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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) August 31, 1999
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TransTechnology Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-7872 95-4062211
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(State or Other Jurisdiction (Commission (IRS Employer
Of Incorporation) File Number) Identification No.)
150 Allen Road, Liberty Corner, New Jersey 07938
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (908) 903-1600
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- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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TRANSTECHNOLOGY CORPORATION
FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 31, 1999, the Registrant concluded its previously announced
purchase of substantially all of the assets of the Engineered Fasteners Division
("EFD") of Eaton Corporation for a negotiated price of $173 million in cash.
The Registrant will combine its Palnut(TM) fastener operation in
Mountainside, New Jersey with the EFD units in Brunswick and Massillon, Ohio and
Hamilton, Ontario to form the Engineered Components Group, which is included in
the Specialty Fastener Products segment. The Engineered Components Group will be
headquartered in Brunswick, Ohio.
In connection with the completion of the transaction, the Registrant
re-financed and expanded its existing lines of credit with a group of lenders
led by BankBoston, N.A. from $145 million to $325 million. The facility is
structured as a secured $250 million revolver/term loan (the "Senior Loan") and
an unsecured bridge loan in the amount of $75 million (the "Bridge Loan"). The
weighted average interest rate on the new facility, of which approximately $292
million was outstanding following the EFD acquisition, is approximately 9.65%.
The Senior Loan is secured by substantially all the Registrant's assets.
The Bridge Loan requires that the Registrant prepare a Rule 144A
prospectus relative to a public issue of subordinated debt within 60 calendar
days after the closing for the purpose of facilitating the repayment of the
Bridge Loan. In the event that any principal balances on notes issued pursuant
to the Bridge Loan (the "Bridge Notes") are outstanding after August 31, 2000,
the following consequences will occur: (i) the Bridge Notes may, at the option
of the Holders, be exchanged for a class of debt securities which the Registrant
would be required to register for public distribution and (ii) warrants to
purchase 731,197 shares of the Registrant's common stock at a nominal exercise
price will be issued to the holders of the Bridge Notes. The warrants will
entitle the holder thereof to acquire ten percent of the common equity of the
Company on a fully diluted basis after giving effect to the warrants.
Documentation with respect to the notes available upon exchange of the Bridge
Notes and the issuance of the warrants, including a certificate representing the
warrants, has been executed by the Registrant and placed into escrow. The
Registrant may avoid these consequences by completely repaying the Bridge Loan
within one year of August 31, 1999.
The Registrant has announced that it intends to enter the high yield
subordinated debt markets with a $150 million issue in the fourth calendar
quarter of 1999 in order to retire the Bridge Loan and a portion of the Senior
Loan.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The Registrant
intends to file the financial statements required by this item
not later than sixty days after the date this report on Form
8-K is required to be filed.
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(b) PRO FORMA. The Registrant intends to file the pro forma
information required by this item within sixty days after the
date this report on Form 8-K is required to be filed.
(c) EXHIBITS.
Exhibit Description
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10.26 Asset Purchase Agreement dated as of July 9,
1999 as amended by Amendment No. 1 as of
August 31, 1999 and further amended by
Amendment No. 2 as of August 31, 1999
between Eaton Corporation
and TransTechnology Corporation.
10.27 Second Amended and Restated Credit Agreement
dated as of June 30, 1995, amended and
restated as of July 24, 1998 and further
amended and restated as of August 31, 1999
among TransTechnology Corporation,
TransTechnology Seeger-Orbis GmbH,
TransTechnology (GB) Limited, The Lenders
referred to therein, BankBoston, N.A.,
acting through its London Branch, as
Sterling Fronting Bank, BHF-Bank
Aktiengesellschaft, as DM Fronting Bank, ABN
AMRO Bank, N.V., as Syndication Agent, The
First National Bank of Chicago, as
Documentation Agent and BankBoston, N.A. as
Administrative Agent and Issuing Bank.
10.28 Senior Subordinated Note Purchase Agreement
dated as of August 31, 1999 among
TransTechnology Corporation, the Lenders and
Holders referred to therein and BankBoston,
N.A. as Administrative Agent.
10.29 Warrant Agreement as of August 31, 1999 by
and between TransTechnology Corporation and
State Street Bank and Trust
Company as Warrant Agent.
10.30 Warrant Holders' Agreement by and among
TransTechnology Corporation, the Purchasers
named therein and BankBoston, N.A., as
Administrative Agent.
10.31 Registration Rights Agreement dated as of
August 31, 1999 by and among TransTechnology
Corporation, the Guarantors named therein
and BankBoston, N.A., as Administrative
Agent.
10.32 Warrant Escrow Agreement dated as of August
31, 1999 among TransTechnology Corporation,
State Street Bank and Trust Company as
Warrant Agent and as Escrow Agent, and
BankBoston, N.A. as Administrative Agent.
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10.33 Exchange Escrow Agreement dated as of August
31, 1999 among TransTechnology Corporation,
State Street Bank and Trust Company as
Trustee and as Escrow Agent, and BankBoston,
N.A. as Administrative Agent.
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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.
TRANSTECHNOLOGY CORPORATION
By: /s/ Joseph F. Spanier
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Joseph F. Spanier, Vice President and
Chief Financial Officer
Date: September 14, 1999
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ASSET PURCHASE AGREEMENT
DATED AS OF
JULY 9, 1999
BETWEEN
EATON CORPORATION
AND
TRANSTECHNOLOGY CORPORATION
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS ...................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS ...................................8
2.1 Transferred Assets ......................................8
2.2 Excluded Assets ........................................10
2.3 Non-Transferability of Certain Assets ..................11
ARTICLE 3 LIABILITIES ..................................................11
3.1 Assumption of Liabilities ..............................11
3.2 Retained Liabilities ...................................12
3.3 Reimbursement for Certain Payments .....................13
ARTICLE 4 PURCHASE PRICE ...............................................13
4.1 Purchase Price .........................................13
4.2 Payment at Closing .....................................14
4.3 Adjustment to the Purchase Price .......................14
4.4 Allocation of the Purchase Price .......................16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLER .................16
5.1 Organization, Existence and Standing ...................16
5.2 Corporate Authority ....................................16
5.3 Financial Statements ...................................16
5.4 Accounts Receivable ....................................17
5.5 Inventory ..............................................17
5.6 Real Property ..........................................17
5.7 Title to Personal Property .............................18
5.8 Condition and Sufficiency of Transferred Assets ........18
5.9 Contracts ..............................................18
5.10 Proprietary Rights .....................................20
5.11 Tax Matters ............................................21
5.12 Environmental Matters ..................................21
5.13 No Breach of Contract, No Violations of Law,
No Prior Approval ......................................22
5.14 Litigation .............................................22
5.15 Finders, Brokers and Investment Bankers ................22
5.16 No Material Adverse Change .............................23
5.17 Governmental Permits and Licenses; Compliance
with Laws ..............................................23
5.18 Insurance ..............................................23
5.19 Employees; Labor Relations .............................23
5.20 Employee Benefits ......................................24
5.21 Residency of Seller Subsidiaries; GST Registration .....25
5.22 Liabilities ............................................25
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5.23 Employee Safety ........................................26
5.24 Customer Assets; Location of Assets ....................26
5.25 Year 2000 Compliance ...................................26
5.26 Disclaimer; Cross References ...........................26
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER ..................27
6.1 Organization, Existence and Standing of the Buyer ......27
6.2 Corporate Authority ....................................27
6.3 No Breach of Contract, No Violations of Law,
No Prior Approval ......................................27
6.4 Litigation .............................................28
6.5 Finders, Brokers and Investment Bankers ................28
6.6 Financing ..............................................28
6.7 GST ....................................................28
6.8 Disclaimer .............................................28
ARTICLE 7 COVENANTS OF THE SELLER ......................................29
7.1 Conduct of Business to Closing Date ....................29
7.2 Access by the Buyer to Properties and
Records; Furnishing Information ........................30
7.3 Compliance with Conditions .............................31
7.4 Third-Party Consents ...................................31
7.5 Notification to the Buyer of Damage or Destruction
of Transferred Assets or Material Changes ..............31
7.6 Transfer of Warranties .................................31
7.7 HSR/Competition Act Filings; Other Governmental
Filings ................................................32
7.8 Transitional Use of Trade Names, Trademarks
and Logos ..............................................32
7.9 Negotiations with Third Parties ........................32
7.10 Update of Schedules ....................................33
7.11 Covenant Not to Compete ................................33
7.12 Assignment of Confidentiality Agreements ...............33
ARTICLE 8 COVENANTS OF THE BUYER .......................................34
8.1 Compliance with Conditions .............................34
8.2 Cooperation in Obtaining Consents ......................34
8.3 HSR/Competition Act Filings; Other Governmental
Filings ................................................34
8.4 Make Records and Personnel Available ...................35
8.5 Buyer Qualification ....................................35
8.6 London Sales Office ....................................35
8.7 Operation Covenant .....................................35
ARTICLE 9 MUTUAL COVENANTS .............................................37
9.1 GST Election ...........................................37
9.2 Election Regarding Accounts Receivable .................37
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9.3 Transitional Services Agreement ........................37
9.4 Payments Received ......................................37
9.5 Further Assurances .....................................38
9.6 Certain Tax Payments and Returns .......................38
9.7 Covenant Regarding Personnel ...........................38
9.8 Supply Agreement .......................................39
9.9 Assignment and Assumption of Real Property Leases ......39
9.10 Guarantee of Performance ...............................39
9.11 Joint Environmental Investigation ......................39
ARTICLE 10 EMPLOYEES AND EMPLOYEE BENEFITS ..............................40
10.1 Offer of Employment ....................................40
10.2 Severance Payment Responsibilities .....................40
10.3 Welfare Benefit Responsibilities .......................41
10.4 Seller's Responsibilities and Obligations as
to Certain Pensions ....................................46
10.5 Buyer's Responsibilities and Obligations as to
Certain Pensions .......................................47
10.6 Transfer of Share Purchase and Investment
Plan Responsibilities. .................................50
10.7 Transfer of Savings Plan Responsibilities ..............52
10.8 Allocation of Canadian Savings Plan
Responsibilities .......................................53
10.9 Incentive Compensation .................................53
10.10 Foreign Employment Liabilities .........................54
10.11 Vacation Responsibilities ..............................54
10.12 Retained Liability and Successor Liability .............54
10.13 Reimbursement For Other Party's Liabilities ............54
10.14 No Third-Party Beneficiaries ...........................54
ARTICLE 11 CERTAIN REAL ESTATE MATTERS ..................................55
11.1 Title Commitment; Title Policy .........................55
11.2 Objections .............................................55
ARTICLE 12 ENVIRONMENTAL MATTERS ........................................56
12.1 Allocation of Environmental Liabilities ................56
12.2 Seller's Environmental Indemnification .................57
12.3 Buyer's Environmental Indemnification ..................58
12.4 Release ................................................58
12.5 Notice of Claim ........................................58
12.6 Acceptance of Responsibility ...........................59
12.7 Party Declines Responsibility ..........................59
12.8 Cooperation ............................................59
12.9 The Seller's Indemnity and the Buyer's Re-Sale of
Real Property ..........................................60
12.10 No Consequential Damages ...............................60
12.11 Access to the Real Property and Documents ..............60
12.12 The Seller's Pursuit of Third Parties ..................60
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12.13 Limitations ............................................60
12.14 Agency Contact .........................................61
12.15 Survival ...............................................61
ARTICLE 13 CONDITIONS TO OBLIGATIONS OF THE BUYER .......................61
13.1 HSR/Competition Act Compliance .........................61
13.2 No Litigation ..........................................62
13.3 No Casualty ............................................62
13.4 Retail Sales Tax Certificate ...........................62
13.5 Truth of Representations and Warranties ................62
13.6 Performance by the Seller ..............................62
13.7 Statutory Prohibition ..................................63
13.8 No Material Adverse Change .............................63
13.9 Real Estate Matters ....................................63
13.10 Landlord Consent .......................................63
ARTICLE 14 CONDITIONS TO OBLIGATIONS OF THE SELLER ......................63
14.1 HSR/Competition Act Compliance .........................63
14.2 No Litigation ..........................................64
14.3 Truth of Representation and Warranties .................64
14.4 Performance by the Buyer ...............................64
14.5 Statutory Prohibition ..................................64
14.6 Landlord Consent .......................................64
ARTICLE 15 CLOSING ......................................................64
15.1 The Closing Date .......................................64
15.2 Deliveries by the Buyer ................................65
15.3 Deliveries by the Seller ...............................65
15.4 Rights to Possession ...................................66
ARTICLE 16 SALES AND TRANSFER TAXES .....................................66
ARTICLE 17 BULK SALES ...................................................66
ARTICLE 18 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS ........66
18.1 Survival ...............................................66
18.2 Notice of Claim ........................................67
ARTICLE 19 INDEMNIFICATION ..............................................67
19.1 Indemnification of the Buyer ...........................67
19.2 Indemnification of the Seller ..........................67
19.3 Eligible Claim, Threshold Amount, Payment ..............68
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19.4 Procedures for Claims ..................................68
19.5 Third-Party Claims .....................................68
19.6 Exclusive Remedy .......................................69
19.7 Payment of Amounts .....................................69
19.8 Tax and/or Insurance Offset ............................69
19.9 No Indemnification For Known Breaches of
Representations and Warranties .........................70
19.10 Maximum Amount of Any Indemnification ..................70
19.11 Indemnification with Respect to Certain Liabilities ....70
ARTICLE 20 TERMINATION ..................................................70
20.1 Grounds ................................................70
20.2 Effect .................................................71
20.3 Letter of Credit .......................................71
ARTICLE 21 EXPENSES .....................................................72
ARTICLE 22 DISPUTE RESOLUTION ...........................................72
22.1 Notice of Dispute ......................................72
22.2 Investigation; ADR .....................................72
22.3 Selection of Neutral ...................................73
22.4 Prehearing Conference ..................................73
22.5 Written Summary of Position ............................73
22.6 Hearing ................................................73
22.7 Commitment to ADR ......................................74
22.8 Fees ...................................................74
22.9 Confidentiality ........................................74
ARTICLE 23 MISCELLANEOUS ................................................74
23.1 Notices ................................................74
23.2 Waiver .................................................75
23.3 Captions ...............................................75
23.4 Successors and Assigns .................................75
23.5 Enforceability .........................................75
23.6 No Third-Party Beneficiaries or Right to Rely ..........76
23.7 Counterparts ...........................................76
23.8 Governing Law ..........................................76
23.9 Time of Essence ........................................76
23.10 No Strict Construction .................................76
23.11 Public Announcements ...................................76
23.12 Currency/Method of Payment .............................76
23.13 Subsequent Legal Fees ..................................76
23.14 Exclusive Jurisdiction and Consent
to Service of Process ..................................76
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23.15 Miscellaneous ..........................................77
23.16 Entire Agreement; Amendment ............................77
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EXHIBIT CORRESPONDING
INDEX AGREEMENT SECTION NUMBER
Buyer Guaranty .......................................... Article 1
Assumption Agreement .......................................... 3.1
Services Agreement ............................................ 9.3
Leased Real Property Assignment and Assumption Agreements ..... 9.9
Supplemental Phase II .........................................9.11
General Assignment and Bill of Sale ........................15.3(a)
LIST OF CORRESPONDING
SCHEDULES TITLE SECTION NUMBER
Individuals with Actual Knowledge of the Business ........ Article 1
Seller's Accounting Principles ........................... Article 1
Owned Real Property ......................................... 2.1(b)
Leased Real Property ........................................ 2.1(c)
Personal Property and Personal Property Leases .............. 2.1(d)
Proprietary Rights .......................................... 2.1(h)
Other Assets ................................................ 2.1(m)
Excluded Proprietary Rights ................................. 2.2(b)
Other Excluded Assets ....................................... 2.2(i)
Exceptions to Seller's Accounting Principles for
Closing Balance Sheet .................................. 4.3(a)
Allocation of the Purchase Price ............................ 4.4
Financial Statements ........................................ 5.3
Adjustments to Pro Forma Financial Statements ............... 5.3
Accounts Receivable Exceptions .............................. 5.4
Real Property Exceptions .................................... 5.6(a)
Leased Real Property Exceptions and Defaults ................ 5.6(b)
Other Real Property Used in the Business .................... 5.6(c)
Personal Property Exceptions ................................ 5.7
Material Contracts .......................................... 5.9
Proprietary Rights Exceptions ............................... 5.10
Environmental Exceptions .................................... 5.12
Consents; Creation of Lien on Transferred Assets ......... 5.13(a)
Litigation .................................................. 5.14
Material Adverse Changes .................................... 5.16
Collective Bargaining Agreements ......................... 5.19(b)
Employee Claims .......................................... 5.19(c)
Employee Benefit Plans ...................................... 5.20
Claims Respecting Certain Plans .......................... 5.20(d)
Liabilities ................................................. 5.22
Employee Safety ............................................. 5.23
List of Customer or Third Party Assets ................... 5.24(a)
Asset Location Exceptions ................................ 5.24(b)
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LIST OF CORRESPONDING
SCHEDULES TITLE SECTION NUMBER
Year 2000 Compliance ........................................ 5.25
Other Permitted Contracts ................................. 7.1(d)
Retained Employees ......................................... 10.1
Severance Obligations ...................................... 10.2
Seller Welfare Plans ....................................... 10.3
Contribution Threshold .................................. 10.5(j)
Seller's 1999 Incentive Plans .............................. 10.9
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of July 9,
1999, between Eaton Corporation, an Ohio corporation (the "Seller"), and
TransTechnology Corporation, a Delaware corporation (the "Buyer").
RECITALS:
A. The Seller is engaged in the design, manufacture and marketing of
metal fasteners, plastic fasteners, retaining rings, metal light shields and
automotive headlamp adjusters (the "Business") by and through the Seller's
Engineered Fasteners Division (the "Division"); and
B. The Seller, directly, and indirectly through (i) Eaton MDH Company,
Inc., a corporation organized under the laws of the State of Delaware ("Eaton
MDH"), (ii) Eaton Yale Ltd., a corporation organized under the laws of the
Province of Ontario, Canada ("Eaton Yale") and (iii) Eaton ETN Offshore Ltd., a
corporation organized under the laws of the Province of Ontario, Canada ("ETN
Offshore," and together with Eaton MDH and Eaton Yale, the "Seller
Subsidiaries"), owns or leases the assets used in the conduct of the Business of
the Division, including, without limitation, trade accounts receivable,
inventory, land, buildings, fixtures, machinery and equipment, contract rights,
customer and supplier lists, records and related information, patents, trade
secrets and trademarks; and
C. The Seller desires to sell, and to cause the Seller Subsidiaries to
sell, and the Buyer desires to purchase, and shall cause its wholly-owned
subsidiary, currently named Palnut Fasteners, Inc., a Delaware corporation
("Fasteners"), to purchase, substantially all of the assets and assume
substantially all of the liabilities of the Division with respect to its U.S.
operations and shall cause a wholly-owned subsidiary to be formed as an Ontario
corporation ("Canadian Sub," and together with Fasteners, the "Buyer
Subsidiaries"), to purchase, substantially all of the assets and assume
substantially all of the liabilities of the Division with respect to its
Canadian operations in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the payments herein provided for
and the covenants herein contained, the Parties hereby agree as follows.
ARTICLE 1
DEFINITIONS
Unless elsewhere defined herein, the following terms shall have the
meanings set forth in this Article 1.
"ACCOUNTS RECEIVABLE" means all of the Division's trade and other accounts
receivable including all accounts receivable, if any, that are owed by the
Seller or by any Subsidiary or Affiliate of the Seller.
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"AFFILIATE" shall mean, with respect to any Person, at the time in question, any
other Person controlling, controlled by or under common control with such
Person. For purposes of this definition, "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"AGREEMENT" means this Asset Purchase Agreement.
"APRIL 30 BALANCE SHEET" means the pro forma interim balance sheet of the
Business as of April 30, 1999 included in the Financial Statements.
"ASSUMED LIABILITIES" has the meaning set forth in Section 3.1.
"BUSINESS" has the meaning set forth in Recital A.
"BRUNSWICK FACILITY" has the meaning set forth in Section 2.1(c).
"BUYER" has the meaning set forth in the first paragraph of this Agreement.
"BUYER GUARANTY" means the Guaranty in the form of Corresponding Exhibit A under
which Buyer guarantees any and all obligations of the Buyer Subsidiaries under
any Related Agreements to which the Buyer Subsidiaries are parties.
"BUYER SUBSIDIARIES" has the meaning set forth in Recital C.
"CAA" means the Clean Air Act, 42 U.S.C. Section 7401, et seq., as amended.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as amended by, among
other things, the Superfund Amendments and Reauthorization Act of 1986.
"CLOSING" means the closing of the transactions contemplated by this Agreement.
"CLOSING BALANCE SHEET" has the meaning set forth in Section 4.3(a).
"CLOSING DATE" has the meaning set forth in Section 15.1.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, including the rules and regulations promulgated thereunder.
"COLLECTIVE BARGAINING AGREEMENTS" has the meaning set forth in Section 5.19(b).
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"CONTRACTS" means all purchase orders, sales orders, distributor agreements,
franchise agreements, sales representation agreements, warranty agreements,
service agreements, collective bargaining agreements and other contracts with
labor unions or employee associations, if any, employment and consulting
agreements, guaranty agreements, confidentiality agreements and other
agreements, contracts and commitments of any sort whatever except for leases and
licenses with respect to the Leased Real Property.
"CORRESPONDING EXHIBIT" means an exhibit which is numbered, captioned or named
to correspond to the number, caption or name of the section of this Agreement
which refers to that exhibit.
"CORRESPONDING SCHEDULE" means a schedule which is numbered, captioned or named
to correspond to the number, caption or name of the section of this Agreement
which refers to that schedule.
"CWA" means the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et
seq., as amended.
"DAMAGES" has the meaning set forth in Section 12.2.
"DIVISION" has the meaning set forth in Recital A.
"DIVISION EMPLOYEES" means all persons employed by the Seller or the Seller
Subsidiaries in the conduct of the Business as of the Closing Date.
"EMPLOYEE BENEFIT PLAN" means each employee bonus, retirement, pension, profit
sharing, stock option, stock appreciation, stock purchase, incentive, deferred
compensation, hospitalization, medical, dental, vision, life and other health
and disability (whether provided by insurance or otherwise), severance,
termination and other plan, program, arrangement, policy or payroll practice
providing any remuneration or benefits (other than current cash compensation),
including, without limitation, each ERISA Plan (other than a multiemployer plan
within the meaning of Section 3(37) of ERISA) or each employee benefit plan
within the meaning of the Pension Benefits Act (Ontario), which is both (a) (i)
maintained by the Seller or any Seller Subsidiary or any Person that would be
aggregated with, or treated as the same employer as, the Seller for any purpose
under the Tax Code or ERISA (an "ERISA Affiliate") or (ii) to which the Seller,
any Seller Subsidiary or any ERISA Affiliate contributes or has contributed and
(b) one under which any Division Employee or former Division Employee
participates or had accrued any rights or under which the Seller or any Seller
Subsidiary is liable in respect of a Division Employee or former Division
Employee with respect to his employment with the Division.
"ENVIRONMENTAL CONDITION" means the use, generation, handling, storage,
emission, discharge, processing, reclamation, recycling, release, transportation
or disposal of any Regulated Substance related to the operation of the Business,
or the presence of any of them in any environmental medium (air, water, soil,
sediments, subsurface strata or groundwater) on, in or under any real property.
