Commitments, as the case may be, shall terminate."
Section 1.17. Section 6.3.2 is amended by deleting such section in
its entirety and substituting therefor the following:
"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)
provided, however, that, for purposes of this clause (ii) only, the
Applicable Margin shall be deemed to be that Applicable Margin which
is to be applied to Eurocurrency Rate Loans;
(b) as to interest due with respect to the Third US
Tranche of Term Loan A, to the Agent for the account of the Third
Tranche Lenders in the proportion to their respective Third Tranche
Commitment Percentages from time to time;
(c) 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 from time to time;
(d) as to interest due with respect to Term Loan A
(except to the extent provided in clauses (a) and (b) 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
<PAGE> 11
-11-
(e) 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."
Section 1.18. Section 6.5 is amended by deleting "the Banks" on
line 15 thereof and substituting therefor "the applicable Lender(s)".
Section 1.19. Section 9.9.2 is amended by deleting the words "Twice
each calendar year (or more frequently as determined by the Agent)," from the
first two lines thereof.
Section 1.20. Section 11.1 (Consolidated EBITDA to Consolidated
Total Interest Expense) is amended by deleting the ratio "4.00:1" on the last
line of the column headed "Ratio" in the chart therein, and substituting
therefor "3.50:1".
Section 1.21. Section 11.3 (Leverage) is amended by deleting the
last two periods and ratios set forth in the chart therein, and substituting
therefor the following:
<TABLE>
<S> <C>
"From March 31, 1997 through March 30, 1998 3.50:1
From March 31, 1998 through March 30, 1999 3.25:1
From March 31, 1999 and thereafter 2.75:1"
</TABLE>
Section 1.22. Section 11.6 (Capital Expenditures) is amended by
deleting the figure "$7,000,000" on the fifth line thereof, and substituting
therefor the figure "$9,000,000".
Section 1.23. Section 16.8 is amended by inserting the words ",
Third Tranche Commitment" following the words "Term B Commitment" on line 3
thereof.
Section 1.24. Section 20.1 is amended by addition the following new
Section 20.1.3 at the end thereof:
"20.1.3. CONDITIONS TO ASSIGNMENT BY THIRD TRANCHE LENDERS. Except as
provided herein, each Third Tranche Lender may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations as a Third
Tranche Lender under this Credit Agreement (including all or a portion of the
Third Tranche Loans at the time owing to it and the same portion of the Term A
US Tranche Notes held by it); provided that (a) the Agent shall have given its
prior written consent to such assignment, (b) each such assignment shall be of
a constant, and not a varying, percentage of all the assigning Third Tranche
Lender's rights and obligations as a Third Tranche Lender under this Credit
Agreement, (c) each such assignment shall be in an amount that is a whole
multiple of $1,000,000 and (d) 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
mutatis mutandis to reflect its use to assign portions of the Third US Tranche
of Term Loan A (also being referred to herein as an "Assignment and
Acceptance"), together with any Term A US Tranche Notes subject to
<PAGE> 12
-12-
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 Third Tranche Lender hereunder, and (ii) the assigning Third
Tranche 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, if
required, be released from its obligations under this Credit Agreement."
Section 1.25. Section 20.2 is amended by adding the words "or Third
Tranche Lender" following the words "or Term B Lender" on line 3 of clause (g)
thereof.
Section 1.26. Section 20.3 is amended by deleting such section in
its entirety and substituting therefor the following new Section 20.3:
"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, the Term B
Lenders and the Third Tranche Lenders, (b) the Revolving Credit Commitment
Percentages and Term Loan A Commitment Percentages of, the principal amounts of
the Revolving Credit Loans and the Tranches of Term Loan A owing to, and the
Letter of Credit Participations and participations in the risk related to the
Fronted Loans purchased by, the Banks from time to time, (c) the principal
amount of Term Loan B owing to each of the Term B Lenders from time to time,
and (d) the Third Tranche Commitment Percentages of, and principal amounts of
the Third US Tranche of Term Loan A owing to, the Third Tranche 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 or
Third Tranche 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, other than the
recordations of transfers from the original Bank, Term B Lender or Third
Tranche Lender, as the case may be, the assigning Lender agrees to pay to the
Agent a registration fee in the sum of $2,500."