"ENVIRONMENTAL LAWS" means all laws, ordinances, regulations, rules, orders,
permits, approvals, decisions or decrees, and any common law rules, orders,
permits, approvals, decisions or decrees,
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and any common or civil law concerning the subject of the introduction,
emission, discharge or release of pollutants or contaminants into the air, soil,
or surface or ground water; the transportation, handling, use, storage,
treatment or disposal of waste materials; or the remediation or investigation of
contamination of air, soil, or surface or ground water by pollutants,
contaminants or waste materials; or exposure to hazardous substances, hazardous
waste, or toxic substances; including, but not limited to, CERCLA, RCRA, CWA,
SWDA, CAA, TSCA, and EPCRA, and similar federal, state, provincial, territorial,
local, municipal and foreign laws, but will not include laws, ordinances,
regulations, rules, orders, permits, approvals, decisions or decrees, and any
common law concerning primarily worker health or safety, including, but not
limited to, OSHA and similar state, provincial, territorial, local, municipal
and foreign laws.
"EPCRA" means the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001, et seq., as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
including the rules and regulations promulgated thereunder.
"ERISA PLAN" has the meaning set forth in section 3(3) of ERISA with respect to
Employee Benefits Plans which are subject to ERISA.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"FACILITIES" has the meaning set forth in Section 2.1(c).
"FINANCIAL STATEMENTS" means each of the pro forma unaudited balance sheets for
each of the three fiscal years of the Business most recently completed prior to
the date of this Agreement, the pro forma statements of income for each of the
years ended on the date of each of the balance sheets and a pro forma interim
balance sheet of the Business as of April 30, 1999 and the pro forma income
statement of the Business for the interim period then ended.
"FINAL NET ASSETS" has the meaning set forth in Section 4.3(a).
"GAAP" means generally accepted accounting principles in the United States of
America.
"GLOW AVENUE AGREEMENT" means the Agreement of Purchase and Sale, dated June 9,
1999, relating to the purchase by Eaton Yale of real property municipally known
as 80 Glow Avenue, Hamilton, Ontario.
"GST LEGISLATION" means the Excise Tax Act (Canada), Part IX.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, including the rules and regulations promulgated thereunder.
"HAMILTON FACILITY" has the meaning set forth in Section 2.1(b).
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"INACTIVE EMPLOYEES" means Division Employees who are temporarily absent from
active employment by reason of disability, illness, injury, workers'
compensation, military leave, approved leave of absence or layoff.
"INDEPENDENT ACCOUNTANT" means PricewaterhouseCoopers LLP.
"INTELLECTUAL PROPERTY" means the following items, in each case related
exclusively or primarily to the operation of the Business:
(a) all inventions (whether patentable or unpatentable, and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications, and invention disclosures, together with
all reissues, continuations, continuations-in-part, revisions,
extensions, divisions, and reexaminations thereof;
(b) all trademarks and service marks (whether common law or
registered), trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith,
and all applications, registrations, and renewals in connection
therewith;
(c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith;
(d) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals);
(e) computer software, including source code to the extent
assignable, disks, documentation, operating manuals, related systems
data, source programs, record layouts, program libraries, and any other
documentation in those application areas that may pertain to any data
processing system or operation; and
(f) all copies and tangible embodiments of any of the
foregoing (in whatever form or medium).
"INVENTORY" means all of the Division's inventory of raw materials,
work-in-process and finished goods, as the same shall exist on the Closing Date,
whether in the Seller's or any Seller Subsidiary's possession, in transit to or
from the Seller or any Seller Subsidiary or held by any third party.
"KNOWLEDGE" means the actual knowledge of the individuals set forth on
Corresponding Schedule A and any other Division management personnel with
compliance responsibility.
"LEASED REAL PROPERTY" has the meaning set forth in Section 2.1(c).
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"LEASED REAL PROPERTY ASSIGNMENT AND ASSUMPTION AGREEMENTS" has the meaning set
forth in Section 9.9.
"LIEN" means any lien, mortgage, charge, pledge, security interest, restriction,
reservation or condition on transferability, easement, defect of title or other
claim, encroachment or other encumbrance of any nature whatsoever on any Real
Property or Personal Property or property interest.
"MASSILLON FACILITY" has the meaning set forth in Section 2.1.
"MATERIAL ADVERSE EFFECT" means (a) any effect that is materially adverse to the
value of the Transferred Assets taken as a whole or materially adverse to the
Business, the condition (financial or otherwise), or results of operations of
the Business in each case taken as a whole, or (b) any effect that would,
individually or in the aggregate, materially impair, hinder or otherwise
materially and adversely affect the ability of the Seller or the Buyer, as the
case may be, to effect the Closing, to perform any of their material obligations
under this Agreement or any of the Related Agreements, or to receive all
material benefits of the transactions contemplated by this Agreement.
"MATERIAL CONTRACTS" has the meaning set forth in Section 5.9(b).
"NON-TRANSFERABLE ASSETS" has the meaning set forth in Section 2.3(a).
"OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C. Section
651, et seq.
"OWNED REAL PROPERTY" has the meaning set forth in Section 2.1(b).
"PARTY" means the Buyer or the Seller, referred to individually, and "Parties"
means the Buyer and the Seller referred to collectively.
"PERMITS" has the meaning set forth in Section 2.1(j).
"PERSON" means an individual, corporation, limited liability company,
partnership, association, estate, trust, unincorporated organization,
governmental or quasi-governmental agency or body or other entity or
organization.
"PERSONAL PROPERTY" means all of the Division's personal property, including,
without limitation, all machinery, equipment, computer hardware, vehicles,
tools, dies, repair and replacement parts, and office furniture, fixtures and
equipment owned by the Seller or the Seller Subsidiaries, except to the extent
disposed of in the ordinary course of business prior to the Closing Date, and
such additional items as are acquired in the ordinary course of business prior
to the Closing Date, in each case consistent with the terms and conditions of
this Agreement.
"PERSONAL PROPERTY LEASES" means all leases covering any Personal Property.
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"PERSONAL PROPERTY PERMITTED EXCEPTIONS" has the meaning set forth in Section
5.7.
"PRE-CLOSING ENVIRONMENTAL CONDITION" means the presence as of the Closing of
any hazardous substance, hazardous waste or toxic substance, as defined under
the Environmental Laws, as existing and in effect as of the Closing, in any
environmental medium (air, water, soil, sediments, subsurface strata or
groundwater) on, in or under the Real Property or off the Real Property as a
result of migration from the Real Property, in either case in violation of the
Environmental Laws, as existing and in effect as of the Closing; provided,
however, that "Pre-Closing Environmental Condition" shall not include under any
circumstances (a) the presence of any such hazardous substance, hazardous waste
or toxic substance that was generated, or caused by a spill or release
occurring, off the Real Property, or (b) any matter or condition for which the
Seller has not received notice from the Buyer pursuant to Section 12.5 prior to
the third anniversary of the Closing Date.
"PRIME RATE" means the rate per annum equal to the publicly announced prime
commercial lending rate of KeyBank National Association (or any successor
thereof) in effect from time to time, changing as such publicly announced rate
changes, effective as of the date KeyBank National Association publicly
announces each change.
"PROPRIETARY RIGHTS" has the meaning set forth in Section 2.1(h).
"PROPRIETARY RIGHTS EXCEPTIONS" has the meaning set forth in Section 5.10.
"PURCHASE PRICE" has the meaning set forth in Section 4.1.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901, et seq., as amended.
"REAL PROPERTY" means the Owned Real Property and the Leased Real Property,
collectively.
"REAL PROPERTY PERMITTED EXCEPTIONS" has the meaning set forth in Section
5.6(a).
"REGULATED SUBSTANCE" means any hazardous or extremely hazardous chemical,
hazardous substance, hazardous or special waste (or waste requiring special
handling), oil, petroleum or petroleum products or residue, pollutant or
contaminant or toxic substance, all as defined under any of the applicable
Environmental Laws.
"RELATED AGREEMENTS" means the related agreements contemplated by this Agreement
including those attached to this Agreement as Corresponding Exhibits.
"RETAINED LIABILITIES" has the meaning set forth in Section 3.2.
"SELLER" has the meaning set forth in the first paragraph of this Agreement.
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"SELLER'S ACCOUNTING PRINCIPLES" means the accounting principles currently used
by the Seller in preparing the Financial Statements which principles are in
accordance with GAAP except as set forth on Corresponding Schedule B.
"SELLER SUBSIDIARIES" has the meaning set forth in Recital B.
"SETTLEMENT DATE" has the meaning set forth in Section 4.3(f).
"SERVICES AGREEMENT" has the meaning set forth in Section 9.3.
"SUBSIDIARY" means any corporation, the capital stock of which represents more
than 50% of the general voting power under ordinary circumstances of such
corporation, which is directly or indirectly owned or controlled by another
corporation.
"SWDA" means the Solid Waste Disposal Act, 42 U.S.C. Section 6901, et seq., as
amended.
"TAX CODE" means the Internal Revenue Code of 1986, as amended.
"TERMINATION DATE" means November 1, 1999.
"THIRD PARTY" means any Person not a signatory to this Agreement other than a
Buyer Subsidiary or a Seller Subsidiary.
"TRANSFERRED ASSETS" has the meaning set forth in Section 2.1.
"TSCA" means the Toxic Substances Control Act, 15 U.S.C. Section 52601, et seq.,
as amended.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 TRANSFERRED ASSETS. On the terms and subject to the conditions of
this Agreement, and for the consideration set forth in Article 4, the Seller
shall, and shall cause the Seller Subsidiaries to, on the Closing Date, sell,
transfer and convey to the Buyer or the Buyer Subsidiaries, free and clear of
all Liens, other than the Assumed Liabilities, the Real Property Permitted
Exceptions, the Personal Property Permitted Exceptions and the Proprietary
Rights Exceptions, all of the Seller's and the Seller Subsidiaries' respective
rights, titles and interests in and to the assets that are used exclusively or
primarily to operate the Business as currently operated by the Seller or the
Seller Subsidiaries, wherever such assets are located and whether real, personal
or mixed, tangible or intangible, and whether or not such assets have any value
for accounting purposes or are carried or reflected on or specifically referred
to in the books or financial statements of the Seller, with such changes,
deletions or additions thereto as may occur from the date hereof to the Closing
Date consistent with the terms and conditions of this Agreement, subject in each
case to Section 2.2 and
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Section 2.3 (the "Transferred Assets"), including, to the extent used
exclusively or primarily to operate the Business as currently operated, the
following:
(a) ACCOUNTS RECEIVABLE. All of the Accounts Receivable;
(b) OWNED REAL PROPERTY. All of the real property owned by the
Seller or any of the Seller Subsidiaries, including land, buildings,
structures and improvements thereon or appurtenances thereto, such
real property being located at Massillon, Ohio (the "Massillon
Facility") and Hamilton, Ontario, Canada, (the "Hamilton Facility"),
as the same shall exist on the Closing Date (the "Owned Real
Property") with a legal description of each parcel of Owned Real
Property included on the Corresponding Schedule;
(c) LEASED REAL PROPERTY. All real property, including,
without limitation, the facility located at Brunswick, Ohio (the
"Brunswick Facility," which together with the Massillon Facility and
the Hamilton Facility may be referred to hereinafter as the
"Facilities") listed on the Corresponding Schedule, which real
property is leased or subleased or the rights or benefits thereof are
licensed by the Seller or any of the Seller Subsidiaries, as the same
shall exist on the Closing Date (the "Leased Real Property");
(d) PERSONAL PROPERTY. All Personal Property and Personal
Property Leases including those items and leases identified on the
Corresponding Schedule;
(e) INVENTORY. All Inventory and any packaging, supplies and
spare parts;
(f) CONTRACTS. All rights and claims under all Contracts
including those identified on the Corresponding Schedule A to Section
5.9;
(g) LISTS AND RECORDS. All of the Seller's and the Seller
Subsidiaries' books and records, customer and supplier lists, sales,
cost and shipping records and other lists and documents, other than
the corporate minute books, stock books and stock transfer ledgers of
the Seller and the Seller Subsidiaries and other than tax records,
litigation files and any records related to Excluded Assets or
Retained Liabilities;
(h) PATENTS, TRADEMARKS, INTELLECTUAL PROPERTY, ETC. All of
the Intellectual Property, including those items identified on the
Corresponding Schedule (the "Proprietary Rights");
(i) PREPAID ITEMS. All of the Division's prepaid expenses and
deposits;
(j) GOVERNMENTAL PERMITS AND LICENSES. All of the permits,
licenses, certifications, approvals, consents, and other governmental
authorizations (the "Permits") issued to the Seller or any Seller
Subsidiary, subject to Section 2.3;
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(k) VENDOR PAYMENT IDENTIFICATION NUMBERS, AND UPC CODES. All
UPC codes or the similar vendor payment identification numbers used by
the Seller or the Seller Subsidiaries for remittances from customers;
(l) CLAIMS AGAINST THIRD PARTIES. All claims, actions, suits,
proceedings or choses in action, except those relating to Excluded
Assets or Retained Liabilities; and
(m) OTHER ASSETS. Those other assets, whether or not used
exclusively or primarily in the Business, identified on the
Corresponding Schedule as Transferred Assets (the "Other Assets").
2.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the following
assets (the "Excluded Assets") shall be retained by the Seller or the Seller
Subsidiaries, as the case may be, and shall not be included in the Transferred
Assets:
(a) all cash (other than petty cash located at the
Facilities), cash equivalents, marketable securities and bank accounts;
(b) any intellectual property owned, licensed or otherwise
used by the Seller or any Seller Subsidiary which is not used
exclusively or primarily in the conduct of the Business, including,
without limitation any patents or pending applications, trade secrets,
the trade names and trademarks "Eaton" and "Eaton Corporation" and any
other trade names, trademarks, corporate names and logos incorporating
in any way the foregoing names or affiliated therewith and trademarks
and other intellectual property as identified on the Corresponding
Schedule;
(c) any Non-Transferable Assets for which consent or approval
to transfer has not been obtained prior to the Closing Date;
(d) all claims and rights of, relating to or arising from any
of the Excluded Assets or the Retained Liabilities;
(e) all rights, properties and assets of the Division which
shall have been transferred or disposed of by the Seller or any of the
Seller Subsidiaries prior to the Closing in transactions occurring in
the ordinary course of the Business and consistent with the terms of
this Agreement;
(f) except as provided in Article 10, all assets held by or
on behalf of the Seller or any Seller Subsidiary in trust, reserve or
otherwise, in respect of Employee Benefit Plans or any other
obligations pertaining to Division Employees;
(g) all rights to the refund of any tax, of any kind,
including, without limitation, Canadian workers compensation rebates
paid by Seller or any of the Seller Subsidiaries prior to the Closing
Date;
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(h) all office furniture and furnishings located at Seller's
Administrative and Marketing Center in Southfield, Michigan; and
(i) all assets, whether or not used exclusively or primarily
in the conduct of the Business, specifically identified on the
Corresponding Schedule as Excluded Assets or identified on the
Corresponding Schedule A to Section 5.24 as property owned by a
customer or other Third Party (the "Other Excluded Assets").
2.3 NON-TRANSFERABILITY OF CERTAIN ASSETS.
(a) To the extent that there are certain assets used in the Business,
including without limitation the Permits, which are not assignable without the
consent or approval of Persons other than the Seller or the Seller Subsidiaries
("Non-Transferable Assets"), and such consents or approvals are not obtained by
the Closing Date, this Agreement and the Closing shall not constitute an
assignment or agreement to assign or transfer such assets without such consent
or approval.
(b) For a reasonable period following the Closing Date, the Seller
agrees to cooperate in good faith with the Buyer to enter into any reasonable
arrangement (other than an arrangement under which the Seller or any of the
Seller Subsidiaries would incur or retain any financial obligation with respect
to the Non-Transferable Assets) designed to provide the Buyer the benefit of
such Non-Transferable Assets, including the enforcement for the benefit and at
the expense of the Buyer of any rights previously enjoyed by the Seller or a
Seller Subsidiary in connection with any such assets. Provided that the Seller
so cooperates and proceeds in good faith to obtain such consents and provide
such arrangements, the Seller shall not be deemed to be in breach of any of its
obligations under this Agreement by reason of the failure to obtain any consent
or approval. Except as reimbursed by the Buyer, in no event shall compliance by
the Seller with this Section 2.3 be deemed to require that the Seller or any of
the Seller Subsidiaries incur any obligation or pay any monies to Third Parties
in connection with such efforts.
(c) To the extent that the Buyer is provided the benefits pursuant to
this Section 2.3 of any Permit or approval or the like or any contract, lease,
license or other agreement, the Buyer shall perform the obligations of the
Seller or the Seller Subsidiary under or in connection with such Permit or
approval or the like or any contract, lease, license or other agreement.
ARTICLE 3
LIABILITIES
3.1 ASSUMPTION OF LIABILITIES. Upon the transfer of the Transferred
Assets on the Closing Date in accordance with this Agreement, the Buyer shall,
by an Assumption Agreement in the form set forth on the Corresponding Exhibit
(the "Assumption Agreement"), assume and agree to pay,
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discharge or perform, as appropriate, all of the liabilities and obligations of
the Seller and the Seller Subsidiaries in respect of the Business (the "Assumed
Liabilities"), including but not limited to:
(a) all liabilities and obligations of the Seller and the
Seller Subsidiaries, including accounts payable and accrued liabilities
arising in the ordinary course of business, in respect of the Business
on or prior to the Closing;
(b) all liabilities and obligations of the Seller and the
Seller Subsidiaries in respect of the Contracts which are Transferred
Assets, the leases for the Leased Real Property, the Personal Property
Leases and the Permits which are Transferred Assets;
(c) all liabilities and obligations of the Seller and the
Seller Subsidiaries in respect of customer returns and customer
warranty claims for products sold by the Seller or any of the Seller
Subsidiaries on or prior to the Closing;
(d) product liability and similar claims for injury to person
or property (including death), in connection with any products sold by
the Seller or any of the Seller Subsidiaries on or prior to the Closing
and any products included in Inventory as of the Closing;
(e) subject to, and in accordance with the terms of, Article
12, all liabilities and obligations in respect of any Environmental
Condition on, in or under any Real Property, including the Buyer's
share of any Pre-Closing Environmental Condition; and
(f) all liabilities and obligations assumed by the Buyer
pursuant to Article 10.
3.2 RETAINED LIABILITIES. Notwithstanding the foregoing, the Seller
or any of the Seller Subsidiaries, as the case may be, shall retain and shall
pay and timely discharge without liability to the Buyer or the Buyer
Subsidiaries, the following liabilities of the Seller or the Seller Subsidiaries
(the "Retained Liabilities"):
(a) any liability or obligation under or in connection with
the Excluded Assets and any liability or obligation of the Seller or
any of the Seller Subsidiaries with respect to any Retained Liability;
(b) any federal, state, local, provincial or other foreign
income, capital gain or other tax payable with respect to the
Business, the Transferred Assets or the Assumed Liabilities for any
period prior to the Closing;
(c) all liabilities and obligations of the Seller and the
Seller Subsidiaries arising out of claims or similar suits, actions or
proceedings by any Transferred Employee (as defined in Article 10)
pursuant to governmental workers' compensation or similar law, or
occupational disease or injury which arise out of the Business on or
prior to the Closing;
(d) any indebtedness of the Seller or any of the Seller
Subsidiaries or any Affiliate of the Seller for borrowed money;
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(e) any liability for the failure to comply with the bulk
sales laws of any jurisdiction, except any such liability arising out
of the failure of the Buyer to pay any Assumed Liability;
(f) any fees and expenses incurred by the Seller or any of the
Seller Subsidiaries in connection with negotiating, preparing, closing
and carrying out this Agreement and the transactions contemplated by
this Agreement, including, without limitation, the fees, disbursements
and expenses for the Seller's investment bankers, attorneys,
accountants and consultants;
(g) all liabilities and obligations retained by the Seller
pursuant to Article 10, including, without limitation, (i) all
withdrawal liability (both for any complete or partial withdrawal)
under any multiemployer plan (as defined in Sections 3(37) and
4001(a)(3) of ERISA) to which Seller has at any time made
contributions, and (ii) all liability to any single-employer plan (as
defined in Sections 3(31) and 4001(a)(15) of ERISA) to which Seller has
at any time made contributions and (iii) all liabilities and
obligations of the Seller pursuant to Section 10.3(d);
(h) subject to, and in accordance with the terms of, Article
12, all liabilities and obligations in respect of the Seller's share of
any Pre-Closing Environmental Condition; and
(i) all liabilities and obligations in respect of any
Environmental Condition on, in or under any real property, other than
the Real Property, previously owned, leased or otherwise used in or by
the Business prior to the Closing or to which any Regulated Substance
generated by the Business was transported or disposed prior to the
Closing.
3.3 REIMBURSEMENT FOR CERTAIN PAYMENTS. If the Seller or any of the
Seller Subsidiaries pay any of the Assumed Liabilities, then the Buyer shall
reimburse the Seller or the appropriate Seller Subsidiary by wire transfer
within two business days of receipt by the Buyer of a demand for reimbursement,
together with corresponding documentation of such payment, from the Seller. If
the Buyer or any of the Buyer Subsidiaries pay any of the Retained Liabilities,
then the Seller shall reimburse the Buyer or the applicable Buyer Subsidiary by
wire transfer within two business days of receipt by the Seller of a demand for
reimbursement, together with corresponding documentation of such payment, from
the Buyer.
ARTICLE 4
PURCHASE PRICE
4.1 PURCHASE PRICE. The aggregate purchase price for the Transferred
Assets shall be $173,000,000 (the "Purchase Price"), subject to any adjustment
as provided for in Section 4.3, and the assumption by the Buyer of the Assumed
Liabilities.
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4.2 PAYMENT AT CLOSING. At the Closing, the Buyer shall wire transfer
the Purchase Price to the Seller and/or the Seller Subsidiaries as may be
designated by the Seller in writing prior to the Closing, in immediately
available funds to a bank account or at bank accounts designated by the Seller
in writing prior to the Closing.
4.3 ADJUSTMENT TO THE PURCHASE PRICE.
(a) Following the Closing Date, the Seller shall prepare or cause to
be prepared, at its sole expense, a balance sheet of the Business dated as of
the Closing (the "Closing Balance Sheet") setting forth the net book value of
the Transferred Assets (excluding amounts for depreciation and amortization
expense since April 30, 1999) and the Assumed Liabilities as of the Closing (the
"Final Net Assets") determined in accordance with the Seller's Accounting
Principles except as set forth on the Corresponding Schedule. The Seller shall
deliver the Closing Balance Sheet to the Buyer within 90 days after the Closing.
(b) The Buyer and its representatives at the Buyer's sole expense
shall have the right to observe the work performed by the Seller or its
representatives in connection with the preparation of the Closing Balance Sheet,
and shall have the right to examine and make copies of the work papers used in
connection with the preparation of the Closing Balance Sheet; provided, however,
that to the extent such work papers are prepared by outside independent
auditors, the Buyer shall have the right to examine, but not make copies of,
such work papers, unless otherwise permitted by applicable accounting standards.
(c) The Buyer shall have 30 days after the delivery of the Closing
Balance Sheet to review the Closing Balance Sheet. If within said 30-day period,
the Buyer notifies the Seller in writing that it is unwilling to accept any
item(s) on the Closing Balance Sheet, specifically identifying the item(s) and
amount(s) in dispute and the basis for such dispute, the Parties shall use their
reasonable efforts to reach agreement within the 30 days following the delivery
of the Buyer's notice of dispute, or such longer period as may be agreed upon by
the Parties, with respect to such disputed item(s). Any items on the Closing
Balance Sheet not identified in writing as a disputed item within the foregoing
30-day period as provided above shall be deemed to have been accepted by the
Buyer and not subject to any further review or change.
(d) If the Parties fail to reach a mutually agreeable determination
with respect to the Closing Balance Sheet within the foregoing 30-day period, or
such longer period as may have been agreed upon, the disputed item(s) shall be
submitted to a partner having relevant expertise and practicing at the
Cleveland, Ohio office of the Independent Accountant for resolution. The
Independent Accountant's determination shall be made using the Seller's
Accounting Principles, shall be final and binding on both Parties, and judgment
on such determination may be entered in any court having jurisdiction, in
accordance with Section 23.14. The costs and expenses of the Independent
Accountant will be paid by the Party against whom the disputed item(s) are
resolved, or shall be prorated between the Parties by the Independent Accountant
to the extent disputed item(s) are resolved in favor of each Party based on
their relative degree of success and shall be paid promptly following the
Settlement Date.
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(e) The resolution of any disputed item(s) shall be combined with
the undisputed items from the Closing Balance Sheet to re-calculate the Closing
Balance Sheet. The Parties shall request that such determination by the
Independent Accountant be resolved as promptly as possible.
(f) Upon the later of the expiration of the 30-day period referred
to above, during which time the Buyer may notify the Seller of any disputed
item(s) in the Closing Balance Sheet, or, in the event the Buyer provides the
Seller with written notice of disputed item(s) in accordance with the foregoing,
the final determination of such disputed item(s), either by agreement of the
Parties or a final determination by the Independent Accountant (the "Settlement
Date"), the Parties shall make the adjustments, if any, to the Purchase Price
provided for in subsections (g) and (h) below. Between the Closing Date and the
Settlement Date, the Buyer shall, during regular business hours, afford the
Seller and its representatives reasonable access to all books, records,
correspondence, files, financial statements, operating data, and all other
information with respect to the Business, and shall provide to the Seller and
its representatives such operating and financial data and any other information
with respect to the Business as it or they may from time to time reasonably
request for the purpose(s) of preparing the Closing Balance Sheet and resolving
any disputed item(s). The Buyer shall cause the personnel of the Buyer to
perform such procedures and measures as are reasonably necessary to prepare the
Closing Balance Sheet. The Seller and its representatives shall be provided with
offices at the Business and telephones, facilities, office equipment and
miscellaneous office supplies, as the Seller reasonably requests subsequent to
the Closing Date until the Settlement Date. The Buyer shall make reasonably
available during regular business hours the appropriate officers and employees
of the Business after the Closing for purposes of the Seller or its
representatives interviewing the same in connection with the preparation of the
Closing Balance Sheet and resolving any disputed item(s). During the 30-day
period following the initial delivery of the Closing Balance Sheet to the Buyer
by the Seller, the Seller shall make reasonably available during regular
business hours its relevant officers and employees to address questions
regarding the preparation of the Closing Balance Sheet.
(g) If the Final Net Assets exceed the net book value of the
Transferred Assets and the Assumed Liabilities as of April 30, 1999 as set forth
on the April 30 Balance Sheet, the Buyer shall pay to the Seller and/or the
Seller Subsidiaries (as may be designated by the Seller) within three business
days following the Settlement Date the amount of the excess, with interest on
such amount calculated at the Prime Rate (net of any applicable tax withholding)
accruing from the Closing through the Settlement Date by wire transfer of
immediately available funds to an account or accounts designated in writing to
the Buyer by the Seller.
(h) If the Final Net Assets are less than the net book value of the
Transferred Assets and the Assumed Liabilities as of April 30, 1999 as set forth
on the April 30 Balance Sheet, the Seller shall pay to the Buyer within three
business days following the Settlement Date the amount of the deficit, with
interest on such amount calculated at the Prime Rate (net of any applicable tax
withholding) accruing from the Closing through the Settlement Date by wire
transfer of immediately available funds to an account or accounts designated in
writing to the Seller by the Buyer.
(i) The Parties agree and acknowledge that the Closing Balance Sheet
shall be prepared solely for the purpose of determining the value of the Final
Net Assets of the Business and the final
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Purchase Price to be paid to the Seller and/or the Seller Subsidiaries, and that
such valuations do not reflect or indicate the price to be paid for any, or any
class or category, of the Transferred Assets.
4.4 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price, as
adjusted, shall be allocated among the Transferred Assets as set forth on the
Corresponding Schedule. Such allocation shall be used in the preparation and
filing of Internal Revenue Service Form 8594 and any other domestic or any
foreign income tax returns with respect to the transactions contemplated hereby,
and no Party hereto shall take or assert any position inconsistent therewith.
The Buyer and the Seller shall cooperate in connection with the preparation,
execution and filing with the Internal Revenue Service of all necessary
information returns required by Section 1060 of the Tax Code and comparable
provisions under applicable foreign law relating to the allocation of the
consideration for the Transferred Assets.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As of the date hereof, the Seller makes the following representations
and warranties to the Buyer.
5.1 ORGANIZATION, EXISTENCE AND STANDING. The Seller and each of the
Seller Subsidiaries is a corporation duly organized and validly existing under
the laws of the jurisdiction of its incorporation and has full corporate power
and authority to own or lease the Transferred Assets owned or leased by it, to
carry on the Business as it is now conducted by it and to consummate the
transactions contemplated by this Agreement and the Related Agreements. The
Seller and each of the Seller Subsidiaries is duly qualified to do business in
all of the jurisdictions in which the nature of the Transferred Assets owned or
leased by it, or the conduct of the Business conducted by it, requires it to be
so qualified, except where the failure to be so qualified would not have a
Material Adverse Effect.
5.2 CORPORATE AUTHORITY. The entering into and the execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby (a) have been duly and validly
authorized by requisite corporate action of the Seller and prior to the Closing
Date will have been duly and validly authorized by requisite corporate action of
each of the Seller Subsidiaries, and (b) constitutes the legal, valid, and
binding obligation of each (to the extent a party to this Agreement and/or any
of the Related Agreements), and no additional corporate or shareholder
authorization or consent is or will be required.
5.3 FINANCIAL STATEMENTS. Copies of the Financial Statements have
been delivered to the Buyer and are attached to Corresponding Schedule A. The
Financial Statements (i) have been prepared from information contained in the
books and records of the Seller, (ii) present fairly, in all material respects,
for those items listed therein, the financial position of the Division as of the
dates shown, and the results of the Division's operations (as the same are set
forth on the Corresponding Schedule) for the periods then ended, and (iii) have
been prepared in accordance with the Seller's
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Accounting Principles applied on a consistent basis, except as set forth on
Corresponding Schedule B.
5.4 ACCOUNTS RECEIVABLE. The Accounts Receivable included in the
Financial Statements constitute all of the Accounts Receivable of the Seller or
the Seller Subsidiaries, as the case may be, that relate to the Business as of
April 30, 1999. Other than those reserved for in the allowance for doubtful
accounts on the Financial Statements, all of such Accounts Receivable are, and
those existing on the Closing Date will be, valid and existing accounts
receivable arising in the ordinary course of business. Except as set forth on
the Corresponding Schedule, to the Seller's Knowledge, none of such Accounts
Receivable is or will be at the Closing Date subject to any counterclaim or
set-off except to the extent reserved for in the allowance for doubtful accounts
on the Financial Statements.
5.5 INVENTORY. The Inventory included in the Financial Statements
consists only of raw materials, work-in-process and finished goods of a quality
and quantity usable and saleable in the ordinary course of business, as
determined in accordance with the Seller's Accounting Principles. Except where
the book value of such Inventory has been written down on or prior to the
Closing Date, the Inventory is valued in the Financial Statements in accordance
with the Seller's Accounting Principles.
5.6 REAL PROPERTY.
(a) OWNED REAL PROPERTY. Except as set forth on the Corresponding
Schedule, the Seller, with respect to the Massillon Facility, and Eaton Yale,
with respect to the Hamilton Facility, each has good and marketable fee simple
title to such Owned Real Property free and clear of all Liens, except (i) Liens
for real estate taxes and assessments, both general and special, not yet due and
payable, for which adequate reserves have been established on the Financial
Statements or which are being contested in good faith, (ii) easements for
electricity, water, gas and telephone lines serving only the real property and
the business conducted thereon and easements of record; (iii) any laws,
regulations or ordinances (including, but not limited to, those related to or
affecting zoning, building and environmental matters) adopted or imposed by any
governmental authority or agency, (iv) workmen's or other similar Liens imposed
by law and arising or incurred in the ordinary course of business, (v) public or
private rights, if any, in such portion of the Real Property as may be presently
used, laid out or dedicated in any manner whatsoever, for street, roadway and/or
alley purposes, and (vi) other Liens, the cost of which to remove, individually
or in the aggregate, is not in excess of $20,000. The exceptions set forth in
clauses (i) through (vi) above shall be referred to as the "Real Property
Permitted Exceptions."
(b) LEASED REAL PROPERTY. Except as set forth on the Corresponding
Schedule, the Seller has good and valid leaseholds as to the Leased Real
Property, free and clear of all Liens except Real Property Permitted Exceptions.
Each of the leases for the Leased Real Property is in full force and effect, and
the Seller has provided the Buyer with complete copies of all such leases.
Except as disclosed on the Corresponding Schedule, the Seller has in all
material respects performed and is performing all obligations required to be
performed by it under the leases, and neither the Seller, nor, to the Seller's
Knowledge, any other party thereto, is in default of any material obligation
under any
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of the leases. Except as disclosed on the Corresponding Schedule, the Seller has
not received any written notice of default under any of the leases, nor to the
Seller's Knowledge has any event occurred which with notice or lapse of time or
both would constitute a material default by the Seller thereunder.
(c) REAL PROPERTY. Except as described on the Corresponding Schedule,
the Real Property constitutes all of the real property used by the Seller or the
Seller Subsidiaries in connection with the conduct of the Business. There are no
pending or, to the Seller's Knowledge, threatened condemnation or eminent domain
proceedings involving the Real Property or any portion thereof, or for a sale in
lieu thereof.
5.7 TITLE TO PERSONAL PROPERTY. Except as set forth on the
Corresponding Schedule, the Seller or the Seller Subsidiaries, as the case may
be, have good and marketable title to all of the Personal Property included in
the Transferred Assets, free and clear of all Liens, except for (a) Liens for
taxes not yet due and payable or which are being contested in good faith, and
(b) Liens, the cost of which to remove, individually or in the aggregate, is not
in excess of the greater of (i) $10,000 or (ii) ten percent (10%) of the asset's
original purchase price. The exceptions set forth in subsections (a) and (b)
above shall be referred to as the "Personal Property Permitted Exceptions."
5.8 CONDITION AND SUFFICIENCY OF TRANSFERRED ASSETS. Except for
matters that would not have a Material Adverse Effect and matters set forth on
the Corresponding Schedule to Section 5.12 and Item (v) of Corresponding
Schedule A to Section 5.9, (a) the Transferred Assets currently used in the
operation of the Business are in such condition and repair, reasonable wear and
tear excepted, as is suitable for the purposes for which they are presently used
in the Business, and (b) the Transferred Assets, together with the Buyer's
rights and interests under the Related Agreements, constitute all of the assets,
rights and interests which are related primarily or exclusively to the Business
(other than Excluded Assets) and are sufficient, together with the items set
forth on Corresponding Schedule to Section 5.24(a), for the operation of the
Business.
5.9 CONTRACTS.
(a) Except as set forth on the Corresponding Schedule A, neither the
Seller nor any of the Seller Subsidiaries is a party to or bound by any
agreement or contract, whether written or oral, of the following types that
involve the Business, the Transferred Assets or the Assumed Liabilities nor are
any such agreements or contracts presently being negotiated or discussed:
(i) Any contract, lease, agreement, plan or arrangement (other
than blanket purchase orders from customers) involving commitments to
others to make capital expenditures or purchases or sales involving
$50,000 or more in any one case or $100,000 in the aggregate in any
period of 12 consecutive months which are not cancelable by the Seller
or the Seller Subsidiaries, without penalty, on less than 90 days
prior written notice and any blanket purchase orders from customers
involving $100,000 or more which are not cancelable by the Seller or
the Seller Subsidiaries, without penalty, on less than 90 days prior
written notice;
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(ii) Any contract, lease, agreement, plan or arrangement
relating to any direct or indirect indebtedness for borrowed money
(including loan agreements, lease purchase arrangements, guarantees,
agreements to purchase goods or services or to supply funds or other
undertakings on which others rely in extending credit), or any
conditional sales contracts, chattel mortgages, equipment lease
agreements and other security arrangements with respect to personal
property with an obligation in excess of $50,000 in any one case or
$100,000 in the aggregate in any period of 12 consecutive months which
are not cancelable by the Seller or the Seller Subsidiaries, without
penalty, on less than 90 days prior written notice;
(iii) Any contract, lease, agreement, plan or arrangement
between the Division and the Seller or any of the Seller Subsidiaries
or any Affiliate of the Seller or any of the Seller Subsidiaries or
related party in their respective individual capacities;
(iv) Any employment, consulting or management services
contract or any confidentiality or proprietary rights agreements with
any employee of the Seller or any of the Seller Subsidiaries or any
Third Party;
(v) Any contract containing covenants limiting the freedom of
the Seller or any of the Seller Subsidiaries to compete in any line of
business with any Person or in any area or territory;
(vi) Any license agreement, either as licensor or licensee, or
any other agreement or arrangement of any type relating to any patent,
trademark or trade name or other Transferred Asset;
(vii) Any contract, agreement or arrangement of any kind
whatsoever, whether exclusive or otherwise, with any sales agent, sales
representative, franchisee or distributor;
(viii) Any contract or arrangement of any kind whatsoever
which requires the payment of royalties;
(ix) Any prime contract with any government or any agency or
instrumentality thereof; and
(x) Any other legally binding contract, agreement, plan or
arrangement not of the type covered by any of the other items of this
Section 5.9 involving money or property having an obligation in excess
of $50,000 in any one case or $100,000 in the aggregate in any period
of 12 consecutive months which are not cancelable by the Seller or the
Seller Subsidiaries, without penalty, on less than 90 days prior
written notice.
(b) "MATERIAL CONTRACTS" shall mean those contracts listed on the
Corresponding Schedule A. All of the Material Contracts are in full force and
effect and are valid, binding and enforceable in accordance with their terms as
to (i) the Seller or the Seller Subsidiaries, as the case may be, and (ii) to
the Seller's Knowledge, the other parties to such Material Contracts. Except as
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disclosed on the Corresponding Schedule B, the Seller and each of the Seller
Subsidiaries, to the extent a party to the Material Contracts, has in all
material respects performed and is performing all obligations required to be
performed by it under the Material Contracts, and neither the Seller or any of
the Seller Subsidiaries, to the extent a party to the Material Contracts, nor,
to the Seller's Knowledge, any other party thereto, is in default of any
material obligation under any of the Material Contracts. Except as disclosed on
the Corresponding Schedule B, neither the Seller nor any of the Seller
Subsidiaries has received any written notice of default under any of the
Material Contracts, nor has any event occurred which with notice or lapse of
time or both would constitute a default by the Seller or any of the Seller
Subsidiaries, as applicable, thereunder.
(c) Except as disclosed on the Corresponding Schedule C, neither the
Seller nor any of the Seller Subsidiaries has received any written or verbal
notice of intent to terminate any Material Contract.
5.10 PROPRIETARY RIGHTS. The Seller or the Seller Subsidiaries are
the sole owners of all of the Proprietary Rights listed as "OWNED" on the
Corresponding Schedule to Section 2.1(h), and the Seller or the Seller
Subsidiaries has the right, under valid, binding and subsisting license,
technology or similar agreements to employ or otherwise use the Proprietary
Rights listed as "licensed" on the Corresponding Schedule to Section 2.1(h).
Except as disclosed on the Corresponding Schedule (the "Proprietary Rights
Exceptions"):
(a) Neither the Seller nor any of the Seller Subsidiaries or,
to the Seller's Knowledge, any other party thereto, is in default of
any material obligation under any such license, technology or similar
agreement;
(b) Neither the Seller nor any of the Seller Subsidiaries has
granted any right or interest to any Person, other than a Seller
Subsidiary, in connection with any of the Proprietary Rights;
(c) Neither the Seller nor any of the Seller Subsidiaries is
obligated to pay any amount, whether as a royalty, license fee or other
payment, to any Person in order to use any of the Proprietary Rights in
the conduct of the Business or the ownership of the Transferred Assets;
(d) The Seller and the Seller Subsidiaries have acquired sole
and exclusive ownership of all Proprietary Rights listed as "owned" on
the Corresponding Schedule to Section 2.1(h) and applications thereof
(whether or not patentable) and have the right to use or license the
use of such Proprietary Rights on the products or services on, or in
respect of which, they are now being used and all of such patents and
registrations and applications therefor are free and clear of any
Liens; and
(e) Except with respect to the software for which the Seller
and the Seller Subsidiaries have been granted standard form end-user
licenses or licensed proprietary rights and for routine patent
prosecutions in various patent offices, (i) none of the Proprietary
Rights and none of the applications therefor set forth on the
Corresponding Schedule to
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Section 2.1(h) are subject to any pending or, to the Seller's
Knowledge, threatened challenge, claim or dispute, (ii) none of the
Proprietary Rights and none of the applications therefor set forth on
the Corresponding Schedule to Section 2.1(h) have during the prior
five years been the subject of any challenge, claim or dispute, (iii)
to the Seller's Knowledge, the operation of the Business and the
ownership of the Transferred Assets does not infringe upon or
otherwise violate any right of any Third Party, (iv) to the Seller's
Knowledge, none of the Proprietary Rights is being infringed by any
Third Party; (v) to the Seller's Knowledge, there are no impediments
to the ability of the Seller or the Seller Subsidiaries, as the case
may be, to maintain and, where lawful, to renew the Proprietary
Rights, (vi) none of the Proprietary Rights is subject to any
outstanding order, decree, judgment or stipulation, and (vii) neither
the Seller nor any of the Seller Subsidiaries has received any notice
of conflict with asserted proprietary rights of others.
5.11 TAX MATTERS.
(a) The Seller and the Seller Subsidiaries have filed all tax returns
and tax reports required to be filed by them with respect to the Business or the
Transferred Assets, including, without limitation, those returns and reports
pertaining to federal, state, provincial, local, foreign or other income taxes,
gross receipt taxes, ad valorem taxes, transfer taxes, excise taxes, sales and
use taxes, payroll taxes, unemployment insurance payroll premiums, withholding
taxes, occupation taxes, property taxes and franchise taxes, and all taxes,
interest and penalties shown or claimed to be due thereon have been paid. There
are no Liens for taxes (other than for current real and personal property taxes
not yet due and payable) on the Transferred Assets or with respect to the
Business.
(b) None of the Transferred Assets, directly or indirectly, secures
any debt the interest on which is tax-exempt under Section 103(a) of the Tax
Code. None of the Transferred Assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Tax Code.
5.12 ENVIRONMENTAL MATTERS. Except for matters described on the
Corresponding Schedule or except as would not have a Material Adverse Effect (a)
the Business and the Real Property are operated in compliance with all
applicable Environmental Laws, (b) to the Seller's Knowledge, no Real Property
contains, with respect to the ownership and operations of the Business, any
Regulated Substances in any environmental medium (air, water, soil, sediments,
subsurface strata or groundwater) to an extent or in a manner or condition now
requiring remediation under any currently applicable Environmental Law existing
and in effect as of the Closing Date, (c) no judicial or administrative
proceeding is pending or, to the Seller's Knowledge, threatened relating to
liability with respect to the Business for any off-site disposal of any
Regulated Substance, (d) none of the Seller or any of the Seller Subsidiaries
has received in writing within three years prior to the Closing any claims or
notices alleging it is not in compliance with or liable with respect to the
Business under any Environmental Law, and (e) the Corresponding Schedule sets
forth all those Permits that Seller or the Seller Subsidiaries now holds in
connection with the operation of the Business pursuant to Environmental Laws.
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5.13 NO BREACH OF CONTRACT, NO VIOLATIONS OF LAW, NO PRIOR APPROVAL.
(a) Neither the execution and delivery of this Agreement or any
Related Agreement nor compliance with their terms and provisions will conflict
with, result in the breach or violation of, or constitute a default under, any
of the terms, conditions or provisions of (i) the Seller's or any of the Seller
Subsidiaries' Articles of Incorporation or Regulations (or comparable charter
documents); (ii) any agreement or instrument to which the Seller or any of the
Seller Subsidiaries is a party, or by which either the Seller or any of the
Seller Subsidiaries is bound or to which any of the Transferred Assets or
Assumed Liabilities are subject except as identified on the Corresponding
Schedule; or (iii) any law applicable to the Seller, any of the Seller
Subsidiaries or any of the Transferred Assets, other than, in the case of
clauses (ii) and (iii) of this Section 5.13(a), conflicts, breaches, violations
or defaults which would not, individually or in the aggregate, have a Material
Adverse Effect. Except as identified on the Corresponding Schedule, neither the
execution and delivery of this Agreement nor compliance with its terms and
provisions will result in the creation or imposition of any Lien upon any of the
Transferred Assets.
(b) Other than the filing of a pre-merger notification report under
the HSR Act, filings to be made under the Competition Act (Canada) with the
Commissioner of Competition, and those filings, Permits, authorizations,
consents and approvals identified on the Corresponding Schedule or addressed in
Section 5.12, no filing with, or Permit, authorization, consent or approval of,
any domestic or foreign government authority is required for the consummation by
the Seller of the transactions contemplated by this Agreement, except for any
filings, Permits, authorizations, consents or approvals the failure to make,
file, give or obtain which would not, individually or in the aggregate, have a
Material Adverse Effect; provided, however, that the representation given in
this Section 5.13(b) is limited to the Seller's Knowledge with respect to
foreign Permits, filings, authorizations, consents or approvals.
5.14 LITIGATION. Except as set forth on the Corresponding Schedule or
on the Corresponding Schedule to Section 5.10 or 5.12, there is no pending or,
to the Seller's Knowledge, threatened claim, litigation, proceeding or order of
any court or governmental agency or arbitrator or governmental investigation
relating to the Business or any of the Transferred Assets. Except as set forth
on the Corresponding Schedule or on the Corresponding Schedule to Section 5.10
or 5.12, no claim, litigation, proceeding or order listed on the Corresponding
Schedule would, if adversely determined, have a Material Adverse Effect, and
there is no existing or, to the Seller's Knowledge, threatened order, judgment
or decree of any court, governmental agency or arbitrator that specifically
applies to the Business or the Transferred Assets.
5.15 FINDERS, BROKERS AND INVESTMENT BANKERS. Other than Bowles
Hollowell Conner, a division of First Union Capital Markets Corp., whose fees
will be the responsibility of the Seller, no finder, broker or investment banker
acting or who has acted on behalf of the Seller or any of the Seller
Subsidiaries in connection with the transactions contemplated by this Agreement
is entitled to receive any commission or finder's fee in connection with such
transactions, and, to the Seller's Knowledge, no other Person is entitled to
receive any commission or finder's fee from the Seller or any of the Seller
Subsidiaries in connection with such transactions.