Section 1.27. Section 20.4 is amended by adding the words "or Third
Tranche Lender" following the words "or Term B Lender" on lines 11, 13 and 14
thereof.
Section 1.28. Section 21 is amended by deleting clauses (a) - (c)
thereof in their entirety and substituting therefor the following:
"(a) if to any of the Borrowers, at TransTechnology
Corporation, 150 Allen Road, Liberty Corner, New Jersey 07938, U.S.A.,
Attention: Gerald C. Harvey, Esq., Vice President, Secretary and General
Counsel, 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, Vice President, or
such other address for notice as the Agent shall last have furnished in writing
to the Person giving the notice;
<PAGE> 13
-13-
(c) if to any Bank or Third Tranche Lender, at such Lender's
address set forth on Schedule 1 hereto, or such other address for notice as
such Lender shall have last furnished in writing to the Person giving the
notice; and"
Section 1.29. Section 27.1 is amended by adding "and the Third
Tranche Lenders" following "the Banks" on line 2 of clause (g) thereof, and
adding the following new clause (h) at the end thereof:
"(h) Except as otherwise set forth in this Agreement, without the
prior unanimous written consent of the Third Tranche Lenders, no amendment,
consent or waiver shall affect the amount or extend the time of the obligations
of the Third Tranche Lenders to make the Third US Tranche of Term Loan A or
extend the originally scheduled time or times of payment of the principal of
such Tranche or alter the time or times of payment of interest on such Tranche
or the amount of the principal thereof or the rate of interest thereon or
permit any subordination of the principal or interest on such Tranche or alter
the apportionment of any repayments or prepayment of such Tranche to which the
Third Tranche Lenders (as a class) are entitled. 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 Third
Tranche Lenders are entitled."
Section 1.30. The Schedules to the Credit Agreement are amended by
deleting Schedules 1, 2 and 3 thereto in their entirety and substituting
therefor the Schedules 1, 2 and 3 attached hereto as Exhibits A and B.
Section 1.31. The Schedules to the Credit Agreement are further
amended by adding the disclosures listed on Exhibit C to each of the respective
Schedules referred to in such Exhibit.
Section 2. AMENDMENT TO SUBSIDIARY GUARANTY. Immediately upon
the completion of the TCR Closing, the Subsidiary Guaranty shall be amended to
add TCR as a party thereto as a "Guarantor", and TCR hereby consents and agrees
to join the Subsidiary Guaranty as a Guarantor and to assume all of the
obligation of make each of the covenants, representations and warranties made
by and grant each of the rights granted by a Guarantor thereunder, jointly and
severally with each of the other Guarantors, with immediate effect from and
after the TCR Closing.
Section 3. AMENDMENT TO SECURITY AGREEMENT. Immediately upon the
completion of the TCR Closing, the Security Agreement dated as of June 30, 1995
among TransTechnology, certain of the Guarantors and the Agent, shall be
amended to add TCR as a party thereto as a "Subsidiary" and one of the
"Companies" thereunder, and TCR hereby consents and agrees to join the Security
Agreement as one of the Subsidiaries and Companies referred to therein, and to
assume all of the obligations of make each of the covenants, representations
and warranties made by, and grant each of the rights granted by a Subsidiary or
by a Company thereunder, with immediate effect from and after the TCR Closing,
and TCR unconditionally and jointly and severally grants to the Agent, for the
benefit of the Lenders and the Agent, a security interest in, and so pledges
and assigns to the Agent, for the benefit of the Lenders and the Agent, all of
its Collateral (as defined in Section 2.1 of such Security Agreement), to
secure the payment and performance in full of all of the Obligations, as
defined in such Security Agreement.