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5.16 NO MATERIAL ADVERSE CHANGE. Except as disclosed on the
Corresponding Schedule, since April 30, 1999, the Seller and each of the Seller
Subsidiaries have conducted the Business in the ordinary course consistent with
past practices and there has not occurred:
(a) any Material Adverse Effect;
(b) any uninsured damage to, destruction or loss of any
Transferred Asset that could reasonably be expected to have a Material
Adverse Effect;
(c) any material change by the Seller to the Seller's
Accounting Principles, except changes mandated by GAAP;
(d) any material revaluation by the Seller or any of the
Seller Subsidiaries of any of the Transferred Assets, including,
without limitation, writing down the value of Inventory or writing off
notes or Accounts Receivable other than in the ordinary course of
business;
(e) any other action or event that would have required the
consent of the Buyer pursuant to Section 7.1 had such action or event
occurred after the date of this Agreement; or
(f) any sale or transfer of a material amount of the
Transferred Assets, other than sales of inventory in the ordinary
course of business.
5.17 GOVERNMENTAL PERMITS AND LICENSES; COMPLIANCE WITH LAWS. Except
for matters which would not have a Material Adverse Effect and except for those
matters addressed by Section 5.12, (a) the Seller and the Seller Subsidiaries
have all of the Permits required to own the Transferred Assets and to carry on
the Business as presently conducted, and, assuming proper action by the other
party thereto or by the issuer thereof, all such Permits are valid and in
effect, and (b) to the Seller's Knowledge, neither the ownership of the
Transferred Assets by the Seller or the Seller Subsidiaries, nor the operation
of the Business by the Seller or the Seller Subsidiaries as it is presently
conducted, violates any applicable order, law, ordinance, code or regulation.
Except for those matters set forth on the Corresponding Schedule to Section
5.12, neither the Seller nor any Seller Subsidiary has received any written
notice from any governmental authority of any such violation.
5.18 INSURANCE. The Seller has adequately insured all of the
Transferred Assets against loss or damage resulting from fire or other risks
insured against by extended coverage and public liability insurance of a kind
and in an amount customarily obtained by similar businesses.
5.19 EMPLOYEES; LABOR RELATIONS.
(a) Seller has provided to Buyer a complete list which sets forth,
as of the date so indicated, the name, position, salary, length of service and
location of all persons employed (including persons who are temporarily absent
from active employment by reason of disability, illness, injury, workers'
compensation, military leave, approved leave of absence or layoff) by the Seller
or the Seller Subsidiaries in the conduct of the Business. The Seller and the
Seller
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Subsidiaries have paid in full or accrued in the Financial Statements all wages,
salaries, commissions, bonuses, benefits, and other compensation due to any
employee of the Division or otherwise arising under any employment related
policy, practice, agreement, plan, program, statute or law.
(b) The Corresponding Schedule sets forth a correct and complete list
of all collective bargaining agreements (the "Collective Bargaining
Agreements"), complete copies of which have been made available to the Buyer,
covering employees of the Division.
(c) With respect to the Business, neither the Seller nor any of the
Seller Subsidiaries has received any written notice of any unfair labor practice
complaints or any other action, suit, complaint, charge, arbitration, inquiry,
proceeding or investigation pending before the National Labor Relations Board or
the Ontario Labour Relations Board or any other agency having jurisdiction
thereof and, to the Seller's Knowledge, no such complaint has been threatened.
Neither the Seller nor any Seller Subsidiary has received any written notice of
any activities or proceedings of any labor union (or representatives thereof) to
organize any non-union employees of the Division, or of any strikes, slowdowns,
work stoppages, lockouts or threats thereof, by or with respect to any employees
of the Division of the Seller and, within the 12 months prior to the date of
this Agreement, no such proceedings or, to the Seller's Knowledge, activities
are or were underway nor has the Seller or any of the Seller Subsidiaries been
the subject of any strikes, slowdowns, work stoppages, lockouts or, to the
Seller's Knowledge, threats thereof. With respect to the employees of the
Division, except as set forth on the Corresponding Schedule, there are no
material unsatisfied claims, grievances, arbitration proceedings or workers'
compensation proceedings other than standard employee medical, temporary total,
permanent partial and applications for increase in permanent partial disability
benefits. Except as set forth on the Corresponding Schedule, neither the Seller
nor any of the Seller Subsidiaries is a party to or otherwise bound by, any
consent decree with, or order or citation by, any government agency relating to
any employee of the Division or employment practices, wages, hours, and terms
and conditions of employment with respect to the Business.
5.20 EMPLOYEE BENEFITS.
(a) The Corresponding Schedule lists or describes all material
Employee Benefit Plans maintained by the Seller. Each Employee Benefit
Plan has been maintained in all material respects in accordance with
its terms and with applicable law. The Corresponding Schedule sets
forth all Employee Benefit Plans maintained by the Seller which are
intended to be qualified within the meaning of Section 401 (a) of the
Tax Code.
(b) The Seller has delivered or made available to the Buyer
a true and complete copy of:
(i) each Employee Benefit Plan identified on the
Corresponding Schedule to Section 5.20(a);
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(ii) each current summary plan description as to each
Employee Benefit Plan that is described in clause (i) and is
subject to the reporting and disclosure requirements of ERISA.
(c) The Seller shall, prior to the Closing, deliver or make
available to the Buyer a true and complete copy of:
(i) the most recent determination letters for Seller's
Investment Plan (as defined in Section 10.6) and Seller's Savings
Plan (as defined in Section 10.7) and documentation that
demonstrates that Seller's RRSP (as defined in Section 10.8) is
registered under applicable governmental requirements;
(ii) the most recent Form 5500 that was filed on behalf of
Seller's Investment Plan and Seller's Savings Plan;
(iii) all insurance policies owned by the Seller or any
Seller Subsidiary providing benefits or funding the benefits
under an Employee Benefit Plan; and
(iv) each material notice that was given by the Internal
Revenue Service or the Department of Labor to the Seller or any
Seller Subsidiary with respect to Seller's Investment Plan or
Seller's Savings Plan during the prior three-year period, the
subject or content of which remains outstanding as of the
Closing.
(d) Except as set forth on the Corresponding Schedule, there
are no material actions, suits, investigations or claims pending or, to
the Seller's Knowledge, threatened with respect to or affecting
Division Employees under Seller's Investment Plan or Seller's Savings
Plan, other than routine claims for benefits.
(e) Neither Seller nor any of the Seller Subsidiaries makes,
nor are any of them obligated to make, contributions or payments of
withdrawal liability to any multi-employer plan (as defined under
Section 3(37) of ERISA) covering current or former employees of the
Division which could result in liability to the Buyer or any Buyer
Subsidiary.
5.21 RESIDENCY OF SELLER SUBSIDIARIES; GST REGISTRATION. Neither
Eaton Yale nor ETN Offshore are non-residents of Canada under the Income Tax Act
(Canada), and Eaton Yale is registered for the purposes of the GST Legislation.
5.22 LIABILITIES. Except as set forth and adequately reserved for in
the Financial Statements or as set forth on the Corresponding Schedule or on the
Corresponding Schedules to
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Sections 5.10, 5.12, 5.14 or 5.19(c), to the Seller's Knowledge, neither the
Seller nor any of the Seller Subsidiaries have any outstanding claims,
liabilities or indebtedness, fixed or contingent, or obligations of any nature,
whether accrued, absolute, contingent, threatened or otherwise, whether due or
to become due, with respect to the Business, other than (a) liabilities incurred
in the ordinary course and conduct of the Business since April 30, 1999, which
do not involve borrowings, and (b) claims, liabilities or indebtedness of the
type not required to be disclosed in the Financial Statements or notes thereto
in accordance with GAAP, but in no event in excess of $50,000.
5.23 EMPLOYEE SAFETY. Except as set forth on the Corresponding
Schedule, during the past three years neither the Seller nor the Seller
Subsidiaries, with respect to the Business, (a) is or has been subject to an
investigation by the U.S. or Canadian Department of Labor or similar state,
provincial or other foreign or local agencies over compliance with OSHA or any
similar state, provincial, foreign or local statute and the rules and
regulations promulgated thereunder ("Safety Laws"), or (b) has received or has
paid any fine, penalty or citation relating to or arising out of a violation or
alleged violation of any Safety Laws during the past three years.
5.24 CUSTOMER ASSETS; LOCATION OF ASSETS.
(a) Except as disclosed on the Corresponding Schedule, no material
Personal Property owned by a customer of the Business or owned by any other
Third Party currently is located at Owned Real Property or Leased Real Property.
To the Seller's Knowledge, there are no impediments to the ability of the Seller
or any of the Seller Subsidiaries to use the Personal Property identified on the
Corresponding Schedule in the manner in which it is currently being used in the
Business.
(b) Except as disclosed on the Corresponding Schedule, all Personal
Property owned by the Seller or a Seller Subsidiary and included in the
Transferred Assets is located at Owned Real Property or Leased Real Property,
except for immaterial Personal Property the aggregate value of which is not in
excess of $25,000.
5.25 YEAR 2000 COMPLIANCE. Except as disclosed on the Corresponding
Schedule, to the Seller's Knowledge, all hardware, software and embedded systems
("Systems") required by Seller to operate the Business are currently "Year 2000
Compliant" or are projected to be Year 2000 Compliant by August 15, 1999, as
shown on the Corresponding Schedule. For the purposes of this Agreement, "Year
2000 Compliant" means that the Systems will consistently and accurately process
date information before, during and after January 1, 2000, and between dates
before and after January 1, 2000.
5.26 DISCLAIMER; CROSS REFERENCES.
(a) EXCEPT FOR REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER IN
ARTICLE 5 OF THIS AGREEMENT, THE SELLER HAS MADE AND MAKES NO REPRESENTATIONS OR
WARRANTIES, EITHER EXPRESS OR IMPLIED, CONCERNING THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, ALL
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SUCH WARRANTIES BEING EXPRESSLY DISCLAIMED, AND THE BUYER HAS NOT RELIED ON ANY
SUCH REPRESENTATIONS AND WARRANTIES, EXCEPT FOR THOSE MADE BY THE SELLER IN
ARTICLE 5 OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE COVERED BY THE
WARRANTIES PROVIDED BY ARTICLE 2 OF THE UNIFORM COMMERCIAL CODE, THE SALE OF
GOODS ACT (ONTARIO), OR ANY SIMILAR LAWS OF ANY JURISDICTION. THIS PROVISION
SHALL NOT IN ANY WAY AFFECT OR DIMINISH ANY AGREEMENT OR COVENANT CONTAINED IN
ANY OTHER SECTION OF THIS AGREEMENT.
(b) Information to be disclosed in any one Corresponding Schedule
herein referred to may be supplied in any Corresponding Schedule by cross
reference to any other Corresponding Schedule.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer makes the following representations and warranties to the
Seller.
6.1 ORGANIZATION, EXISTENCE AND STANDING OF THE BUYER. Each of the
Buyer and the Buyer Subsidiaries is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation and has full
corporate power and authority to own or lease its assets, to carry on its
business as it is now conducted and to consummate the transactions contemplated
by this Agreement and the Related Agreements.
6.2 CORPORATE AUTHORITY. The entering into and the execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby (a) have been duly and validly
authorized by requisite corporate action of the Buyer and prior to the Closing
Date will have been duly and validly authorized by requisite corporate action of
each of the Buyer Subsidiaries, and (b) constitutes the legal, valid, and
binding obligation of each (to the extent a party to this Agreement and/or any
of the Related Agreements) and no additional corporate or stockholder
authorization or consent is or will be required.
6.3 NO BREACH OF CONTRACT, NO VIOLATIONS OF LAW, NO PRIOR APPROVAL.
(a) Neither the execution and delivery of this Agreement or any
Related Agreement nor compliance with their terms and provisions will conflict
with, result in the breach or violation of, or constitute a default under, any
of the terms, conditions, or provisions of (i) the Buyer's or Buyer
Subsidiaries' Certificate of Incorporation or By-laws (or comparable charter
documents); (ii) any agreement or instrument to which the Buyer or any Buyer
Subsidiary is a party or by which the Buyer or any Buyer Subsidiary is bound; or
(iii) any law applicable to the Buyer or any Buyer Subsidiary, other than, in
the case of clauses (ii) and (iii) of this Section 6.3(a), conflicts, breaches,
violations or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect.
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(b) Other than the filing of a pre-merger notification report under
the HSR Act and the Competition Act (Canada) and the Investment Canada Act, no
filing with, or Permit, authorization, consent or approval of, any domestic or
foreign government authority is required for the consummation by the Buyer of
the transactions contemplated by this Agreement.
6.4 LITIGATION. There is no pending, or to the Buyer's knowledge,
threatened claim, litigation, proceeding or order of any court or governmental
agency or arbitrator or governmental investigation relating to the Buyer or any
Buyer Subsidiary, their business or their assets which, if adversely determined,
would, individually or in the aggregate, materially impair, hinder or otherwise
materially and adversely affect the ability of the Buyer to effect the Closing,
or to perform any of its material obligations under this Agreement or any of the
Related Agreements.
6.5 FINDERS, BROKERS AND INVESTMENT BANKERS. No finder, broker or
investment banker acting or who has acted on behalf of the Buyer or the Buyer
Subsidiaries in connection with the transactions contemplated by this Agreement
is entitled to receive any commission or finder's fee in connection with such
transactions, and to the Buyer's Knowledge, no other Person is entitled to
receive any commission or finder's fee from the Buyer or any Buyer Subsidiary in
connection with such transactions.
6.6 FINANCING. The Buyer, on the Closing Date and on the Settlement
Date, will have sufficient funds available to it to pay to the Seller and/or the
Seller Subsidiaries, as the case may be, the Purchase Price and to otherwise
satisfy all of its obligations under this Agreement and the Related Agreements.
Buyer has received from BankBoston, N.A. a commitment letter representing the
funds necessary to pay the Purchase Price and to otherwise satisfy all of
Buyer's obligations under this Agreement and the Related Agreements. Buyer has
delivered a copy of such commitment letter to Seller.
6.7 GST. The Buyer or a Buyer Subsidiary, as required, will be, as
of the Closing Date, registered for the purposes of the GST Legislation and is
acquiring under this Agreement ownership, possession or use of all or
substantially all of the property that reasonably can be regarded as being
necessary for the Buyer to be capable of carrying on the Business following the
Closing.
6.8 DISCLAIMER. EXCEPT FOR REPRESENTATIONS AND WARRANTIES MADE BY
THE BUYER IN ARTICLE 6 OF THIS AGREEMENT, THE BUYER HAS MADE AND MAKES NO
REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, CONCERNING THE SUBJECT
MATTER OF THIS AGREEMENT, AND THE SELLER HAS NOT RELIED ON ANY REPRESENTATIONS
AND WARRANTIES EXCEPT FOR THOSE MADE BY THE BUYER IN ARTICLE 6 OF THIS
AGREEMENT. THIS AGREEMENT SHALL NOT BE COVERED BY THE WARRANTIES PROVIDED BY
ARTICLE 2 OF THE UNIFORM COMMERCIAL CODE, THE SALE OF GOODS ACT (ONTARIO) OR ANY
SIMILAR LAWS OF ANY JURISDICTION. THIS PROVISION SHALL NOT IN ANY WAY AFFECT OR
DIMINISH ANY AGREEMENT OR COVENANT CONTAINED IN ANY OTHER SECTION OF THIS
AGREEMENT.
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ARTICLE 7
COVENANTS OF THE SELLER
The Seller covenants and agrees with the Buyer as follows.
7.1 CONDUCT OF BUSINESS TO CLOSING DATE. Except upon the written
consent of the Buyer, which consent shall not be unreasonably withheld or
delayed, the Seller shall and shall cause the Seller Subsidiaries to, from and
after the date hereof until the Closing Date, carry on the Business in
substantially the same manner as it has heretofore been conducted, including,
without limitation, doing the following:
(a) MAINTAIN TRANSFERRED ASSETS. Consistent with the
Seller's past practice, the Seller shall maintain and keep, and shall
cause the Seller Subsidiaries to maintain and keep, the Transferred
Assets in at least as good condition and repair, reasonable wear and
tear excepted, as the condition and repair the Transferred Assets are
in as of the date hereof.
(b) DISPOSITION OF ASSETS. The Seller shall not, and shall
not permit the Seller Subsidiaries to, sell, lease, pledge, mortgage
or otherwise dispose of or encumber any of the Transferred Assets
except for (i) the sale, lease, pledge, mortgage or disposal or
encumbrance of any of the Transferred Assets, including Inventory, in
a manner consistent with the Seller's past practice and in the
ordinary course of business which would not, individually or in the
aggregate, be material to the operation of the Business, (ii) the
disposal of any obsolete, unusable or unsalable Inventory (as
determined in accordance with the Seller's Accounting Principles)
consistent with the Seller's past practice, or (iii) any sale, lease,
pledge, mortgage or disposal or encumbrance of any of the Transferred
Assets that would not have a Material Adverse Effect.
(c) PERFORM CONTRACTS AND OTHER OBLIGATIONS. The Seller
shall, and shall cause the Seller Subsidiaries to, perform all of its
or their, as the case may be, material obligations under the Material
Contracts and any and all other agreements relating to or affecting
the Transferred Assets or the Business.
(d) OTHER CONTRACTS. Except as set forth on the Corresponding
Schedule, the Seller shall not, and shall not permit the Seller
Subsidiaries to, with respect to the Business (i) enter into any
Material Contract outside the ordinary course of business, (ii) modify
or change any Material Contract, (iii) cancel any debts or waive any
claims or rights where such cancellation or waiver would have a
Material Adverse Effect, (iv) make any capital expenditure or
commitment exceeding $150,000 in any one instance or $500,000 in the
aggregate, other than as identified in the Division's 1999 Capital
Expenditure Budget included as part of the Corresponding Schedule,
which budget shall not be amended or modified, or (v) make any loan to,
or enter into any business transaction, agreement, arrangement or
understanding of any other nature with, any employee of the Business or
any officer or director of the Seller or any of the Seller Subsidiaries
or any Affiliate or associate of any such officer or director.
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(e) WAGES OR SALARY INCREASES. The Seller shall not, and
shall not permit the Seller Subsidiaries to (i) grant any increases in
wages, salaries or benefits of any of the Seller's or the Seller
Subsidiaries' employees, as the case may be, employed exclusively in
the conduct of the Business, except increases in the ordinary course
of business in accordance with the Seller's or the applicable Seller
Subsidiary's existing policies and except for increases in wages
and/or benefits as required by the Collective Bargaining Agreements,
(ii) enter into any employment agreements with respect to any
employees of the Business, (iii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required by any
existing plan, agreement or arrangement to any officer or employee of
the Business, whether past or present, or (iv) with respect to the
employees of the Division, commit itself to any additional pension,
profit-sharing, bonus, incentive, deferred compensation, group
insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or to any employment or consulting agreement
with or for the benefit of any employee of the Division, or to
terminate or amend any of such plans or any of such agreements in
existence on the date of this Agreement.
(f) MAINTAIN RELATIONSHIPS OF CUSTOMERS AND SUPPLIERS. The
Seller shall, and shall cause the Seller Subsidiaries to, use its or
their reasonable efforts to maintain satisfactory relationships with
all of the existing customers and suppliers of the Business.
(g) TRANSFER OF THE TRANSFERRED ASSETS. The Seller shall
not, and shall not permit the Seller Subsidiaries to, take any action
that would prevent the transfer of the Transferred Assets to the Buyer
pursuant to the terms of this Agreement free and clear of all Liens,
other than Assumed Liabilities, Real Property Permitted Exceptions and
Personal Property Permitted Exceptions.
(h) BOOKS AND RECORDS. The Seller shall, and shall cause the
Seller Subsidiaries to, maintain their books, accounts and records with
respect to the Business and the Transferred Assets in the usual,
regular and ordinary manner, on a basis consistent with prior years,
and comply with all laws, the enforcement of which, if the Seller or
the Seller Subsidiaries were not in compliance, would have a Material
Adverse Effect.
(i) PERMITS. The Seller shall, and shall cause the Seller
Subsidiaries to, keep and maintain all Permits in full force and
effect, continue their business pursuant to such Permits and take all
steps necessary to meet requirements on pending applications for
Permits, except where the lapse of any such Permits would not have a
Material Adverse Effect.
7.2 ACCESS BY THE BUYER TO PROPERTIES AND RECORDS; FURNISHING
INFORMATION.
(a) Following the date hereof, authorized representatives of the
Buyer shall have reasonable access during normal business hours to all premises,
properties, books, contracts and documents of the Seller and the Seller
Subsidiaries relating to the Business, the Transferred Assets and the Assumed
Liabilities. Such access shall be arranged through a representative designated
in writing by the Seller and shall be coordinated in such a manner to not
materially interfere with the Seller's or any Seller Subsidiary's operations. In
order to assist the Buyer, the Seller's designated
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representatives may attend all meetings held between the Buyer or its authorized
representatives and any officers and employees or customers and suppliers of the
Seller or any representatives thereof. At no time prior to the Closing shall the
Buyer contact any of the Seller's or any of the Seller Subsidiaries' customers
or suppliers or employees (other than the Seller's designated representatives)
with respect to any matters related to the content of this Agreement or the
transactions contemplated hereby, unless accompanied by a representative of the
Seller or upon the written consent of the Seller.
(b) Consistent with and without limiting Section 7.2(a), the Buyer's
access to the premises, properties, books, contracts and documents of the Seller
and the Seller Subsidiaries relating to the Business, the Transferred Assets and
the Assumed Liabilities shall expressly include all reasonable access necessary
to evaluate the environmental liabilities of the Business. Seller further
expressly covenants to transfer upon Closing, all books, files and records,
including any audits, site assessments, site investigation reports, and any
other materials relating to environmental matters with respect to the Business,
provided, however, Seller may retain copies of such books, files and records.
(c) From and after the Closing Date, the Seller will make available
to the Buyer, from time to time as the Buyer may reasonably request, copies of
such of the records retained by the Seller or the Seller Subsidiaries relating
to the Business, the Transferred Assets and the Assumed Liabilities as may be
reasonably required to enable the Buyer to defend against or assert claims
related to or arising from ownership of the Transferred Assets, the assumption
of the Assumed Liabilities or the conduct of the Business by the Seller and the
Seller Subsidiaries prior to the Closing and to handle tax and financial audits
involving the Division or the Business thereof; provided, however, that the
Buyer agrees to hold such records in confidence, except to the extent required
to defend or assert such claims and to handle such audits, and to return the
same to the Seller promptly upon the conclusion of their use by the Buyer for
the purposes herein specified.
7.3 COMPLIANCE WITH CONDITIONS. The Seller shall use its reasonable
efforts to cause the conditions in Article 14 to be satisfied at or prior to the
Closing Date.
7.4 THIRD-PARTY CONSENTS. The Seller shall use its reasonable efforts
to obtain, on or prior to the Closing Date, all consents and approvals of Third
Parties.
7.5 NOTIFICATION TO THE BUYER OF DAMAGE OR DESTRUCTION OF TRANSFERRED
ASSETS OR MATERIAL CHANGES. The Seller shall give the Buyer written notice
promptly upon becoming aware of any damage or destruction of any material
portion of the Transferred Assets.
7.6 TRANSFER OF WARRANTIES. In the event that any of the Transferred
Assets are under any warranty or vendor's indemnification agreement from the
manufacturer or the original seller thereof, the Buyer shall be entitled to the
benefit of the warranty or vendor's indemnification agreement to the extent that
the warranty or vendor's indemnification agreement is available to the
transferee, and the Seller shall execute such instruments as may be required to
transfer the warranty to the Buyer.
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7.7 HSR/COMPETITION ACT FILINGS; OTHER GOVERNMENTAL FILINGS.