<PAGE> 14
-14-
Section 4. AMENDMENT TO STOCK PLEDGE AGREEMENT. Immediately upon
the completion of the TCR Closing, the Stock Pledge Agreement dated as of June
30, 1995 among TransTechnology, SSP Industries, TTSO and the Agent shall be
amended (a) to provide for the addition of TCR as a "Subsidiary" thereunder and
(b) by deleting the original Annex A thereto and substituting, therefor the
Annex A attached as Exhibit D hereto, and TCR hereby consents and agrees to the
pledge of all of the issued and outstanding shares of its capital stock
pursuant to such Stock Pledge Agreement and joins in such Agreement for the
sole purpose of consenting to and being bound by the provisions of Sections
4.1, 6 and 7 thereof, and agrees to co-operate fully and in good faith with the
Agent and the Pledgors, as defined therein, in carrying out such provisions.
Section 5. AMENDMENT TO TRADEMARK COLLATERAL SECURITY AND PLEDGE
AGREEMENT. Immediately upon the completion of the TCR Closing, the Trademark
Collateral Security and Pledge Agreement dated as of June 30, 1995 by and among
TransTechnology, WTI and the Agent shall be amended (a) to add TCR as an
"Assignor" thereunder, and (b) to add to Schedule A thereto the trademarks and
trademark assignments set forth in Exhibit E hereto, and TCR hereby consents
and agrees to assume all of the obligations of, make each of the covenants,
representations and warranties made by and grant each of the rights granted by
an Assignor thereunder, with immediate effect from and after the TCR Closing.
Section 6. AMENDMENT TO PATENT COLLATERAL ASSIGNMENT AND
SECURITY AGREEMENT. Immediately upon the completion of the TCR Closing, the
Patent Collateral Assignment and Security Agreement dated as of June 30, 1995
by and among TransTechnology, WTI and the Agent shall be amended (a) to add TCR
as a "Assignor" thereunder, and (b) to add to Schedule A thereto the patents
and patent assignments set forth in Exhibit F hereto, and TCR hereby consents
and agrees to assume all of the obligations of, make each of the covenants,
representations and warranties made by and grant each of the rights granted by
an Assignor thereunder, with immediate effect from and after the TCR Closing.
Section 7. CONSENT. Subject to the conditions set forth herein,
the Agent and the Lenders hereby consent to the acquisition by TransTechnology
of all of the issued and outstanding capital stock of TCR, and the entry by TCR
into that certain Amended and Restated Lease Agreement with Polo Investment
Company, to be dated as of the TCR Closing Date, substantially in the form most
recently delivered to the Agent prior to the date hereof.
Section 8. CONDITIONS TO EFFECTIVENESS. The effectiveness of
this Amendment and the consents set forth herein shall be conditioned upon the
satisfaction of the following conditions precedent:
Section 8.1. Delivery of Documents. The Borrowers shall have
delivered to the Agent (a) this Amendment executed and delivered by each of the
Borrowers and the Guarantors, and (b) each of the documents listed on Exhibit G
hereto, all in form and substance satisfactory to the Lenders and the Agent.
Section 8.2. Legality of Transaction. No change in applicable law
shall have occurred as a consequence of which it shall have become and continue
to be unlawful on the date this Amendment is to become effective (a) for the
Agent or any Lender to perform any of its
<PAGE> 15
-15-
obligations under any of the Loan Documents or (b) for any of the Borrowers or
Guarantors to perform any of its agreements or obligations under any of the
Loan Documents.
Section 8.3. Performance. Each of the Borrowers shall have duly
and properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default under any of the Loan Documents.
Section 8.4. Proceedings and Documents. All corporate,
governmental and other proceedings in connection with the transactions
contemplated by this Amendment and all instruments and documents incidental
thereto shall be in form and substance reasonably satisfactory to the Agent and
the Agent shall have received all such counterpart originals or certified or
other copies of all such instruments and documents as the Agent shall have
reasonably requested.