(a) The Seller, within five business days following the date of this
Agreement, or as the Buyer and the Seller may otherwise agree, will submit (i)
to the United States Department of Justice and the Federal Trade Commission all
of the requisite forms and information required of Seller and any of the Seller
Subsidiaries and applicable to this transaction under the HSR Act and (ii) all
filings required of Seller and any of the Seller Subsidiaries to be made under
the Competition Act (Canada) to the Commissioner of Competition and/or other
governmental authority under such Act. Following such submissions, the Seller
shall respond promptly to any appropriate request by any of such agencies or
authorities for additional information or data and shall take such other
reasonable actions as may be required or necessary in order to comply with such
laws. The Seller will request early termination of the applicable waiting period
requirements under the HSR Act.
(b) The Seller shall also comply with the laws of any country and
province, including Canada, which are applicable to the transactions
contemplated by this Agreement and pursuant to which governmental notification
and/or approval of such transactions is required. The Seller and the Buyer shall
cooperate in providing any requisite information and data regarding the Seller
or the Buyer, as the case may be, and making such filings as may be required in
any such jurisdictions in connection with obtaining any required governmental
approval or providing any required notice and shall take such other reasonable
actions as may be required or necessary in order to comply with such laws.
7.8 TRANSITIONAL USE OF TRADE NAMES, TRADEMARKS AND LOGOS. The Buyer
and the Seller recognize that certain Inventory, labels and containers therefor
and promotional material being sold to the Buyer under this Agreement (as well
as Inventory manufactured by the Buyer after the Closing Date with tooling or
other assets to the extent permitted by the last sentence of this paragraph) may
bear the trade names "Eaton Corporation" or "Eaton," and may bear logos or marks
associated therewith, which trade names, logos and marks are not being assigned
or licensed to the Buyer. The Seller agrees that the Buyer shall be permitted to
sell such Inventory and use such labels, containers and promotional material for
a period not exceeding six months after the Closing Date. Thereafter, internal
storage and material handling containers that currently bear such trade names,
logos or marks may continue to be used only if such trade names, logos or marks
are removed or covered so that they cannot be viewed. In no event shall the
Buyer be entitled to the use of the trade names and untransferred logos and
trademarks in advertising such Inventory. The Buyer shall remove the Seller's,
any of the Seller Subsidiaries' and their Affiliate's trade names and
untransferred logos and trademarks from signage no later than three months from
the Closing Date and from tooling or other assets used in production no later
than six months from the Closing Date.
7.9 NEGOTIATIONS WITH THIRD PARTIES. From the date hereof through
the Closing Date or the earlier termination of this Agreement, neither the
Seller nor any of the Seller Subsidiaries or any of their respective officers,
directors, agents or employees will initiate or solicit proposals or conduct
negotiations for the sale, transfer or other disposition of the Division with
any prospective purchasers other than the Buyer; provided, however, that nothing
contained in this Section 7.9 shall prohibit the Board of Directors of the
Seller from furnishing information to or entering into discussions or
negotiations with, any Person that makes an unsolicited bona fide proposal in
writing, not subject
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to any financing condition, to acquire the assets of the Division, if, and only
to the extent that (a) the Board of Directors determines in good faith and upon
written advice of outside counsel to the Seller that such action is required for
the Board of Directors to comply with its fiduciary duties to shareholders
imposed by law, (b) prior to furnishing such information to, or entering into
discussions or negotiations with, such Person, the Seller provides written
notice to the Buyer to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such Person, and (c) the Seller
keeps the Buyer informed of the status (not the terms) of any such discussions
or negotiations.
7.10 UPDATE OF SCHEDULES. The Seller shall promptly notify the Buyer,
prior to the Closing Date, of any changes in the information contained in the
Corresponding Schedules or Corresponding Exhibits or in any document or
information supplied to the Buyer pursuant to a Corresponding Schedule. Such
information shall be deemed to amend such Corresponding Schedules, and, to the
extent the Seller first becomes aware of such information after the date of this
Agreement, shall not be deemed a breach of this Agreement.
7.11 COVENANT NOT TO COMPETE. The Seller agrees that for a period of
four years after the Closing Date, neither it, any of the Seller Subsidiaries,
nor any Affiliate shall, directly or indirectly, own, manage, operate, join,
control or participate in the ownership, management, operation or control of any
business whether in corporate, proprietorship or partnership form or otherwise
as more than a five percent (5%) owner in such business where such business is
competitive with the Business as conducted on or prior to the Closing Date (a
"Competitive Business). The covenant contained in the immediately preceding
sentence shall not be deemed to have been violated by any sale by the Seller,
any of the Seller Subsidiaries or any Affiliate, of fasteners or retaining rings
sold either (a) as a component of a larger product sold by such Seller, Seller
Subsidiary or Affiliate or (b) as a replacement part for a component of a larger
product sold by such Seller, Seller Subsidiary or Affiliate, so long as such
fasteners or retaining rings are not manufactured by Seller, any of the Seller
Subsidiaries or any Affiliate. The provisions of this Section 7.11 shall not
prevent the Seller, any of the Seller Subsidiaries, or any Affiliate from
acquiring a business engaged in a Competitive Business (an "Acquired Business");
provided that such Competitive Business constitutes less than 20% of the
revenues of the Acquired Business. If Seller, any Seller Subsidiaries or any
Affiliate acquires an Acquired Business, then Seller shall promptly notify Buyer
of such transaction and afford Buyer the opportunity to make an offer to
purchase the Competitive Business. Seller shall consider Buyer's offer for such
Competitive Business in good faith, but shall not be under any obligation to
accept such offer. The Seller specifically acknowledges and agrees that the
remedy at law for any breach of this Section 7.11 will be inadequate and that
the Buyer, in addition to any other relief available to it, shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damage. In the event that the provisions of this Section 7.11 should ever
be deemed to exceed the limitation provided by applicable law, then the Parties
agree that such provisions shall be reformed to set forth the maximum
limitations permitted.
7.12 ASSIGNMENT OF CONFIDENTIALITY AGREEMENTS. At Closing, subject to
the exceptions set forth below in this Section 7.12, the Seller shall assign to
the Buyer all of the Seller's right, title and interest in each confidentiality
agreement entered into by Seller or its Subsidiaries or Affiliates and each
entity (other than Buyer or its Subsidiaries or Affiliates) to whom confidential
information was
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provided in connection with the sale of the Business (collectively, the "Sale
Confidentiality Agreements"). Notwithstanding the foregoing, (i) the Seller
shall not assign, and shall retain, all right, title and interest with respect
to the provisions of Sections 11, 12, 13 and 14 of each of the Sale
Confidentiality Agreements and (ii) both the Seller and the Buyer shall have the
benefit of the provisions of Section 15 of each of the Sale Confidentiality
Agreements.
ARTICLE 8
COVENANTS OF THE BUYER
The Buyer covenants and agrees with the Seller as follows.
8.1 COMPLIANCE WITH CONDITIONS. The Buyer shall use its reasonable
efforts to cause the conditions in Article 13 to be satisfied at or prior to the
Closing Date.
8.2 COOPERATION IN OBTAINING CONSENTS. The Buyer shall take all steps
reasonably requested by the Seller to help secure the consents and approvals
referred to in Section 7.4 hereof.
8.3 HSR/COMPETITION ACT FILINGS; OTHER GOVERNMENTAL FILINGS.
(a) The Buyer, within five business days following the date of this
Agreement, or as the Buyer and the Seller may otherwise agree, will submit (i)
to the United States Department of Justice and the Federal Trade Commission all
of the requisite forms and information required of Buyer and the Buyer
Subsidiaries and applicable to this transaction under the HSR Act and (ii) all
filings required of Buyer and the Buyer Subsidiaries to be made under the
Competition Act (Canada) to the Commissioner of Competition and/or other
governmental authority under such Act and the Investment Canada Act. Following
such submissions, the Buyer shall respond promptly to any appropriate request by
any of such agencies or authorities for additional information or data and shall
take such other reasonable actions as may be required or necessary in order to
comply with such laws. The Buyer will pay all filing fees in connection with
filings and submissions under the Competition Act. Each Party will pay its own
filing fees in connection with filings and submissions under the HSR Act. The
Buyer will request early termination of the applicable waiting period
requirements under the HSR Act.
(b) The Buyer shall also comply with the laws of any country and
province, including Canada, which are applicable to the transactions
contemplated by this Agreement and pursuant to which governmental notification
and/or approval of such transactions is required. The Seller and the Buyer shall
cooperate in providing any requisite information and data regarding the Seller
or the Buyer, as the case may be, and making such filings as may be required in
any such jurisdictions in connection with obtaining any required governmental
approval or providing any required notice and shall take such other reasonable
actions as may be required or necessary in order to comply with such laws.
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8.4 MAKE RECORDS AND PERSONNEL AVAILABLE. From and after the Closing
Date, the Buyer shall make available to the Seller, from time to time as the
Seller may reasonably request, employees of the Business and copies of such of
the records transferred to the Buyer by the Seller pursuant to this Agreement as
may be reasonably required to enable the Seller to defend against or assert
claims related to or arising from ownership of the Transferred Assets or the
conduct of the Business by the Seller and the Seller Subsidiaries prior to the
Closing Date and to handle tax and financial audits involving the Division or
the Business thereof; provided, however, that the Seller agrees to hold such
records in confidence, except to the extent required to defend or assert such
claims and to handle such audits, and to return the same to the Buyer promptly
upon the conclusion of their use by the Seller for the purposes herein specified
and the Seller shall reimburse the Buyer or any Buyer Subsidiary for reasonable
expenses incurred by any employees of the Buyer or any Buyer Subsidiary who may
be made available to the Seller in accordance with the foregoing.
8.5 BUYER QUALIFICATION. The Buyer and each Buyer Subsidiary shall
be qualified under applicable Canadian or other foreign law to accept the
portion of the Transferred Assets to be accepted by the Buyer or such Buyer
Subsidiary.
8.6 LONDON SALES OFFICE. The Buyer shall establish office space in
the United Kingdom for the sales personnel of the Business currently located in
the United Kingdom at such location and upon such terms and conditions as Buyer
shall determine in its sole discretion. The Buyer acknowledges that the Seller's
current arrangements for such office space with respect to the Business shall
terminate as of the Closing Date.
8.7 OPERATION COVENANT.
(a) The Buyer shall within 12 months of the Closing Date (i) form
the Engineered Components Division, consisting of the operations of the Seller's
Engineered Fasteners Division in its Massillon Facility, Brunswick Facility and
Hamilton Facility, together with the Buyer's operations at The Palnut Company
("Palnut"), under the direction of those senior managers of the Engineered
Fasteners Division who execute employment agreements with a Buyer Subsidiary on
or prior to the Closing Date and who do not thereafter terminate their
respective employment agreements of their own accord at any time after the
Closing or are terminated for cause under those agreements (the "Existing
Management Team"), and reporting to the President of the Domestic Industrial
Products Group of the Buyer and (ii) consolidate the operations of the
respective sales offices located in Southfield, Michigan of Palnut and the
Engineered Fasteners Division. Thereafter during the period expiring on the
third anniversary of the Closing Date, the Buyer shall implement and/or maintain
(A) the Engineered Components Division with headquarters at the Brunswick
Facility, managed by the Existing Management Team and reporting to the President
of the Domestic Industrial Products Group of the Buyer, (B) the consolidated
Southfield, Michigan sales office, (C) the consolidation of accounts receivable,
customer service, sales and marketing activities for the facilities of the
Engineered Fasteners Division and Palnut into the Brunswick Facility, (D)
operation of the facilities at the present locations in Massillon, Brunswick and
Hamilton and (E) employment levels substantially consistent with operations as
they existed on the Closing Date at the facilities identified in the preceding
clause (D).
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(b) The Buyer shall be relieved of its obligations under this
Section in the event the Facilities fail to achieve 90% of the forecasted net
sales set out in Chart B, Summary Pro Forma Financial Results, of the Tinnerman
Engineered Fasteners Confidential Information Memorandum dated April 1999.
(c) The Buyer agrees that, in the event that the Buyer materially
breaches any of the covenants set out in this Section, the Buyer shall pay the
amount of $2,500,000 (the "Damages Amount") into an account to be distributed,
in a form and manner to be agreed upon jointly by the Buyer and the Seller in
good faith, among employees who were employed at the Facilities and the
Southfield, Michigan sales office on the Closing Date and who continued to be so
employed as of the time of such breach or who were terminated without cause
within 60 days prior to the time of such breach. The Damages Amount shall
constitute liquidated damages to the reputation of the Seller and not a penalty,
the parties hereby acknowledging and agreeing that the amount of the Seller's
actual damages in the event of a breach by the Buyer of this Section would be
difficult if not impossible to ascertain, and that the establishment of an
account for the benefit of the employees described above in the amount set out
herein constitutes both a reasonable estimate of the harm the Seller would
suffer and an appropriate remedy therefor. The establishment of such account
shall be the sole and exclusive remedy of the Seller with respect to any breach
by the Buyer of its obligations under this Section. Without limiting the general
applicability of Section 23.6 of this Agreement to the other terms and
provisions of this Agreement, the provisions of Section 23.6 shall apply to the
provisions of this Section.
(d) If the Seller believes that the Buyer has breached any of the
covenants set forth in this Section, then the Seller may give written notice
thereof to the Buyer. Within 15 calendar days after receipt of such notice, the
Buyer shall by written notice to the Seller either concede liability or deny
liability. If the Buyer fails to give written notice denying liability within
such 15-day period, the Buyer shall be deemed to have conceded liability. If the
Parties are not able to resolve any dispute over a claim brought under this
Section 8.7 within 15 days after the Seller receives written notice from the
Buyer denying liability, the Parties shall submit the dispute to the dispute
resolution procedure set forth in Article 22. In the event that it is determined
that the Buyer has liability under this Section, the Parties shall negotiate in
good faith to reach agreement with respect to the form and manner in which the
Damages Amount shall be distributed to the employees described in paragraph (c)
of this Section. If the Parties cannot reach such agreement within 15 days after
the determination of the Buyer's liability, the Parties shall submit the dispute
to the dispute resolution procedure set forth in Article 22. Within 10 calendar
days after the Parties reach agreement with respect to the form and manner in
which the Damages Amount shall be distributed or, in the event of a dispute,
within 10 calendar days after resolution of such dispute, the Buyer shall pay
the Damages Amount into the account described in paragraph (c) of this Section.
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ARTICLE 9
MUTUAL COVENANTS
9.1 GST ELECTION. Eaton Yale and the Buyer agree to jointly elect
under Section 167 of the GST Legislation to have Subsection 167(l.1) of the GST
Legislation apply to the sale under this Agreement. The Buyer shall file the
election in the manner and within the time prescribed by the GST Legislation. In
the event that an election under Section 167 of the GST Legislation cannot be
validly made, or Revenue Canada does not accept in whole or in part such an
election, the Buyer (i) shall pay to Eaton Yale, in addition to any amounts
payable by the Buyer under this Agreement, all goods and services tax payable
pursuant to the GST Legislation on or in respect of the property and services
supplied hereunder including, without limitation, such tax calculated on or in
respect of the value of the consideration paid or payable by the Buyer under
this Agreement, and (ii) shall indemnify and save harmless Eaton Yale from any
penalties and interest which may be payable by or assessed against the Seller or
Eaton Yale under the GST Legislation due to the supplies made under this
Agreement not being eligible for the Section 167 election.
9.2 ELECTION REGARDING ACCOUNTS RECEIVABLE. Eaton Yale and the Buyer
shall, as soon as possible after the Closing Date, jointly execute an election
under Section 22 of the Income Tax Act (Canada) as to the sale of the Accounts
Receivable sold by Eaton Yale, shall designate therein the face value of the
Accounts Receivable sold by Eaton Yale and the applicable portion of the
Purchase Price, consistent with the provisions of Section 4.4, as the
consideration paid by the Buyer therefor and shall each file such election with
Revenue Canada forthwith after execution thereof (and, in any event, with their
respective Canadian income tax returns for the year of sale) to make such
election.
9.3 TRANSITIONAL SERVICES AGREEMENT. At Closing, the Seller and the
Buyer shall enter into a Transitional Services Agreement (if required) in
substantially the form set forth on the Corresponding Exhibit, with such
additions to Schedule A thereto as shall be mutually agreed and with such
deletions to Schedule A thereto as Buyer shall notify Seller not less than 10
days prior to the Closing Date (the "Services Agreement"). The Services
Agreement relates to the provision of certain services by the Seller for the
Buyer on an interim basis following the Closing Date.
9.4 PAYMENTS RECEIVED. The Seller and the Buyer agree that, after the
Closing Date, they shall hold and shall promptly transfer and deliver to the
other, from time to time as and when received by them and in the currency
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing Date which properly belongs to the other
Party, including, without limitation, any payments of accounts receivable and
insurance proceeds, and shall account to the other for all such receipts. From
and after the Closing Date, the Buyer shall have the right and authority to
endorse without recourse the name of the Seller or any of the Seller
Subsidiaries on any check or any other evidences of indebtedness received by the
Buyer on account of the Business and the Transferred Assets transferred to the
Buyer under this Agreement. In the event of a dispute between the Parties
regarding their respective obligations hereunder, the Parties shall cooperate
and
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act in good faith to promptly resolve such dispute and, in connection with such
cooperation, allow each other reasonable access to the records of the other
relating to such disputed item.
9.5 FURTHER ASSURANCES. From time to time after the Closing Date,
the Buyer and the Seller shall, and the Seller shall cause the Seller
Subsidiaries to, at its own expense, execute and deliver, or cause to be
executed and delivered, all such other instruments, including instruments of
conveyance, assignment and transfer and to make all filings with and to obtain
all consents, approvals or authorizations of any governmental or regulatory
authority or any other Person under any Permit and take all such other actions
as such Party may reasonably be requested to take by the other Party to this
Agreement, consistent with the terms of this Agreement, in order to effectuate
better the provisions and purposes of this Agreement and the transactions
contemplated by this Agreement.
9.6 CERTAIN TAX PAYMENTS AND RETURNS. Each of the Seller and the
Buyer shall be responsible for the preparation and filing of any tax returns
which it is required by law to file. If either Party receives a refund of taxes
that is an asset of the other Party subsequent to the Closing, the receiving
Party shall pay such refund to the other Party within two business days after
receipt (reduced by the amount of income taxes, if any, imposed on such
receiving Party on account of the refund).
9.7 COVENANT REGARDING PERSONNEL.
(a) Except as contemplated by Section 10.1 of this Agreement, the
Seller agrees that, for a period of two years after the Closing, it shall not,
and shall cause the Seller Subsidiaries and Affiliates not to, without first
obtaining the written consent of the Buyer, which consent may be withheld for
any reason, directly or indirectly solicit or attempt to solicit any person who
is employed by the Buyer or the Buyer Subsidiaries or Affiliates in the Business
to leave his or her employer or to become an employee of the Seller or any of
the Seller Subsidiaries or Affiliates. The foregoing shall not prohibit (i) the
Seller or the Seller Subsidiaries or Affiliates from soliciting or employing any
individual who has received notice of termination from, or ceases to be employed
by, the Buyer or the Buyer Subsidiaries or Affiliates prior to the first time
such individual discussed with any representative of the Seller or the Seller
Subsidiaries or Affiliates employment by such party, and (ii) the Seller or the
Seller Subsidiaries or Affiliates from employing an individual who responds to a
general solicitation of employment by such party.
(b) Except as contemplated by this Agreement, the Buyer agrees that,
for a period of two years after the Closing, it shall not, and shall cause the
Buyer Subsidiaries and Affiliates not to, without first obtaining the written
consent of the Seller, which consent may be withheld for any reason, employ, or
offer employment to any current or former employee of the Seller or any of the
Seller Subsidiaries or Affiliates, including without limitation (i) any Division
Employee who does not become a Transferred Employee for any reason, including,
without limitation, because of his refusal of the Buyer's offer of employment
pursuant to Section 10.1, or (ii) any former employee of the Business whose
employment with the Seller or a Seller Subsidiary previously terminated for any
reason, including without limitation, retirement under any pension plan of the
Seller or a Seller Subsidiary on or prior to the Closing. Except with respect to
current or former employees of the
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Business, the foregoing sentence shall not prohibit (i) the Buyer or the Buyer
Subsidiaries or Affiliates from soliciting or employing any individual who has
received notice of termination from, or ceases to be employed by, the Seller or
the Seller Subsidiaries or Affiliates prior to the first time such individual
discussed with any representative of the Buyer or the Buyer Subsidiaries or
Affiliates employment by such party, and (ii) the Buyer or the Buyer
Subsidiaries or Affiliates from employing an individual who responds to a
general solicitation of employment by such party.
9.8 SUPPLY AGREEMENT. For a period of 18 months after the Closing
Date, the Buyer shall cause the Business to continue to sell to the Seller and
its Affiliates any and all products presently supplied by the Business to other
businesses of the Seller and its Affiliates. Such products shall be sold upon
the same terms and conditions as presently apply and at the same prices
presently charged by the Business for such products, except to the extent that
(i) different prices are agreed upon by the Parties or (ii) the price of a
particular product is increased to all customers.
9.9 ASSIGNMENT AND ASSUMPTION OF REAL PROPERTY LEASES. At Closing,
the Seller and the Buyer shall enter into an Assignment and Assumption of Lease
in the form set forth on the Corresponding Exhibit with respect to each lease
for the Leased Real Property (collectively, the "Leased Real Property Assignment
and Assumption Agreements").
9.10 GUARANTEE OF PERFORMANCE.
(a) The Buyer hereby irrevocably and unconditionally guarantees to
the Seller the full, faithful and prompt performance by the Buyer Subsidiaries
of all obligations, when due, which are, by this Agreement, obligations of (i)
the Buyer Subsidiaries or (ii) the Buyer, but which have been assigned or
transferred to the Buyer Subsidiaries, whether such obligations are in the
nature of the payment of money, the providing of services or otherwise ("Buyer
Obligations"). The obligations of the Buyer hereunder are direct and primary and
shall not be discharged until all of the Buyer Obligations have been discharged
by the Buyer Subsidiaries or the Buyer, and such obligations of the Buyer
hereunder shall not be discharged, released or affected by any bankruptcy,
insolvency, dissolution, liquidation, reorganization or similar circumstances of
or relating to the Buyer Subsidiaries.
(b) The Seller hereby irrevocably and unconditionally guarantees to
the Buyer the full, faithful and prompt performance by the Seller Subsidiaries
of all obligations, when due, which are, by this Agreement, obligations of (i)
the Seller Subsidiaries or (ii) the Seller, but which have been assigned or
transferred to the Seller Subsidiaries, whether such obligations are in the
nature of the payment of money, the providing of services or otherwise ("Seller
Obligations"). The obligations of the Seller hereunder are direct and primary
and shall not be discharged until all of the Seller Obligations have been
discharged by the Seller Subsidiaries or the Seller, and such obligations of the
Seller hereunder shall not be discharged, released or affected by any
bankruptcy, insolvency, dissolution, liquidation, reorganization or similar
circumstances of or relating to the Seller Subsidiaries.
9.11 JOINT ENVIRONMENTAL INVESTIGATION. Promptly after the signing of
this Agreement, the Buyer and the Seller shall retain a mutually agreeable
environmental consulting and engineering firm
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to conduct the site investigation at the Massillon Facility described in the
Corresponding Exhibit to this Section 9.11 ("Supplemental Phase II"), and they
shall jointly direct and share equally the cost thereof. The Parties further
covenant that neither the consulting firm nor project manager selected for the
Supplemental Phase II shall thereafter be engaged to conduct either any further
site investigation or any remedial or other response activity at the Massillon
Facility without the written concurrence of both Parties.