Section 9. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers
hereby represents and warrants to the Lenders that, as of the date hereof and
as of the TCR Closing Date:
(a) The representations and warranties of such Borrower contained
in the Credit Agreement and the other Loan Documents to which it is a party
were true and correct in all material respects when made, continue to be true
and correct in all material respects on the date hereof and, except as set
forth in the amendments to the Schedules to the Credit Agreement set forth in
Exhibit C hereto, will be true and correct in all material respects on the TCR
Closing Date, both before and immediately after giving effect to the TCR
Closing, provided that the financial statements referred to in such
representations and warranties shall be the financial statements of the
Borrowers most recently delivered to the Agent, and the "Balance Sheet Date",
as used in such representations and warranties, shall be the date of the most
recent audited consolidated financial statements of TransTechnology and its
Subsidiaries delivered to the Lenders pursuant to Section 9.4 of the Credit
Agreement.
(b) The execution, delivery and performance by such Borrower of
this Amendment and the consummation of the transactions contemplated hereby;
(i) are within the corporate powers of such Borrower and have been duly
authorized by all necessary corporate action on the part of such Borrower, (ii)
do not require any approval, consent of, or filing with, any governmental
agency or authority, or any other person, association or entity, which bears on
the validity of this Amendment and which is required by law or the regulation
or rule of any agency or authority, or other person, association or entity,
(iii) do not violate any provisions of any order, writ, judgment, injunction,
decree, determination or award presently in effect in which such Borrower is
named, or any provision of the charter documents or by-laws of such Borrower,
(iv) do not result in any breach of or constitute a default under any agreement
or instrument to which such Borrower is a party or to which it or any of its
properties are bound, including without limitation any indenture, loan or loan
agreement, lease, debt instrument or mortgage, except for such breaches and
defaults which would not have a material adverse effect on such Borrower and
its Subsidiaries taken as a whole, and (v) do not result in or require the
creation or imposition of any mortgage, deed of trust, pledge or encumbrance of
any nature upon any of the assets or properties of such Borrower;
<PAGE> 16
-16-
(c) This Amendment, each of the Loan Documents as amended hereby,
the Collateral Assignment of TCR Stock Purchase Agreement, and the Term A US
Tranche Notes issued with respect to the Second and Third US Tranches of Term
Loan A, constitute the legal, valid and binding obligations of each of the
Borrowers and their Subsidiaries party hereto, enforceable against such
Borrower or Subsidiaries in accordance with their respective terms, provided
that (i) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
rights and remedies of creditors, and (ii) enforcement may be subject to
general principles of equity, and the availability of the remedies of specific
performance and injunctive relief may be subject to the discretion of the court
before which any proceeding for such remedies may be brought; and
(d) TransTechnology has delivered to the Agent in connection with
the TCR Acquisition (a) the audited financial statements of TCR for its fiscal
years ending December 31, 1994, 1995 and 1996 (the "TCR Financial Statements"),
(b) consolidated projections dated March 10, 1997 of the financial performance
of TransTechnology and its Subsidiaries for the five (5) years commencing on
March 31, 1997, assuming the completion of the TCR Acquisition as of March 31,
1997 (the "TCR Projections"), and which fairly disclose all assumptions made
with respect to general economic, financial and market conditions used in their
formulation, and (c) a pro forma consolidated balance sheet of TransTechnology
and its Subsidiaries as at the TCR Closing, employing the unaudited
consolidated balance sheet of TransTechnology and its Subsidiaries and the
unaudited balance sheet of TCR, each dated February 28, 1997, which properly
gives effect to the TCR Acquisition and the Loans to be made in connection
therewith. The TCR Financial Statements have been prepared in accordance with
generally accepted accounting principles and fairly present the financial
condition of TCR as at the close of business on the dates thereof and the
results of operations for the fiscal years then ended. Since December 31, 1996,
there has occurred no materially adverse change in the financial condition or
business of TCR or any material assets of TCR as shown on or reflected in the
balance sheet of TCR as at December 31, 1996, or the statement of income for
its 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 TCR or any material
assets of TCR. 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 TCR Projections. The TCR 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.