ARTICLE 10
EMPLOYEES AND EMPLOYEE BENEFITS
10.1 OFFER OF EMPLOYMENT. The Buyer shall offer, and agrees to cause
the Buyer Subsidiaries to offer, immediate employment (so that no period of
unemployment shall occur between employment with the Seller or a Seller
Subsidiary prior to the Closing and employment with the Buyer or a Buyer
Subsidiary on and after the Closing) to all of the Division Employees,
including, without limitation, the Inactive Employees, other than those Division
Employees identified on the Corresponding Schedule, with such employment to
commence on the Closing. Employment for Division Employees who are subject to
the Collective Bargaining Agreements shall be offered on the terms and
conditions of the Collective Bargaining Agreements. The Buyer shall become a
signatory to, and shall assume all obligations of the Seller and the Seller
Subsidiaries under, the Collective Bargaining Agreements. Employment for
Division Employees who are not subject to a Collective Bargaining Agreement (the
"Non-Union Division Employees") shall be offered on terms and conditions which
are substantially similar in the aggregate (without taking into account the
post-retirement welfare benefits provided by the Seller and the Seller
Subsidiaries) to such terms and conditions provided for and on behalf of such
Division Employees immediately prior to the Closing by the Seller or a Seller
Subsidiary in accordance with the Seller's or a Seller Subsidiary's then
established plans, programs, practices, and arrangements. Further, the
employment terms and conditions described in the preceding sentence, except as
otherwise provided in this Article 10, shall be continued on a comparable basis
in all material respects for a period of at least three years following the
Closing. The Division Employees whose employment is transferred on an
uninterrupted basis from the Seller or a Seller Subsidiary to the Buyer or a
Buyer Subsidiary as a result of the Closing and the acceptance of the Buyer's
offer of employment by each such Division Employee shall be hereinafter referred
to as "Transferred Employees."
10.2 SEVERANCE PAYMENT RESPONSIBILITIES. The Corresponding Schedule
identifies or sets forth a description of the Seller's severance obligations,
plans, programs and/or policies as related to the Non-Union Division Employees
of the Business. As of and after the Closing, the Buyer shall assume all
liabilities, responsibilities, and obligations for severance payments or other
separation benefits to which any Non-Union Division Employee who becomes a
Transferred Employee may be or become entitled or claim to be entitled as a
result of the Buyer's acquisition of the Business,
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including, without limitation, any such claim which might be made against either
the Seller or any Seller Subsidiary or the Buyer or any Buyer Subsidiary at any
time:
(a) by such Transferred Employee because of the transfer of
his employment from the Seller or any Seller Subsidiary to the Buyer or
any Buyer Subsidiary;
(b) because of any action(s) taken by the Buyer or the Buyer
Subsidiaries as of or after the Closing, including, without limitation,
any termination of such Transferred Employee's employment with the
Buyer or the Buyer Subsidiaries, or any change which the Buyer or the
Buyer Subsidiaries may make in such Transferred Employee's
compensation, fringe benefit coverage, or employment position; or
(c) by any such Transferred Employee or by any "qualified
beneficiary" (as defined under COBRA) with respect to such Transferred
Employee (a "Qualified Beneficiary") for any claim made for
continuation of benefits pursuant to COBRA.
The severance payments and separation benefits provided by the Buyer to
any Transferred Employee as of and after the Closing shall be substantially
similar in the aggregate to the payments and benefits that would have been
provided to such Transferred Employee under the obligations, plans, programs and
policies described in the Corresponding Schedule. If any Transferred Employee
claims to be, or becomes, entitled to any severance pay benefits, or other
separation benefits or payments of any sort, from the Seller or a Seller
Subsidiary or otherwise, as a result of the Buyer's acquisition of the Business,
the Buyer agrees to, and shall, indemnify and hold harmless the Seller and the
Seller Subsidiaries from and against any and all expenses, liabilities,
obligations, and costs of any sort associated therewith.
10.3 WELFARE BENEFIT RESPONSIBILITIES.
(a) The Plans, programs, practices and arrangements for welfare
and/or fringe benefits provided by the Seller or a Seller Subsidiary to or with
respect to the Division Employees and/or Qualified Beneficiaries immediately
prior to the Closing are listed on the Corresponding Schedule (the "Seller
Welfare Plans"). Except as otherwise provided pursuant to the terms of a
Collective Bargaining Agreement, the Buyer shall establish and maintain a
program of welfare and fringe benefits to satisfy its obligations as provided in
Section 10.1 above (the "Buyer Welfare Plans"), for the Eligible Individuals (as
defined below) commencing on the Closing, as follows: (1) the medical, dental
and health benefits provided to Eligible Individuals shall be substantially
similar in the aggregate (without taking into account the post-retirement
welfare benefits provided by the Seller and the Seller Subsidiaries) to those
provided under the Seller Welfare Plans and shall be provided without evidence
of insurability or any pre-existing physical or mental condition restrictions,
subject to Section 10.3(g) below, other than any such restrictions in effect for
any Eligible Individual immediately prior to the Closing under the Seller
Welfare Plans and without any increase in the contribution required to be paid
by such Eligible Individual based upon the contribution schedules under the
Seller Welfare Plans immediately prior to the Closing; and (2) welfare and
fringe benefits other than those described in clause (1), above, shall be
provided to the Eligible Individuals on a basis that is substantially similar in
the aggregate (without taking into account the post-retirement
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welfare benefits provided by the Seller and the Seller Subsidiaries) to the
benefits provided under the Seller Welfare Plans immediately prior to the
Closing. Any Eligible Individual's period of employment with the Seller and/or
any Seller Subsidiary, or any predecessor employer thereof, and any and all
periods of any Eligible Individual's coverage under, and/or participation in,
the Seller Welfare Plans shall be deemed to be employment with the Buyer, and
coverage under and/or participation in, the Buyer Welfare Plans, respectively,
for all purposes of establishing such Eligible Individual's eligibility for
participation and benefit entitlement under the Buyer Welfare Plans. The extent
to which an Eligible Individual (either as an individual or as a family member)
has satisfied in whole or in part any Seller Welfare Plan annual deductible, or
has paid any out-of-pocket expenses pursuant to any Seller Welfare Plan
co-insurance provision, shall be counted toward the satisfaction of any
applicable deductible or out-of-pocket expense maximum, respectively, under any
of the Buyer Welfare Plans. Such provision of welfare benefits by the Buyer
shall be applicable to the payment of any otherwise eligible benefit claim which
is incurred on or after the Closing, except as may otherwise be provided in the
following Section 10.3(b). For the purpose of this Article 10, the term
"Eligible Individuals" shall mean (i) the Transferred Employees, (ii) any
Qualified Beneficiary, and (iii) the dependents and/or other beneficiaries of
the Transferred Employees, who were eligible for any such welfare benefit
coverage under and pursuant to the Seller Welfare Plans immediately prior to the
Closing, or who would have become so eligible on or after the Closing in
accordance with the eligibility and participation provisions of the Seller
Welfare Plans. To assist the Buyer and the Buyer Subsidiaries in satisfying the
requirements of this Section 10.3(a) as to medical, dental and health benefits,
the Seller shall, or shall cause a Seller Subsidiary to, provide the Buyer and
the Buyer Subsidiary with access to the applicable Seller Welfare Plans during
the Welfare Transition Period (as defined below) such that the provision of such
benefits by the Buyer for the Eligible Individuals shall be provided through the
applicable Seller Welfare Plans, provided that the Buyer pays the Seller the
monthly Coverage Cost (as defined below) for such benefits. For purposes of this
Section 10.3(a): (i) the term "Welfare Transition Period" means the period
calendar months beginning on the Closing and ending on the last day of the
calendar month for which the Coverage Cost has been paid to the Seller except
that in no event shall the applicable Seller Welfare Plans pay benefits with
respect to claims Incurred (as defined below) after December 31, 1999; and (ii)
the term "Coverage Cost" is the amount determined by Seller in good faith to be
the actual claims Incurred on or after the Closing and paid during a given month
in connection with providing the coverage to the Eligible Individuals, plus 8%
to cover administrative costs. For any month in the Transition Period, Seller
shall provide the Buyer with a written statement of the Coverage Cost for such
month and, within five (5) business days after receipt of such written
statement, the Buyer shall pay Seller the Coverage Cost indicated thereon.
Subject to the requirement that the Seller and the Seller Subsidiaries shall
administer the Seller Welfare Plans in good faith in accordance with their
terms, Buyer agrees to, and shall, indemnify and hold harmless the Seller and
the Seller Subsidiaries from and against any and all expenses, liabilities,
obligations and costs of any sort associated therewith involving any claim or
claim dispute with respect to the coverage of any Eligible Individual during the
Welfare Transition Period, whether asserted by the Eligible Individual or any
third party, which is or relates to a claim that is Incurred on or after the
Closing. For purposes of the preceding sentence, a claim is "Incurred" at the
time the goods and materials are actually provided to or the services are
performed for the individual. Any amounts paid or payable from the Buyer to the
Seller under this Section 10.3(a) shall not be subject to Section 19.3 or
Section 19.10 and shall be disregarded entirely in applying such Sections.
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(b) Notwithstanding the preceding Section 10.3(a), the Seller shall
retain all liabilities, responsibilities, and obligations under the applicable
Seller Welfare Plans on the basis of the eligibility and benefit entitlement
provisions of such Seller Welfare Plans as in effect immediately prior to the
Closing, with respect to any Eligible Individual for the provision of:
(i) life, accidental death and dismemberment, and/or business
travel accident insurance benefits which may become payable with
respect to any qualified death or accident of such Eligible Individual
which occurs prior to the Closing;
(ii) salary continuation or other short-term disability
benefits which may become payable with respect to any qualified
disability of such Eligible Individual which commenced prior to the
Closing, but only for such benefits payable for any period of such
qualified disability, which period occurred prior to the Closing;
(iii) long-term disability benefits payable with respect to
any qualified disability of such Eligible Individual which commenced
prior to the Closing and continues thereafter on an uninterrupted
basis, provided that the claim for such benefits was filed and properly
approved under the applicable Seller Welfare Plan prior to the Closing;
and
(iv) hospital, medical, and/or dental care benefits which may
become payable with respect to any goods, supplies and/or services
which are actually provided to the Eligible Individual prior to the
Closing.
(c) The Seller and the Buyer agree that except as otherwise
specifically provided pursuant to Section 10.3(a), the preceding Section 10.3(b)
and the following Section 10.3(d):
(i) welfare benefit coverage of the Eligible Individuals under
the Buyer Welfare Plans pursuant to this Section 10.3 shall for all
purposes, including, without limitation, the Buyer's provision of
welfare benefit continuation coverage pursuant to COBRA, commence as of
the Closing, and coverage and eligibility of the Eligible Individuals
for welfare benefit coverage or payments under any applicable Seller
Welfare Plan, including, without limitation, COBRA continuation
coverage, shall cease as of the day immediately prior to the Closing;
and
(ii) on and after the Closing no welfare benefit coverage of
any kind shall be provided, and no welfare benefits of any kind shall
be paid, for or on behalf of any Eligible Individual under any Seller
Welfare Plan.
(d) The Seller and/or the Seller Subsidiaries shall retain all
responsibility, obligation and liability with respect to the provision of
post-retirement welfare benefits provided under the Seller Welfare Plans to
individuals who, prior to the Closing, retired from employment with the Division
and/or any former Division facility or operation on a basis entitling them to
such benefits, and the dependents and beneficiaries of such individuals. The
Seller shall assume responsibility and retain
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liability for post-retirement welfare benefit coverage for Future Division
Retirees (as defined below) as follows:
(i) Future Division Retirees (and their dependents and
beneficiaries as of the Closing) shall be provided with
post-retirement welfare benefits under the terms and conditions of the
applicable Seller Welfare Plan as in effect, from time to time, and
subject to any changes or modifications made subsequent to the
Closing, as if continuous and uninterrupted employment ending with
retirement from the Buyer or a Buyer Subsidiary were employment with
and retirement from Seller or a Seller Subsidiary, except as provided
in clause (ii) below; and
(ii) solely for purposes of determining any required
contribution levels by Future Division Retirees for post-retirement
welfare benefit coverage under the Seller Welfare Plan, service or
employment with the Buyer or a Buyer Subsidiary shall be disregarded.
For purposes of this Section 10.3(d) the term "Future Division Retirees" means a
Non-Union Division Employee who both:
(i) becomes a Transferred Employee; and
(ii) after the Closing, retires from employment with the Buyer
or a Buyer Subsidiary in a Qualifying Retirement.
For purposes of this Section 10.3(d), a "Qualifying Retirement" means, after
treating the individual's continuous and uninterrupted employment with the Buyer
or a Buyer Subsidiary and his/her retirement circumstances with the Buyer or a
Buyer Subsidiary as if, in each case, it were employment and retirement
circumstances with the Seller or a Seller Subsidiary, either: (i) the individual
actually retires from employment with the Buyer or a Buyer Subsidiary during the
period after the Closing and ending on the fifth anniversary of the day before
the Closing under circumstances which, if such continuous and uninterrupted
employment, retirement and retirement circumstance occurred with Seller or a
Seller Subsidiary, the individual would have met the eligibility requirements
for post-retirement welfare benefit coverage under Seller's Welfare Plans (and
the rules and regulations thereunder); or (ii) the individual retires after the
fifth anniversary of the day before the Closing, but would have been eligible as
described in clause (i) above had the individual's actual retirement date
occurred on or before such fifth anniversary (taking into account the
individual's service and age at such fifth anniversary and whether the
individual's subsequent actual retirement was voluntary or involuntary).
(e) With respect to the post-retirement welfare benefits payable to
or with respect to any current or former Division Employee who is or was subject
to a Collective Bargaining Agreement, the Buyer and/or the Buyer Subsidiaries
shall assume and bear all responsibilities, obligations and liabilities of the
Seller and any Seller Subsidiary with respect thereto and, from and after the
Closing, the Buyer and the Buyer Subsidiary shall be bound by and subject to the
applicable requirements of collective bargaining with respect thereto.
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(f) Any individual who is eligible for welfare benefit coverage
under any welfare plan maintained by the Buyer or a Buyer Subsidiary, without
regard to whether such individual is actually covered thereunder, shall not be
eligible for post-retirement welfare benefit coverage under the Seller's Welfare
Plans while he/she is so eligible under the Buyer or the Buyer Subsidiary
welfare plan.
(g) The Buyer and the Buyer Subsidiaries shall use their best efforts
to obtain insurance coverage consistent with the evidence of insurability and
the pre-existing condition requirements of the second sentence of Section
10.3(a) ("Insurability/Pre-Existing Condition Coverage"). In the event that the
Buyer and the Buyer Subsidiaries cannot, after using the best efforts described
in the preceding sentence, obtain insurance coverage that includes the
Insurability/Pre-Existing Condition Coverage for one or more Eligible
Individuals on a basis such that the aggregate premium for the entire group of
Eligible Individuals is acceptable to the Buyer, the Buyer shall promptly notify
the Seller of this circumstance. Upon receipt of the notice described in the
preceding sentence, the Seller shall promptly take reasonable steps to assist
the Buyer in identifying alternative opportunities for obtaining insurance
and/or HMO coverage for the group of Eligible Individuals that includes the
Insurability/Pre-Existing Condition coverage. In the event that one or more of
such alternative opportunities presented by the Seller to the Buyer provide
coverage on a basis that is consistent with the Insurability/Pre-Existing
Condition Coverage requirement of Section 10.3(a), the Buyer shall accept any
such alternative coverage (at its expense), but only if the projected aggregate
annual premium for the entire group of Eligible Individuals does not exceed the
projected aggregate annual premium for the group coverage for the Eligible
Individuals as quoted with any legally permissible exclusions from and/or
exceptions to the required Insurability/Pre-Existing Condition Coverage, by not
more than fifteen percent (15%) or such greater percentage as is acceptable to
the Buyer. If the group coverage that includes the Insurability/Pre-Existing
Condition Coverage is not mandated or accepted by the Buyer under the preceding
sentence, the Seller shall, under the Seller Welfare Plans, provide coverage
(for affected Eligible Individuals) for that portion of the coverage otherwise
required to be provided by the Buyer and/or a Buyer Subsidiary for the
Insurability/Pre-Existing Condition Coverage not available under the Buyer
and/or the Buyer Subsidiary Welfare Plans based upon a legally permissible
exclusion from or exception to the Buyer's insurance or HMO coverage in place
for the group of Eligible Individuals, subject to the following:
(i) The Buyer shall reimburse to the Seller the full amount of
the first$85,000 of claims paid under the Seller Welfare Plan as to
each affected Eligible Individual (i.e., determined separately with
respect to each such individual and not in the aggregate) during any
twelve-month period pursuant to the foregoing; and
(ii) For claims paid under the Seller Welfare Plan as to each
affected Eligible Individual (i.e., determined separately with respect
to each such individual and not in the aggregate) during such
twelve-month period in excess of the amount described in clause (i)
above, the Buyer shall reimburse to the Seller: (A) sixty percent (60%)
of the next $100,000 of claims paid as to the individual during such
period (i.e., sixty percent (60%) of claims paid as to the individual
that exceed $85,000 by no more than $100,000; and (B) fifty percent
(50%) of all remaining claims paid as to the individual during such
period (i.e., fifty percent (50%) of claims paid as to the individual
in excess of $185,000.
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The Seller shall determine the claims paid for purposes of determining the
foregoing reimbursement obligation of the Buyer in good faith and shall provide
the Buyer with a detailed written statement of such determination at such times
and such frequency as is determined by the Seller, but no less frequently than
quarterly. Within ten (10) business days following receipt of such written
statement, the Buyer shall pay to the Seller the amount shown on such statement.
Any such payment shall not be subject to Section 19.3 or Section 19.10 and shall
be disregarded entirely in applying such Sections.
10.4 SELLER'S RESPONSIBILITIES AND OBLIGATIONS AS TO CERTAIN PENSIONS.
(a) The Seller and/or the Seller Subsidiaries shall retain all
responsibility, obligation and liability with respect to the Pension Plan for
Eaton Corporation Employees ("Seller's U.S. Pension Plan"), the Eaton
Corporation Pension Plan For Salaried Employees of Certain Divisions and Plants
of Eaton Yale Ltd. ("Seller's Canadian Salaried Pension Plan") and the Eaton
Yale Ltd. Pension Plan DF for Hourly-Rate Employees of the Engineered Fasteners
Division ("Seller's Canadian Hourly Pension Plan") (all such plans collectively
referred to as "Seller's Pension Plans").
(b) With respect to Transferred Employees who, immediately prior to
the Closing, are accruing (or most recently have accrued) benefits under
Seller's Canadian Salaried Pension Plan or under Appendix A of Seller's U.S.
Pension Plan ("Transferred Participants"), the benefits payable (and the terms
and conditions related thereto) with respect to each such Transferred
Participant under Seller's Canadian Salaried Pension Plan or under Appendix A of
Seller's U.S. Pension Plan, as the case may be, shall be determined and paid
pursuant to the terms thereof; provided, however, that except as provided in the
next following sentence: (i) continuous and uninterrupted employment with the
Buyer and/or a Buyer Subsidiary from the Closing through the date of the
individual's termination of employment with the Buyer and the Buyer Subsidiaries
(his "Buyer Termination Date") shall be treated as if it were employment for the
Seller and/or a Seller Subsidiary for purposes of determining the Transferred
Participant's level of vesting and eligibility for an early retirement
opportunity thereunder conditioned upon the attainment of a specified level of
service and/or a specified age during employment and for purposes of applying
pension plan provisions regarding the commencement and suspension of benefits;
and (ii) each such Transferred Participant's accrued retirement benefit under
the Seller's Pension Plan immediately prior to the Closing shall, for the period
from the Closing through the individual's Buyer Termination Date, be indexed to
increase at the Index Rate as defined below. The provisions of clause (i) and
(ii) of the preceding sentence shall not apply to a Transferred Participant
claiming a retirement benefit prior to termination of employment with the Buyer
and the Buyer Subsidiaries if eligibility for such benefit otherwise would
require termination of employment with the Seller and the Seller Subsidiaries.
For purposes of this Article 10, the term "Index Rate" means the lesser of: 4%
per annum; or the applicable maximum index rate permitted (i.e., the U.S.
Consumer Price Index and the Canadian Average Industrial Wage).
(c) With respect to Transferred Employees who, immediately prior to
the Closing are accruing (or most recently have accrued) benefits under Seller's
Canadian Hourly Pension Plan ("Transferred Canadian Hourly Participants"), the
benefits payable (and the terms and conditions related thereto) with respect to
each such Transferred Canadian Hourly Participant thereunder shall
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be determined and paid pursuant to the terms thereof, provided, however, that
except as provided in the next following sentence, continuous and uninterrupted
employment with the Buyer and/or a Buyer Subsidiary from the Closing through his
Buyer Termination Date shall be treated as if it were employment for the Seller
and/or a Seller Subsidiary for purposes of determining the Transferred
Participant's level of vesting and eligibility for an early retirement
opportunity thereunder that is conditioned upon the attainment of a specified
level of service and/or a specified age during employment, and for purposes of
applying pension plan provisions regarding the commencement and suspension of
benefits. The employment credit provision described in the preceding sentence
shall not apply to a Transferred Canadian Hourly Participant claiming a
retirement benefit prior to termination of employment with the Buyer and the
Buyer Subsidiaries if eligibility for such benefit otherwise would require
termination of employment with the Seller and the Seller Subsidiaries.
(d) With respect to Division Employees who immediately prior to the
Closing are accruing (or have most recently accrued) benefits under the Appendix
or other portion of the Seller's U.S. Pension Plan consisting of the plan which
previously separately existed as the Eaton Corporation Pension Plan A-3 For
Hourly-Rate Employees of the Engineered Fasteners Operations Massillon Division,
the benefits payable (and the terms and conditions related thereto) shall be
determined and paid pursuant to the terms thereof.
(e) In no event shall any Transferred Employee or Inactive Employee
who becomes an active employee of the Buyer or a Buyer Subsidiary receive under
any Seller Pension Plan any service credit for benefit accrual purposes for any
service with the Buyer and/or a Buyer Subsidiary.
10.5 BUYER'S RESPONSIBILITIES AND OBLIGATIONS AS TO CERTAIN PENSIONS.
(a) As of the Closing, and on or before December 31, 1999, the Buyer
shall or shall cause a Buyer Subsidiary, to establish defined contribution plans
or amend an existing defined contribution plan ("Buyer's DC Plans") to cover the
Transferred Employees and any Inactive Employee who becomes an active employee
of the Buyer or a Buyer Subsidiary other than any such person who is subject to
a Collective Bargaining Agreement (the "Non-Union DC Participants"). The Buyer's
DC Plans shall provide the Non-Union DC Participants with credit for service
with the Seller or a Seller Subsidiary for all purposes for which service is a
criterion. The Buyer's DC Plans shall also provide each Non-Union DC Participant
with a mandatory employer contribution for each Allocation Period (as determined
under Section 10.5(b) below) equal to the individual Non-Union DC Participant's
compensation (measured by wages subject to income tax withholding) for such
Allocation Period multiplied by his/her Required Allocation Percentage (as
defined below) for such Allocation Period. The mandatory contribution described
in the preceding sentence for an Allocation Period: shall not be subject to any
additional terms and/or conditions including, without limitation, terms and/or
condition relating to the profitability of the Buyer and/or the Buyer
Subsidiaries or the individual's level of hours or service during the Allocation
Period or employment status as of the end of the Allocation Period; and shall be
contributed to the applicable Buyer's DC Plan not later than the time prescribed
by law for allowing a tax deduction for the taxable year of the Buyer or the
Buyer Subsidiary, as the case may be, in which or with which such Allocation
Period ends. Any payment
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required to be made by the Buyer under this Section 10.3(a) shall not be subject
to Section 19.3 or 19.10 and shall be disregarded entirely in applying such
Sections.