Section 10. NO OTHER AMENDMENTS. Except as expressly provided in
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect.
<PAGE> 17
-17-
Section 11. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one instrument. In proving this
Amendment, it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
[rest of page intentionally left blank]
<PAGE> 18
-18-
IN WITNESS WHEREOF, the undersigned have duly executed this Consent
and Amendment Agreement No. 5 as a sealed instrument as of the date first set
forth above.
TRANSTECHNOLOGY CORPORATION
By:
----------------------------
Name:
Title:
TRANSTECHNOLOGY SEEGER-ORBIS
GmbH
By:
----------------------------
Name:
Title:
ANDERTON INTERNATIONAL LIMITED
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
<PAGE> 19
-19-
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent,
Issuing Bank and Fronting Bank
By:
----------------------------
Name:
Title:
NATIONAL BANK OF CANADA, individually
and as Co-Agent
By:
----------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
----------------------------
Name:
Title:
<PAGE> 20
-20-
SUMMIT BANK
By:
----------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research as
Investment Advisor
By:
----------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING FUND
RATE, INC.
By:
----------------------------
Name:
Title:
<PAGE> 21
-21-
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY ACQUISITION CORPORATION
By:
----------------------------
Name:
Title:
PALNUT FASTENERS, INC.
By:
----------------------------
Name:
Title:
INDUSTRIAL RETAINING RING COMPANY
By:
----------------------------
Name:
Title:
RETAINERS, INC.
By:
----------------------------
Name:
Title:
<PAGE> 22
-22-
RANCHO TRANSTECHNOLOGY CORPORATION
By:
----------------------------
Name:
Title:
TRANSTECHNOLOGY SYSTEMS & SERVICES,
INC.
By:
----------------------------
Name:
Title:
ELECTRONIC CONNECTIONS AND ASSEMBLIES,
INC.
By:
----------------------------
Name:
Title:
SSP INDUSTRIES
By:
----------------------------
Name:
Title:
SSP INTERNATIONAL SALES, INC.
By:
----------------------------
Name:
Title:
TRANSTECHNOLOGY SEEGER INC.
By:
----------------------------
Name:
Title:
<PAGE> 23
-23-
SEEGER INC.
By:
----------------------------
Name:
Title:
TCR Corporation hereby acknowledges and affirms its consents and agreements in
this Amendment with immediate effect from and after the TCR Closing (as defined
in this Amendment).
TCR CORPORATION
By:
----------------------------
Name:
Title:
<PAGE> 24
-24-
The Guarantors under and as defined in the English Guarantees hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guarantee of the
Obligations referred to in the English Guarantees, as such Obligations may be
amended in connection with this Amendment.
ANDERTON INTERNATIONAL LIMITED
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
ANDERTON (PREDECESSORS) LIMITED
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
<PAGE> 25
EXHIBIT A to
Consent and Amendment
Agreement No. 5
SCHEDULE 1
PART I
THE BANKS
<TABLE>
<CAPTION>
Name of Bank and Address of Revolving $30,000,000 $3,600,000 $6,400,000 $30,000,000 $8,000,000 $12,000,000
Lending Office (Domestic and Credit and Revolver Revolver Revolver Term A First UK Tranche German Tranche
Eurodollar) Term A (US) (Germany) (UK) US and of Term A Term A
Commitment Second US (Germany)
Percentage Tranches
<S> <C> <C> <C> <C> <C> <C> <C>
The First National Bank of 24.166667% 7,250,000.10 870,000.01 1,546,666.69 7,250,000.10 1,933,333.36 2,900,000.04
Boston
100 Federal Street
Boston, MA 02110
Fax No: (+1) 617-434-6685
National Bank of Canada 22.222222% 6,666,666.60 799,999.99 1,422,222.21 6,666,666.60 1,777,777.76 2,666,666.64
One Cleveland Center
1375 East 9th Street
Suite 2430
Cleveland, OH 44114
Fax No: (216) 574-9236
BHF-Bank AG 15% 4,500.000.00 540,000.00 960,000.00 4,500,000.00 1,200,000.00 1,800,000.00
590 Madison Avenue
New York, NY 10022-2540
Fax No: (212) 756-5911
The First National Bank of 15% 4,500,000.00 540,000.00 960,000.00 4,500,000.00 1,200,000.00 1,800,000.00
Chicago
153 West 51st Street
Mail Suite 4000
New York, NY 10019
Fax No: (212)-373-1388
Summit Bank 10% 3,000,000.00 360,000.00 640,000.00 3,000,000.00 800,000.00 1,200,000.00
750 Walnut Avenue
Cranford, NJ 07016
Fax No: (908)-709-6433
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
Name of Bank and Address of Revolving $30,000,000 $3,600,000 $6,400,000 $30,000,000 $8,000,000 $12,000,000
Lending Office (Domestic and Credit and Revolver Revolver Revolver Term A First UK Tranche German Tranche
Eurodollar) Term A (US) (Germany) (UK) US and Second of Term A Term A (Germany)
Commitment US Tranches
Percentage
<S> <C> <C> <C> <C> <C> <C> <C>
Senior Debt Portfolio 6.8055555% 2,041,666.65 245,000 435,555.55 2,041,666.65 544,444.44 816,666.66
(Eaton Vance)
24 Federal Street, 6th Fl.
Boston, MA 02110
Fax: (617) 695-9594
Merrill Lynch Senior 6.8055555% 2,041,666.65 245,000 435,555.55 2,041,666.65 544,444.44 816,666.66
Floating Rate Fund, Inc.
800 Scudders Mills Road
Plainsboro, NJ 08536
Fax: (609) 282-2756
</TABLE>
<PAGE> 27
EXHIBIT A to
Consent and Amendment
Agreement No. 5
(continued)
SCHEDULE 1
PART II
THE THIRD TRANCHE LENDERS
<TABLE>
<CAPTION>
Name of Third Tranche Third Tranche $20,000,000 Term A
Lender and Address of Commitment Third US Tranche
Lending Office (Domestic Percentage
and Eurodollar)
<S> <C> <C>
The First National Bank of 100% $20,000,000
Boston
100 Federal Street
Boston, MA 02110
Fax No: (+1) 617-434-6685
</TABLE>
<PAGE> 28
EXHIBIT A to
Consent and Amendment
Agreement No. 5
(continued)
SCHEDULE 2
THE TERM B LENDERS
<TABLE>
<CAPTION>
Term B Address of Lending Office Term B Commitment $24,500,000(1)
Lender (Domestic and Eurodollar) Percentage Term B
- ------ ------------------------- ---------- ------
<S> <C> <C> <C>
The First National 100 Federal Street 5% 1,225,000.00
Bank of Boston Boston, MA 02110
Fax: (+1) 617-434-6685
BHF-Bank AG 590 Madison Avenue 5% 1,225,000.00
New York, NY 10022-2540
Fax No: (212) 756-5911
Senior Debt Portfolio 24 Federal Street, 6th Fl. 30% 7,350,000.00
(Eaton Vance) Boston, MA 02110
Fax: (617) 695-9594
Merrill Lynch Senior 800 Scudders Mills Road 60% 14,700,000.00
Floating Rate Fund, Inc. Plainsboro, NJ 08536
Fax: (609) 282-2756
</TABLE>
- --------------------
(1) Reflecting $500,000 amortization payment made as of June 30, 1996.
<PAGE> 29
EXHIBIT B to
Consent and Amendment
Agreement No. 5.