(b) For purposes of this Section 10.5, the Allocation Periods, taken
together, shall span the five-year period (without gaps or overlap) commencing
on the Closing and ending on the fifth anniversary of the day before the
Closing, with the number of Allocation Periods and duration of each Allocation
Period determined pursuant to the following: (i) the first Allocation Period
shall commence on the Closing; (ii) the last Allocation Period shall end on the
fifth anniversary of the day before the Closing, and (iii) except as
specifically provided in clauses (i) and (ii) above, the beginning and end of
each Allocation Period shall correspond to the beginning and end of each plan
year of the applicable Buyer's DC Plan.
(c) Each Non-Union DC Participant's Required Allocation Percentage
for an Allocation Period shall equal his/her individual Defined Benefit
Equivalency Percentage minus the percentage of the Non-Union DC Participant's
compensation (measured by wages subject to income tax withholding) for the
Allocation Period otherwise contributed and allocated to the account of the
Non-Union DC Participant as an employer contribution with respect to the
Allocation Period (disregarding for this purpose, elective deferrals and
matching contributions) under the Buyer's DC Plans or any other tax-exempt
defined contribution plan of the Buyer or a Buyer Subsidiary.
(d) Each Non-Union DC Participant's individual Defined Benefit
Equivalency Percentage will be set forth on the schedule of the actual Defined
Benefit Equivalency Percentage provided by the Seller to the Buyer prior to the
Closing.
(e) In the event that the mandatory contribution for a Non-Union DC
Participant for an Allocation Period under Section 10.5(a), either standing
alone or in combination with any other contributions, would exceed any
contribution limit, discrimination rule or qualification requirement imposed by
the applicable tax or revenue laws on any such contributions, the mandatory
contribution for such Allocation Period shall be reduced by such excess, and
such excess shall be paid to the affected Non-Union DC Participant in cash not
later than the date the mandatory contribution would otherwise be contributed to
the applicable Buyer DC Plan.
(f) In addition to the foregoing requirements, the Buyer's DC Plan
covering the Non-Union DC Participants who, prior to the Closing, participated
in Seller's Canadian Hourly Pension Plan, shall, at least until the fifth
anniversary of the day before the Closing, be designed, administered and
maintained in a manner such that its existence and administration as a
"registered pension plan" will not directly or indirectly cause the partial or
full termination of the Seller's Canadian Hourly Pension Plan. Further, in the
event that the Buyer or any Buyer Subsidiary takes any action or refrains from
taking any action which, during the period through the fifth anniversary of the
day before the Closing, directly or indirectly causes the Ontario Superintendent
of Financial Services to require the partial or full wind up of Seller's
Canadian Hourly Pension Plan or Seller's Canadian Salaried Pension Plan, the
Buyer agrees to, and shall, indemnify and hold harmless the Seller and the
Seller Subsidiaries from and against any and all expenses, liabilities,
obligations and costs of any sort associated with any such partial or full wind
up (including, without limitation, the present value of any acceleration of
amounts not otherwise due as of the date preceding such partial or full wind-up)
other than expenses, liabilities, obligations and costs that: (1) otherwise
would have
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been paid or incurred in the normal course of plan operation or administration;
(2) result from the requirement under the Ontario Act (or regulations under the
Ontario Act) to separately deal with surplus plan assets; or (3) include or are
associated with plan underfunding to the extent any such underfunding exists
independent of such wind up; provided, however, that the Buyer's indemnification
obligation under this sentence shall be reduced by fifty percent (50%) if such
obligation first arises more than three years after the Closing.
(g) The Buyer shall notify the Seller at the end of each calendar
year quarter following the Closing of the names of any Transferred Employees
whose employment with the Buyer and the Buyer Subsidiaries has been terminated
for any reason during the calendar year quarter immediately preceding such date,
and shall provide to the Seller the reason for and the date of such termination,
and such other information as the Seller requires to administer such
individual's benefit interests under Seller's Pension Plans.
(h) Not later than 180 consecutive calendar days immediately
following the Closing:
(i) the Buyer shall apply for a determination by the Internal
Revenue Service of the United States ("IRS") that Buyer's DC Plan(s)
applicable to U.S. Non-Union DC Participants (as established or amended
pursuant to Section 10.5) and any related trusts qualify under Sections
401(a) and 501(a), respectively, of the Tax Code, and any regulations
issued under or pursuant to the Tax Code; and
(ii) the Buyer shall apply for registration of Buyer's DC
Plan(s) applicable to Canadian Non-Union DC Participants with the
Canadian Department of National Revenue ("Revenue Canada") and the
Financial Services Commission of Ontario ("FSCO") to establish
registration thereof under the Canada Income Tax Act (the "Canada Act")
and the Pension Benefits Act of Ontario ("Ontario Act") and the
applicable regulations under both such Acts;
and the Buyer agrees to act reasonably, promptly and in consultation with the
Seller to revise and/or amend any of Buyer's DC Plans as may be required by the
IRS, Revenue Canada and/or the FSCO in accordance with applicable governmental
requirements for the purpose of obtaining any such qualification or
registration. Copies of such filings by the Buyer or a Buyer Subsidiary (with
appropriate deletions of confidential information not relevant to Seller's
concern for the Transferred Employees) shall be furnished by the Buyer to the
Seller when first made, and a copy of the U.S. determination letter and the
Canadian acceptances of registration shall be furnished by the Buyer to the
Seller within a reasonable period of time following the receipt of each such
letter and acceptances by the Buyer or a Buyer Subsidiary.
(i) Notwithstanding any other provisions of this Agreement, the Buyer
hereby agrees that, through the fifth anniversary of the day before the Closing,
Buyer's DC Plans shall not be terminated or suspended with respect to coverage
thereunder of the Transferred Pension Participants, nor shall any amendment of a
Buyer's DC Plan be made which contradicts this Section 10.5 or otherwise
effectively decreases the total value of benefits to be provided under either
such Plan for any Non-Union DC Participant during such five year period, except
as may be required by the
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applicable governmental agency or by law or regulation to ensure continued
compliance with the Tax Code, ERISA, the Ontario Act or the Canada Act.
(j) To the extent that the aggregate amount contributed to all of
Buyer's DC Plans for an Allocation Period or otherwise paid pursuant to Section
10.5(e) above for such Allocation Period (expressed as each such Non-Union DC
Participant's compensation (measured by wages subject to income tax withholding)
for the Allocation Period multiplied by his/her Defined Benefit Equivalency
Percentage, without reduction under 10.5(c) above) exceeds the contribution
threshold set forth on the Corresponding Schedule (the "Contribution
Threshold"), the Seller shall, at the time described below, pay to the Buyer the
amount of such excess. After actual payment by the Buyer and/or a Buyer
Subsidiary of the aggregate amounts described in the preceding sentence for an
Allocation Period, the Buyer shall provide the Seller with a detailed written
statement explaining the calculation of the individual and aggregate amount of
such payments. Within thirty (30) days following the Seller's receipt of the
written statement described in the preceding sentence, the Seller shall
reimburse to the Buyer the amount determined under the first sentence of this
Section 10.5(j) for such Allocation Period. Any payment required to be made by
the Seller under this Section 10.5(j) shall not be subject to Section 19.3 or
Section 19.10 and shall be disregarded entirely in applying such Sections.
10.6 TRANSFER OF SHARE PURCHASE AND INVESTMENT PLAN RESPONSIBILITIES.
(a) As soon as is reasonably practicable after the Closing Date, and
effective as of the Closing, the Buyer shall or shall cause a Buyer Subsidiary
to establish a new defined contribution plan or amend an existing defined
contribution plan ("Buyer's Investment Plan") for the purpose of covering each
Division Employee and each former employee (and, if applicable, the spouse and
beneficiaries of such former employee) of the Business who, immediately prior to
the Closing, is eligible to be a participant in or has an account under
("Investment Plan Participant") the Eaton Corporation Share Purchase and
Investment Plan ("Seller's Investment Plan"). Buyer's Investment Plan shall be
designed to enable it to accept a transfer of assets and liabilities from the
Seller's Investment Plan in accordance with the applicable ERISA and Tax Code
requirements. The Buyer's Investment Plan will recognize service with the Seller
and the Seller Subsidiaries for all purposes for which service is a criterion in
the Buyer's Investment Plan. As soon as practicable after the Closing Date, the
Seller shall cause the Seller's Investment Plan to transfer and the Buyer shall
cause the Buyer's Investment Plan to accept a transfer of all assets and
liabilities associated with the Investment Plan Participants, with earnings
and/or losses credited to the account balances of such Investment Plan
Participants through a date that precedes the date of transfer by no more than
five business days. The amount transferred under the preceding sentence shall
include elective contributions and matching contributions accrued under the
Seller's Investment Plan through the day before the Closing. With respect to the
portion of an Investment Plan Participant's accounts consisting, as of the day
before the transfer, of plan loans and/or investment in Eaton Corporation common
stock, the transfer contemplated by this Section 10.6 shall be made in the form
of an in kind transfer by the Seller's Investment Plan to the Buyer's Investment
Plan. With respect to Eaton Corporation common stock transferred in kind under
the preceding sentence: (i) Buyer shall cause the Buyer's Investment Plan to
allow the Investment Plan Participants, for a period of eighteen (18) months
after such transfer, and on at least four (4) occasions during such period, to
direct that all or
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a portion of the amounts invested in their respective accounts in Eaton
Corporation common stock be invested in an alternative investment otherwise
available under the Buyer's Investment Plan; (ii) as soon as practicable after
the end of the eighteen month period described in clause (i) above, the Buyer's
Investment Plan shall require that any Eaton Corporation common stock remaining
in the Investment Plan Participant accounts at the end of such period shall be
liquidated and the proceeds reinvested in an alternative investment otherwise
available under the Buyer's Investment Plan selected by the Investment Plan
Participant or, in the absence of a selection, the available default investment
alternative identified by the Seller; and (iii) to the extent that either the
Buyer or any Buyer Subsidiary is found liable for breach of a fiduciary duty
under ERISA with respect to the receipt and/or holding of the Eaton Corporation
common stock by the Buyer's Investment Plan or with respect to the foregoing
provisions of this sentence or a claim to the effect that such a breach has
occurred is made: (A) Seller agrees to, and shall, defend, indemnify and hold
harmless the Buyer and the Buyer Subsidiaries and their respective officers,
directors, employees and agents and the trustee of Buyer's Investment Plan from
and against any and all claims, expenses, liabilities, obligations and costs
related thereto (including, without limitation, attorneys fees and expenses);
and (B) the Seller's indemnification obligation under this sentence shall not be
subject to Section 19.3 or Section 19.10 and shall be disregarded entirely in
applying such Sections. After the transfer date, the Investment Plan
Participants shall only be eligible to receive benefits from, and in accordance
with, the Buyer's Investment Plan.
(b) Not later than December 31, 1999, the Buyer shall or shall cause
the Buyer Subsidiaries to apply for a determination by the IRS that Buyer's
Investment Plan (as established or amended pursuant to this Section 10.6)
qualifies under Sections 401(a) and 501(a), respectively, of the Tax Code, and
any regulations issued under or pursuant to the Tax Code. The Buyer further
agrees to act reasonably, promptly and in consultation with Seller to revise
and/or amend the Buyer's Investment Plan as may be required by IRS in accordance
with applicable governmental requirements for the purpose of obtaining any such
qualification. Copies of such filings by the Buyer or a Buyer Subsidiary (with
appropriate deletions of confidential information not relevant to Seller's
concern for the Transferred Employees) shall be furnished by the Buyer to the
Seller when first made, and a copy of the determination letter shall be
furnished by the Buyer to the Seller within a reasonable period of time
following the receipt of such letter by the Buyer or a Buyer Subsidiary. The
Buyer and the Seller acknowledge that the transfer of assets and liabilities,
respectively, from the Seller's Investment Plan to the Buyer's Investment Plan,
as provided for in this Section 10.6 may occur prior to the Buyer's receipt of a
favorable determination letter from the IRS with respect to the tax
qualification of the Buyer's Investment Plan pursuant to Section 401(a) and
Section 501(a), respectively, of the Tax Code. Accordingly, the Buyer hereby
represents and warrants that the Buyer's Investment Plan, as established and
maintained by the Buyer, will receive such favorable determination letter,
effective retroactively to the Closing, and the Buyer agrees to indemnify the
Seller for any liabilities which the Seller may incur as a result of such
transfer of assets and/or liabilities to the Buyer's Investment Plan, if the
Buyer's Investment Plan is determined by the IRS not to be a tax-qualified Plan.
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10.7 TRANSFER OF SAVINGS PLAN RESPONSIBILITIES.
(a) As soon as is reasonably practicable after the Closing Date, and
effective as of the Closing, the Buyer shall or shall cause a Buyer Subsidiary
to establish a new defined contribution plan or amend an existing defined
contribution plan ("Buyer's Savings Plan") for the purpose of covering each
Division Employee and each former employee (and, if applicable, the spouse and
beneficiaries of such former employee) of the Business who, immediately prior to
the Closing, is eligible to be a participant in or has an account under
("Savings Plan Participant") the Eaton Corporation 401(k) Savings Plan and Trust
("Seller's Savings Plan"). Buyer's Savings Plan shall be designed to enable it
to accept a transfer of assets and liabilities from the Seller's Savings Plan in
accordance with the applicable ERISA and Tax Code requirements. The Buyer's
Savings Plan will recognize service with the Seller and the Seller Subsidiaries
for all purposes for which service is a criterion in the Buyer's Savings Plan.
As soon as practicable after the Closing Date, the Seller shall cause the
Seller's Savings Plan to transfer and the Buyer shall cause the Buyer's Savings
Plan to accept a transfer of all assets and liabilities associated with the
Savings Plan Participants, with earnings and/or losses credited to the account
balances of such Savings Plan Participants through a date that precedes the date
of transfer by no more than five business days. The amount transferred under the
preceding sentence shall include elective contributions and matching
contributions accrued under the Seller's Savings Plan through the day before the
Closing. With respect to the portion of a Savings Plan Participant's accounts
consisting, as of the day before the Closing, of plan loans, the transfer
contemplated by this Section 10.7 shall be made in the form of an in kind
transfer by the Seller's Savings Plan to the Buyer's Savings Plan. After the
transfer date, the Savings Plan Participants shall only be eligible to receive
benefits from, and in accordance with, the Buyer's Savings Plan.
(b) Not later than December 31, 1999, the Buyer shall or shall cause
the Buyer Subsidiaries to apply for a determination by the IRS that Buyer's
Savings Plan (as established or amended pursuant to this Section 10.7) qualifies
under Sections 401(a) and 501(a), respectively, of the Tax Code, and any
regulations issued under or pursuant to the Tax Code. The Buyer further agrees
to act reasonably, promptly and in consultation with Seller to revise and/or
amend the Buyer's Savings Plan as may be required by IRS in accordance with
applicable governmental requirements for the purpose of obtaining any such
qualification. Copies of such filings by the Buyer or a Buyer Subsidiary (with
appropriate deletions of confidential information not relevant to Seller's
concern for the Transferred Employees) shall be furnished by the Buyer to the
Seller when first made, and a copy of the determination letter shall be
furnished by the Buyer to the Seller within a reasonable period of time
following the receipt of such letter by the Buyer or a Buyer Subsidiary. The
Buyer and the Seller acknowledge that the transfer of assets and liabilities,
respectively, from the Seller's Savings Plan to the Buyer's Savings Plan, as
provided for in this Section 10.7 may occur prior to the Buyer's receipt of a
favorable determination letter from the IRS with respect to the tax
qualification of the Buyer's Savings Plan pursuant to Section 401(a) and Section
501(a), respectively, of the Tax Code. Accordingly, the Buyer hereby represents
and warrants that the Buyer's Savings Plan, as established and maintained by the
Buyer, will receive such favorable determination letter, effective retroactively
to the Closing, and the Buyer agrees to indemnify the Seller for any liabilities
which the Seller may incur as a result of such transfer of assets and/or
liabilities to the Buyer's Savings Plan, if the Buyer's Savings Plan is
determined by the IRS not to be a tax-qualified Plan.
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(c) Notwithstanding any other provision of this Agreement, the
provisions of this Section 10.7 shall be subject to the applicable requirements
regarding collective bargaining.
10.8 ALLOCATION OF CANADIAN SAVINGS PLAN RESPONSIBILITIES.
(a) Effective as of the day before the Closing, the Seller shall
cause each Division Employee who is eligible to have an account as of such date
("RRSP Participant") under the Eaton Yale Ltd. Group Registered Retirement
Savings Plan ("Seller's RRSP") to have a fully nonforfeitable right to such
account.
(b) As soon as is reasonably practicable after the Closing Date, the
Buyer shall or shall cause a Buyer Subsidiary to establish a new group
registered retirement savings plan ("Buyer's RRSP") covering the Transferee
Canadian Participants and the Transferred Hourly Participants. The Seller and
the Buyer shall make reasonable efforts to cause the RRSP Participants, at their
option, to transfer their individual account balances to the new accounts that
the Buyer shall cause to be established on their behalf under Buyer's RRSP.
Buyer's RRSP will recognize service with the Seller and the Seller Subsidiaries
for all purposes for which service is a criterion in Buyer's RRSP, and Buyer or
a Buyer Subsidiary shall continue a plan providing a similar deferral
opportunity for a period of at least three years following the Closing.
10.9 INCENTIVE COMPENSATION. The Corresponding Schedule identifies or
sets forth a description of the cash incentive compensation and/or cash bonuses
related to the Transferred Employees for 1999 under the Seller's or a Seller
Subsidiary's plans, policies, programs or arrangements immediately prior to the
Closing, excluding any related deferral arrangements ("Seller's 1999 Incentive
Plans"). As of the Closing, the Buyer shall or shall cause a Buyer Subsidiary to
establish and implement plans that mirror the Seller's 1999 Incentive Plans, and
all obligations, responsibilities and liabilities with respect thereto shall be
assumed and/or accepted by the Buyer and/or a Buyer Subsidiary, in a manner such
that the Buyer and/or a Buyer Subsidiary shall provide the Transferred Employees
with cash incentive compensation and/or cash bonuses for 1999 at least equal to
the amounts that would have been paid for 1999 under the Seller's 1999 Incentive
Plans, assuming that the Seller's 1999 Incentive Plans remained in effect
through the end of 1999 and the transactions contemplated by this Agreement had
not occurred. Nothing contained in the preceding sentence shall in any way bind
or constrain the Buyer or any Buyer Subsidiary as to incentive compensation for
any period beginning after December 31, 1999. Commencing with January 1, 2000
and for the then remaining balance of the three-year period following the
Closing, the Buyer and/or a Buyer Subsidiary shall provide to those members of
the Existing Management Team (as defined in Section 8.7(a)) who, immediately
prior to the Closing, participate in Seller's 1999 Incentive Plan, an incentive
plan designed, established and maintained by the Buyer and/or a Buyer Subsidiary
for the purpose of providing some form of meaningful (as reasonably determined
by the Buyer) incentive compensation to such individuals.
10.10 FOREIGN EMPLOYMENT LIABILITIES. With respect to the letter
agreement between Seller or a Seller Subsidiary and Nigel Ware dated May 13,
1997, the Buyer and/or a Buyer Subsidiary shall, as of the Closing, assume the
contractual obligations thereunder, except that the Buyer and/or the Buyer
Subsidiary shall have no obligation whatsoever with respect to: paragraphs 8, 9
or 10 of
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such letter agreement other than the obligations of the Buyer and/or the Buyer
Subsidiary arising pursuant to Section 10.1; or any claim or obligation that
does not specifically arise under the contractual provisions assumed by the
Buyer.
10.11 VACATION RESPONSIBILITIES. The Buyer shall be liable,
responsible, and obligated for the payment of all vacation benefits, as
determined in accordance with the Seller's vacation practices in effect on the
day before the Closing for Division Employees, and which have not been paid by
the Seller prior to the Closing, to the Transferred Employees. On and after the
Closing, the Buyer shall provide each Non-Union Division Employee who becomes a
Transferred Employee, on a going-forward basis, with an annual paid vacation
entitlement at least equal to the annual paid vacation entitlement available
under the Seller's vacation practices as in effect on the day before the
Closing, based upon the Transferred Employee's status and level of service with
the Seller and/or a Seller Subsidiary on such day.
10.12 RETAINED LIABILITY AND SUCCESSOR LIABILITY. With respect to any
pre-Closing liability of Seller or any Seller Subsidiary under any Employee
Benefit Plan or under the letter agreement referred to in Section 10.10 which is
retained by the Seller and/or Seller Subsidiary and is not assumed by the Buyer
and/or a Buyer Subsidiary under this Agreement, such liability shall be deemed a
Retained Liability and, notwithstanding the potential liability of Buyer and/or
a Buyer Subsidiary for any such Retained Liability under a successor liability
theory or otherwise, such Retained Liability shall be subject to the
indemnification provisions of Article 19.
10.13 REIMBURSEMENT FOR OTHER PARTY'S LIABILITIES. Notwithstanding any
other provisions of this Agreement, in the event that either the Seller (or the
Seller Subsidiaries) or the Buyer (or the Buyer Subsidiaries) shall be required,
by operation of law or regulation or by judicial or quasi-judicial determination
or by the operation of any contract or other agreement of any kind with any
insurance company or other Person, to pay or discharge directly, or indirectly
through any representative or benefit trust or other fund or otherwise, any
liability, responsibility, or obligation for the provision of any benefit or
other payment (including any benefit premium payment or other direct or indirect
cost with respect to any benefit coverage) which is the liability,
responsibility, and/or obligation of the other Party pursuant to this Article
10, the Party responsible for such payment agrees to reimburse promptly the
other Party, or any appropriate representative or benefit trust or other fund of
such Party as may be determined thereby, in full for any and all such payments
or discharges upon the presentation of written evidence thereof.
10.14 NO THIRD-PARTY BENEFICIARIES. Neither the Buyer nor the Seller
intend that this Article 10 create any rights or interests, except as between
the Buyer, the Buyer Subsidiaries, the Seller and the Seller Subsidiaries, and
no present or future employees (or any dependents or beneficiaries of such
employees) of either Party, or any of their Affiliates (including the Buyer
Subsidiaries and the Seller Subsidiaries) will be treated or deemed as
Third-Party beneficiaries in or under this Agreement.
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ARTICLE 11
CERTAIN REAL ESTATE MATTERS
11.1 TITLE COMMITMENT; TITLE POLICY.
(a) As soon as practicable following the date of this Agreement, the
Seller shall cause (i) Land America National Commercial Services - Lawyers Title
(the "Title Company") to issue and deliver to the Buyer its commitment for an
ALTA Owner's Policy of Title Insurance (Form B-1992) with respect to the
Massillon Facility and its commitment for an ALTA Leasehold Policy of Title
Insurance with respect to the Brunswick Facility (collectively the "U.S. Title
Policies"), together with a copy of all recorded documents referred to in the
U.S. Title Policies, committing the Title Company to issue the U.S. Title
Policies at Closing, insuring the Buyer as the holder of a fee simple title to
the Massillon Facility and a leasehold interest in the Brunswick Facility,
subject only to the Real Property Permitted Exceptions, in an amount equal to
the portion of the Purchase Price allocated to each such Facility, and (ii) the
Seller's Canadian counsel to deliver to the Buyer its opinion (the "Canadian
Title Opinion") as to title to the Hamilton Facility, which opinion shall be
addressed to the Buyer, its counsel and such other parties as may reasonably be
requested by the Buyer and shall provide that the Seller or the Seller
Subsidiaries, as the case may be, has good title in fee simple to the Hamilton
Facility, subject only to the Real Property Permitted Exceptions.