SCHEDULE 3
AMORTIZATION OF TERM LOANS
Term Loan A
<TABLE>
<CAPTION>
Quarter US German UK Term
Ending Tranches ($) Tranche (DM) Tranche (L.) Loan B ($)
- ------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
12/31/95 600,000 688,080 206,718.37
3/31/96 600,000 666,816 203,627.09
6/30/96 600,000 666,816 203,627.09 500,000
9/30/96 600,000 666,816 203,627.09
12/31/96 600,000 666,816 203,627.09
3/31/97 600,000 666,816 203,627.09
6/30/97 1,450,000 666,816 203,627.09 500,000
9/30/97 1,450,000 666,816 203,627.09
12/31/97 1,450,000 666,816 203,627.09
3/31/98 1,450,000 666,816 203,627.09
6/30/98 2,220,000 666,816 203,627.09 500,000
9/98 2,220,000 666,816 203,627.09
12/98 2,220,000 666,816 203,627.09
3/99 2,220,000 666,816 203,627.09
6/99 2,250,000 833,520 254,533.87 500,000
9/99 2,250,000 833,520 254,533.87
12/99 2,250,000 833,520 254,533.87
3/00 2,250,000 833,520 254,533.87
6/00 2,550,000 1,333,632 407,254.19 500,000
9/00 2,550,000 1,333,632 407,254.19
12/00 2,550,000 1,312,368 404,162.93
--------- ----------
3/01 2,550,000
6/01 3,150,000 7,500,000
9/01 3,150,000
12/01 3,150,000
3/02 3,150,000
---------
6/02 15,000,000
----------
Total(2) 50,000,000 16,670,400 5,090,677.33 25,000,000
</TABLE>
- --------------------
(2) Total payments to be made on the German Tranche and UK Tranche of
Term Loan A are the respective DM Equivalent and Sterling Equivalent of
$12,000,000 and $8,000,000, as of June 30, 1995.
<PAGE> 30
EXHIBIT C to
Consent and Amendment
Agreement No. 5
Amendments to Schedules
<PAGE> 31
EXHIBIT D to
Consent and Amendment
Agreement No. 5
ANNEX A TO PLEDGE AGREEMENT
None of the issuers has any authorized, issued or outstanding shares
of its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this Annex A.
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
- ------ ------ -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
RETAINERS, INC. TRANSTECHNOLOGY 1,000 300 300 0
CORPORATION
TRANSTECHNOLOGY TRANSTECHNOLOGY ORDINARY 100 99 99 L.1.00
EUROPE LIMITED CORPORATION
PALNUT FASTENERS, TRANSTECHNOLOGY COMMON 1,000 100 100 $0.01
INC. CORPORATION
SSP INDUSTRIES TRANSTECHNOLOGY CAPITAL 100 100 100
CORPORATION
SSP INTERNATIONAL SSP INDUSTRIES 25,000 2,500 2,500 $1.00
SALES, INC.
INDUSTRIAL TRANSTECHNOLOGY COMMON 6,000 1,500 1,500 0
RETAINING RING CORPORATION
COMPANY
ELECTRONIC TRANSTECHNOLOGY COMMON 100 100 100 0
CONNECTIONS AND CORPORATION
ASSEMBLIES, INC.
TRANSTECHNOLOGY DOUGLAS WILLIAM ORDINARY 100,000 1 1 A$1.00
AUSTRALASIA PTY, WEBB
LIMITED
TRANSTECHNOLOGY TRANSTECHNOLOGY ORDINARY 100,000 1,000 1,000 A$1.00
AUSTRALASIA PTY, CORPORATION
LIMITED
TRANSTECHNOLOGY TRANSTECHNOLOGY COMMON 1,000 1,000 1,000 $1.00
SEEGER INC. CORPORATION
TRANSTECHNOLOGY TRANSTECHNOLOGY 1,000 1,000 1,000 0
INTERNATIONAL CORPORATION
CORPORATION
TRANSTECHNOLOGY TRANSTECHNOLOGY 200 200 200 $0.01
SYSTEMS & CORPORATION
SERVICES, INC.
SEEGER INC. TRANSTECHNOLOGY COMMON 1,000 1,000 1,000 $1.00
SEEGER INC.
RANCHO TRANSTECHNOLOGY COMMON 100 100 100 $0.01
TRANSTECHNOLOGY CORPORATION
CORPORATION
</TABLE>
<PAGE> 32
-2-
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
------ ------ -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
TRANSTECHNOLOGY TRANSTECHNOLOGY CAPITAL 1,000 1,000 1,000 0
ACQUISITION CORPORATION
CORPORATION
TCR CORPORATION TRANSTECHNOLOGY COMMON 10,000 2,288 2,288 $5.00
CORPORATION
</TABLE>
<PAGE> 33
EXHIBIT E to
Consent and Amendment
Agreement No. 5
(LIST OF U.S. TRADEMARKS)
U.S. TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
Trademark or Service Mark Registration No.
- ------------------------- ----------------
<S> <C>
</TABLE>
U.S.TRADEMARK APPLICATIONS
<TABLE>
<CAPTION>
Trademark or Service Mark Serial No.
- ------------------------- ----------
<S> <C>
</TABLE>
(LIST OF FOREIGN TRADEMARKS)
<TABLE>
<CAPTION>
Trademark or Service Mark Registration No. Country
- ------------------------- ---------------- -------
<S> <C> <C>
</TABLE>
<PAGE> 34
EXHIBIT F to
Consent and Amendment
Agreement No. 5
(LIST OF U.S. PATENTS)
<TABLE>
<CAPTION>
Title Registration No.
----- ----------------
<S> <C>
</TABLE>
(LIST OF FOREIGN PATENTS)
<TABLE>
<CAPTION>
Title Registration No. Country
----- ---------------- -------
<S> <C> <C>
</TABLE>
<PAGE> 35
EXHIBIT G to
Consent and Amendment
Agreement No. 5
SCHEDULE OF CLOSING DOCUMENTS
1. Third US Tranche Term A Note of TransTechnology in favor of The First
National Bank of Boston.
2. Landlord's Waiver of Polo Investment Company with respect to the lease
of 1600 67th Avenue North, Bay AM 0115, Brooklyn Center, Minnesota.
3. Legal opinion of Gerald C. Harvey, Esq., General Counsel of
TransTechnology.
4. Legal opinion of Dorsey & Whitney LLP.
5. Reliance Letter from Faegre & Benson LLP, counsel to Robert H.
Bradley, with respect to the legal opinion delivered pursuant to the
TCR Stock Purchase Agreement.
6. UCC-1 Financing Statements of TCR in favor of the Agent to be filed
with:
a) Minnesota Secretary of State
7. Certificate of Restated Articles of Incorporation of TCR, certified by
the Secretary of State of the State of Minnesota.
8. Certificate of Good Standing of TCR, from the Secretary of State for
the State of Minnesota.
9. Secretary's Certificate of TransTechnology as to:
a) no amendments of its Certificate of Incorporation or
by-laws since June 30, 1995;
b) directors' resolutions; and
c) incumbency and signatures of officers.
10. Officer's Certificate of TransTechnology regarding Approved
Acquisition conditions.
11. Drawdown request with respect to the Second US Tranche and Third US
Tranche.
12. Pro forma balance sheet of TransTechnology and its Subsidiaries after
giving effect to the TCR Acquisition.
13. Collateral Assignment of TCR Stock Purchase Agreement, together with
Seller's consent thereto.
14. Fully-executed original of the TCR Stock Purchase Agreement.
<PAGE> 36
-2-
15. Stock Certificate(s) and undated stock power(s) executed in blank for
TCR.
16. Pay-off Letter between TCR, TransTechnology and Norwest Bank Minnesota
N.A. ("Norwest").
17. UCC-3 Termination of Financing Statement No. 1549589 filed by Norwest
with the Minnesota Secretary of State.