(b) Subject to Article 20, the cost and expense of the U.S. Title
Policy and the Canadian Title Opinion and any transfer or recording fees or
taxes, shall be shared equally by the Seller and the Buyer.
11.2 OBJECTIONS. The Buyer shall have ten days after receipt of all
of the documents referred to in Section 11.1 to give the Seller written notice
of any objections to the conditions or exceptions shown thereon other than Real
Property Permitted Exceptions. Failure to object to any additional condition or
exception within said period shall constitute an approval of such condition or
exception. If the Buyer gives such notice, the Seller shall have the obligation,
prior to the Closing, to use its reasonable efforts to remedy or remove the
objectionable condition or exception, or to provide the Buyer with evidence
reasonably satisfactory to the Buyer that such condition or exception shall be
removed or remedied prior to or concurrently with the Closing. If the Seller
cannot so remedy or remove such condition or exception prior to or concurrently
with the Closing and such condition or exception, individually or in the
aggregate, would have an adverse effect on the value of the Transferred Assets
in excess of an amount equal to five percent (5%) of the Purchase Price, the
Buyer shall have the right to either waive its objection to such condition or
exception and proceed towards the Closing or terminate this Agreement without
liability.
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ARTICLE 12
ENVIRONMENTAL MATTERS
12.1 ALLOCATION OF ENVIRONMENTAL LIABILITIES. Subject to and in
accordance with this Article 12 and Section 3.2(i), liability for Environmental
Conditions and for Pre-Closing Environmental Conditions shall be allocated as
follows:
(a) BUYER'S RESPONSIBILITY. The Buyer shall be responsible for and
shall perform or pay as due all obligations or liabilities, including any loss,
cost or expense of any nature whatsoever relating to or arising from:
(i) Any Environmental Conditions on, in or under any Real
Property that are not Pre-Closing Environmental Conditions;
(ii) Subject to Paragraph (b) of this Section 12.1, any
Pre-Closing Environmental Conditions, to the following extent:
(A) the first $500,000 in the aggregate from the Closing
Date necessary to spend to remediate or correct any Pre-Closing
Environmental Conditions; and
(B) one-half (i.e., 50%) of any and all loss, cost or
expense in excess of the sum of the $500,000 payable by Buyer
under Clause (A) above plus $500,000 payable by Seller under
Paragraph (b) of this Section 12.1 necessary to remediate or
correct any Pre-Closing Environmental Condition; and
(iii) Any Environmental Condition associated with the 80 Glow
Avenue property in Hamilton, Ontario.
(b) SELLER'S RESPONSIBILITY. The Seller shall be responsible for and
shall pay as due:
(i) The following sums in excess of the Buyer's initial
contribution under Clause (a)(ii)(A) above:
(A) the next $500,000 aggregate from the Closing Date
necessary to remediate or correct any Pre-Closing Environmental
Condition that is required to be investigated or remediated by a
regulatory authority consistent with requirements of
Environmental Law ("Required Cleanup");
(B) the remaining one-half (i.e., 50%) of any and all loss
cost or expense that is necessary to remediate or correct any
Pre-Closing Environmental Conditions that give rise to a Required
Cleanup and that is in excess of the sum of the Buyer's $500,000
initial contribution under Clause (A) of Subparagraph (a)(ii) of
this Section 12.1 and the Seller's contribution under Clause (A)
of this Subparagraph (b)(i); and
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(ii) Any and all loss, cost or expense for any Retained
Liability under Section 3.2(i); provided, however, that notwithstanding
any other provision of this Agreement, Seller shall have no liability
under this Agreement with respect to (A) 80 Glow Avenue, Hamilton,
Ontario and (B) any claims for personal injury or property damage
(including economic loss) arising from alleged migration of Regulated
Substances from any Real Property, even though the alleged migration
may be the subject of a Required Cleanup subject to the cost-sharing
provisions of this Section 12.1.
(c) Those portions of any loss, cost or expense relating to or
arising from Environmental Conditions or Pre-Closing Environmental Conditions
that are allocated to the Buyer pursuant to this Section 12.1 are hereinafter
referred to as the "Buyer's Responsibility." Those portions of any loss, cost or
expense relating to or arising from Environmental Conditions or Pre-Closing
Environmental Conditions that are allocated to the Seller pursuant to this
Section 12.1 are hereinafter referred to as the "Seller's Responsibility."
12.2 SELLER'S ENVIRONMENTAL INDEMNIFICATION. Subject to the terms,
conditions and limitations of this Article 12, the Seller will indemnify, defend
and hold harmless the Buyer and its affiliates, officers, directors, employees
and agents from and against any liabilities, costs, damages, penalties, fines,
claims, judgments or proceedings, including necessary and reasonable legal fees
and costs of investigation (collectively "Damages"), arising from:
(a) breach of any representation or warranty in Section 5.12,
provided that the Buyer shall have given the Seller notice of such breach during
the relevant survival period stated in Section 18.1, without regard to Section
18.2; or
(b) any Seller's Responsibility, as defined in Section 12.1(c);
provided, however, that if the cost to remediate or correct any Pre-Closing
Environmental Conditions in the aggregate is reasonably anticipated to trigger
the Seller's Responsibility, Seller shall have full control in dealing and
negotiation with any Third Parties, including any regulatory authorities, in
order to resolve all matters associated with the Pre-Closing Environmental
Condition.
(c) For the purposes of determining whether the proviso regarding
Seller's control in Subsection (b) of this Section 12.2 is triggered, the
parties shall elicit from the consultant retained pursuant to Section 9.11
recommendations with respect to the identification, type and cost of any
remedial or other measure that the Supplemental Phase II indicates would be
necessary to fulfill requirements of Environmental Laws in effect and applicable
as of the Closing. The Parties shall, within 30 days of their receipt of this
recommendations, confer and reach agreement as to whether (and, if so, which of)
the consultant's recommendations shall be implemented. Failure of the Parties to
reach agreement within this 30-day period regarding which, if any, of the
consultant's recommendations shall be implemented will give rise to an
irrebuttable presumption that the Seller's Responsibility will be triggered
solely for purposes of the control proviso of Subsection 12.2(b) hereof, and
Seller will have the right to control.
Notwithstanding the foregoing, the Seller shall not be liable to and shall not
indemnify any party or otherwise be responsible for any Damages under this
Article 12 to the extent the same result from
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actions undertaken voluntarily rather than mandated by legal process or are
caused, contributed to, or exacerbated by the post-Closing actions or omissions
of the Buyer or the Buyer Subsidiaries, and the Buyer will be responsible for
that portion of any Damages attributable to such post-Closing acts or omissions.
12.3 BUYER'S ENVIRONMENTAL INDEMNIFICATION. Subject to the terms,
conditions and limitations of this Article 12, the Buyer will indemnify, defend
and hold harmless the Seller and any Seller Subsidiary and their respective
affiliates, officers, directors, employees and agents from and against any
Damages arising from:
(a) exercise by the Buyer of its right of access under Section 7.2(b)
relating to evaluation of any potential or suspected Environmental Condition; or
(b) any Buyer's Responsibility, as defined in Section 12.1(c).
Notwithstanding the foregoing, the Buyer shall not be liable to and shall not
indemnify any party or otherwise be responsible for any Damages under this
Article 12 to the extent that the same are caused, contributed to or exacerbated
by the post-Closing actions or omissions of the Seller or the Seller
Subsidiaries, and the Seller will be responsible for that portion of any damages
attributable to such acts or omissions.
12.4 RELEASE. THE BUYER EXPRESSLY WAIVES AND RELEASES THE SELLER AND
THE SELLER SUBSIDIARIES FROM, AND COVENANTS NOT TO SUE THE SELLER OR ANY OF THE
SELLER SUBSIDIARIES FOR, ANY CLAIMS, WHETHER PURSUANT TO, OR AS PERMITTED OR
PROVIDED BY, THE ENVIRONMENTAL LAWS (EXPRESSLY INCLUDING, BUT NOT LIMITED TO,
CERCLA, RCRA, CWA, SWDA, CAA, TSCA, AND EPCRA) OR OTHERWISE WHICH THE BUYER OR
ANY BUYER SUBSIDIARY, OR ANY SUCCESSOR IN INTEREST TO THE BUYER WITH RESPECT TO
THE REAL PROPERTY, MAY HAVE IN CONNECTION WITH THE RELEASE OR PRESENCE OF ANY
REGULATED SUBSTANCE AFTER THE CLOSING DATE. After the Closing Date, the remedies
of the Buyer and the Seller provided for under Sections 12.1, 12.2 and 12.3
shall be the exclusive remedies of the Parties with respect to the matters
covered in this Article 12.
12.5 NOTICE OF CLAIM. The Parties agree that they will each promptly,
but in no event later than 30 calendar days from the date of their discovery of
facts or circumstances that are reasonably likely to give rise to a demand for
indemnification pursuant to Section 12.2 or Section 12.3, as the case may be,
notify the other in writing of such facts and potential claim. Any claim made
pursuant to this Article 12 shall cite with particularity the nature of the
claim, the specific basis for believing it is subject to indemnification under
this Article (including, in the case of a Pre-Closing Environmental Condition,
the basis for believing the condition constitutes a violation of Environmental
Law in effect as of the Closing), and the estimated total amount of Damages that
will be incurred with respect thereto. If any legal proceedings are instituted
or any claim is asserted in writing by, or on behalf of, a Third Party in
respect of which either Party, including any Subsidiary, believes it may be
entitled to indemnity hereunder, that Party shall give written notice thereof
within 30 days of service of process after institution of the legal proceedings
or within 30 days after the
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assertion of a claim in writing by, or on behalf of, the Third Party asserting
the claim. A delay in giving notice required by the preceding two sentences
shall relieve the other Party of liability only to the extent that it suffers
actual prejudice because of the delay. After notification, the Party notified
must within 60 days notify the other that it accepts responsibility for the
matters set forth in the notice, or the Party so notified will be deemed to have
declined to accept responsibility for such matters.
12.6 ACCEPTANCE OF RESPONSIBILITY. If the Party notified accepts
responsibility for any Third Party claim under this Article 12:
(a) that Party may in its sole discretion and at its own expense
assume control of, and be responsible for, the defense or settlement of the
claim;
(b) if the Party notified assumes control, the other Party may at
its own expense hire counsel to monitor the claim;
(c) the Party notified shall not, without the prior written consent
of the other Party, which consent will not be unreasonably withheld, settle the
claim or consent to entry of any judgment relating thereto which does not
include as a term thereof the giving by the claimant to the other Party of a
release from all liability in respect to the claim; and
(d) if a claim involves only an injunction or equitable relief, the
Party giving notice shall have the right to be represented, at its own expense,
by counsel of its choice in connection with the defense of the claim, and the
Party notified will not, without the prior written consent of the other Party,
which consent will not be unreasonably withheld, settle the claim or consent to
entry of any judgment relating thereto.
12.7 PARTY DECLINES RESPONSIBILITY. Prior to the expiration of the
60-day period under Section 12.5, and if the Party notified does not within that
time period accept responsibility for any Third Party claim under this Article
12 or declines to assume control:
(a) the Party giving notice may engage counsel to defend, settle or
otherwise dispose of such claim;
(b) the Party notified may at its own expense hire counsel to
monitor the claim;
(c) the Party receiving notice may notify the other Party at a
subsequent time that it is assuming responsibility for the claim, at which time
the provisions of Section 12.6 become applicable; and
(d) the right of either Party to contest the right of the other
Party to indemnification under this Agreement will respect to the proceeding or
claim shall not be extinguished.
12.8 COOPERATION. The Parties will cooperate fully with each other in
connection with the defense, negotiation or settlement of any Third Party claim
under this Article 12, provided, however,
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that in no event shall either Party have any right to privileged correspondence,
material or information of the other Party. Further, the Buyer agrees with
respect to any claim to provide the Seller written notice at least 30 days prior
to undertaking or commencing any investigation or testing that is intended, or
could reasonably be expected, to lead to discovery of any Pre-Closing
Environmental Condition. The undertaking and the scope of any such investigation
or testing shall be subject to the prior approval of the Seller, which approval
shall not be unreasonably withheld, or Seller shall have no liability or
responsibility for any Pre-Closing Environmental Condition thus discovered or
disclosed.
12.9 THE SELLER'S INDEMNITY AND THE BUYER'S RE-SALE OF REAL PROPERTY.
With respect to any matter for which the Seller is to indemnify the Buyer under
Section 12.2 that involves removal, remediation or cleanup of Regulated
Substances, the Seller's Responsibility shall be limited to curing the breach or
contributing to resolution of the Pre-Closing Environmental Condition under, and
only to the extent required by, the Environmental Laws in effect and applicable
at the Closing. The Buyer acknowledges and agrees that if a subsequent purchaser
or a change in law or land use requires additional cleanup or work at the Real
Property beyond that which may already have been initiated or completed by the
Seller, the Buyer will have the sole responsibility to satisfy those additional
requirements. Notwithstanding anything contained in this Agreement to the
contrary, the Seller will have no obligation or liability with regard to any
such additional cleanup or work or to any such purchaser under this Article 12.
12.10 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything contained
herein to the contrary, in no event will either Party be liable to the other for
consequential, special or incidental Damages such as, by way of example and not
of limitation, reduction in market value of the Real Property, loss of profits,
loss of business opportunity or interruption-of-business losses.
12.11 ACCESS TO THE REAL PROPERTY AND DOCUMENTS. If the Seller and its
representatives and agents request, the Buyer or any Buyer Subsidiary shall
provide to the Seller access to the Real Property and the books, records and
employees of the Buyer or any Buyer Subsidiary relating to the Business to the
extent reasonably necessary to assist the Seller in investigating, assessing,
remediating, defending or settling any claim regarding any matter for which the
Buyer notifies the Seller under Section 12.5, provided that such access will be
sought in such manner so as not to interfere unreasonably with the operation of
the Buyer's or any Buyer Subsidiary's business.
12.12 THE SELLER'S PURSUIT OF THIRD PARTIES. If the Seller remediates,
or incurs any Damages with respect to, a matter for which a Third Party may be
responsible or liable, the Buyer and the Buyer Subsidiaries agree to cooperate
with the Seller in pursuing any claim against such Third Party and will use
reasonable efforts to assist the Seller in legally asserting such claim and in
recovering the Seller's Damages against such Third Party including, but not
limited to, acting as the real party in interest and assigning the Buyer's or
the Buyer Subsidiary's rights or any cause of action against any such Third
Party relating to such claim or the proceeds thereof to the Seller.
12.13 LIMITATIONS. In addition to the limitations and conditions on
indemnification stated in this Article 12, the limitations and conditions stated
in Sections 19.7, 19.8, 19.9 and 19.10 shall
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apply to indemnification under this Article 12. No other Sections of Article 19
shall apply to environmental matters addressed by Section 5.12 or this Article
12.
12.14 AGENCY CONTACT.
(a) The Buyer agrees that it will not engage in any contact, whether
written, verbal, or in person, with any governmental agency or agency
representative regarding any condition that it believes may constitute a matter
for which it may be entitled to indemnity under Section 12.2, unless:
(i) the contact is required under any Environmental Law;
(ii) a governmental agency or agency representative contacts
the Buyer regarding that matter; or
(iii) the Seller has approved the contact.
(b) If the Buyer believes it is entitled to contact a governmental
agency or agency representative regarding any condition that it believes may
constitute a matter for which it may be entitled to indemnity under Section
12.2, it shall notify the Seller as soon as it believes it will make the
contact, and the Seller shall have ten days from receipt of the Buyer's notice
in which to approve the contact and advise the Buyer if the Seller wishes to
participate in the contact. The Seller's failure to approve or disapprove the
contact within ten days of receipt of the Buyer's notice of the proposed contact
shall be deemed to be approval of the contact.
(c) Except as provided herein, the Seller will make all reports to
governmental agencies or other reports necessary or desirable in connection with
any condition or circumstance with respect to which the Buyer asserts any claim
for indemnity under Section 12.2.
12.15 SURVIVAL. The rights and obligations of the Parties set forth in
this Article 12 shall survive the Closing as set forth in Section 18.1 without
regard to Section 18.2.
ARTICLE 13
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Buyer in its sole discretion by
delivery of a written notice to that effect to the Seller, which shall
constitute a release by the Buyer with respect to such condition.
13.1 HSR/COMPETITION ACT COMPLIANCE. All applicable governmental
pre-merger filing requirements under the HSR Act shall have been satisfied and
the applicable waiting period requirements under the HSR Act shall have been
terminated early or shall have expired. All filings
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required to be made under the Competition Act (Canada) shall have been made. The
applicable waiting periods under the Competition Act shall have expired or
(i) the Buyer shall have been advised in writing by the Commissioner
of Competition that he has determined not to take any action or
any proceeding, including making an application for an order
under Section 92 of the Competition Act, in respect of this
transaction; or
(ii) an advance ruling certificate shall have been issued under
Section 102 of the Competition Act in respect of this
transaction.
13.2 NO LITIGATION. At the Closing Date, no litigation, proceeding,
investigation, or inquiry shall be pending or threatened to enjoin or prevent
the consummation of the transactions contemplated by this Agreement, or
involving any of the Transferred Assets which, if sustained, would have a
Material Adverse Effect on the Buyer's right to retain the Transferred Assets or
to conduct the Business as it is currently conducted.
13.3 NO CASUALTY. Prior to the Closing Date, there shall not have
occurred any single uninsured casualty in or to any of the Transferred Assets as
a result of which the monetary amount of damage or destruction totals $1,000,000
or a lesser amount if such damage or destruction has a Material Adverse Effect,
unless the Seller agrees to replace the damaged or destroyed Transferred Assets
or unless the Parties mutually agree to an adjustment in the Purchase Price.
13.4 RETAIL SALES TAX CERTIFICATE. On or prior to the Closing, the
Seller shall deliver to the Buyer a certificate issued by the Minister of
Finance pursuant to Section 6 of the Retail Sales Tax Act (Ontario) to the
effect that each of Eaton Yale and ETN Offshore has paid all taxes collectable
or payable under such Act or has otherwise entered into arrangements
satisfactory to such Minister to pay any such taxes.
13.5 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained herein shall, if qualified by materiality, be
true and correct and, if not so qualified, be true and correct in all material
respects at and as of the Closing as if made as of the Closing, in each case,
except for any violations thereof which, individually or in the aggregate, would
not have an adverse effect on the value of the Transferred Assets in excess of
an amount equal to five percent (5%) of the Purchase Price; provided, that
representations and warranties that are made as of a specific date need be true
in all material respects only as of such date and that representations and
warranties with Corresponding Schedules amended pursuant to Section 7.10 need be
true in all material respects subject to any such amendment, in each case,
except for any violations thereof which, individually or in the aggregate, would
not have an adverse effect on the value of the Transferred Assets in excess of
an amount equal to five percent (5%) of the Purchase Price. The Seller shall
furnish the Buyer with an appropriate closing certificate, dated the Closing
Date, to that effect.
13.6 PERFORMANCE BY THE SELLER. All of the covenants and agreements
required by this Agreement to have been performed and complied with by the
Seller, if qualified by materiality, shall
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have been performed and complied with and, if not so qualified, shall have been
performed and complied with by the Seller in all material respects prior to or
on the Closing Date, in each case except where such nonperformance or
noncompliance, individually or in the aggregate, would not have an adverse
effect on the value of the Transferred Assets in excess of an amount equal to
five percent (5%) of the Purchase Price. The Seller shall have delivered to the
Buyer an appropriate certificate to that effect dated the Closing Date.
13.7 STATUTORY PROHIBITION. No written or published statute, rule,
regulation or order shall have been enacted, entered or deemed applicable by any
domestic or foreign government or governmental or administrative agency or court
which would make the transaction contemplated by this Agreement illegal.
13.8 NO MATERIAL ADVERSE CHANGE. There shall have not been any adverse
change in the financial condition or property of the Division or in the Business
as such is currently conducted, the effect of which is materially adverse to the
value of the Transferred Assets taken as a whole or materially adverse to the
Business, the condition (financial or otherwise) or results of operations of the
Business in each case taken as a whole.
13.9 REAL ESTATE MATTERS. The provisions in Section 11.2 shall have
been satisfied by the Seller or waived by the Buyer.
13.10 LANDLORD CONSENT. The landlord for the Brunswick Facility shall
have given its consent to the assignment to the Buyer or a Buyer Subsidiary of
the Seller's interest as tenant under the lease for the Brunswick Facility dated
March 29, 1994, as amended (the "Brunswick Landlord Consent").
ARTICLE 14
CONDITIONS TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement are subject to the
satisfaction at or prior to the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Seller in its sole discretion by
delivery of a written notice to that effect to the Buyer, which shall constitute
a release by the Seller with respect to such condition.
14.1 HSR/COMPETITION ACT COMPLIANCE. All applicable governmental
pre-merger filing requirements under the HSR Act shall have been satisfied and
the applicable waiting period requirements under the HSR Act shall have been
terminated early or shall have expired. All filings required to be made under
the Competition Act (Canada) shall have been made. The applicable waiting
periods under the Competition Act shall have expired or
(i) the Buyer shall have been advised in writing by the Commissioner
of Competition that he has determined not to take any action or
any proceeding, including making an
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application for an order under Section 92 of the Competition Act
in respect of this transaction; or
(ii) an advance ruling certificate shall have been issued under
Section 102 of the Competition Act in respect of this
transaction.
14.2 NO LITIGATION. At the Closing Date, no litigation, proceeding,
investigation, or inquiry shall be pending or threatened to enjoin or prevent
the consummation of the transactions contemplated by this Agreement.
14.3 TRUTH OF REPRESENTATION AND WARRANTIES. The representations and
warranties of the Buyer contained herein shall, if qualified by materiality, be
true and correct and, if not so qualified, be true and correct in all material
respects at and as of the Closing as if made as of the Closing, in each case,
except for any violations thereof which, taken as a whole, would not reasonably
be likely to have a Material Adverse Effect; provided, that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date, except for any violations thereof which, taken as
a whole, would not reasonably be likely to have a Material Adverse Effect. The
Buyer shall furnish the Seller with an appropriate closing certificate, dated
the Closing Date, to that effect.
14.4 PERFORMANCE BY THE BUYER. All of the covenants and agreements
required by this Agreement to have been performed and complied with by the
Buyer, if qualified by materiality, shall have been performed and complied with
and, if not so qualified, shall have been performed and complied with by the
Buyer in all material respects prior to or on the Closing Date, in each case,
except where such nonperformance or noncompliance, taken as a whole, would not
reasonably be likely to have a Material Adverse Effect. The Buyer shall have
delivered to the Seller an appropriate certificate to that effect dated the
Closing Date.
14.5 STATUTORY PROHIBITION. No written or published statute, rule,
regulation or order shall have been enacted, entered or deemed applicable by any
domestic or foreign government or governmental or administrative agency or court
which would make the transaction contemplated by this Agreement illegal.
14.6 LANDLORD CONSENT. The landlord for the Brunswick Facility shall
have given the Brunswick Landlord Consent.
ARTICLE 15
CLOSING
15.1 THE CLOSING DATE. The Closing shall take place at the offices of
the Seller, at Eaton Center, Cleveland, Ohio, at 10:00 a.m. on August 2, 1999
(but effective as of 12:01 a.m., Cleveland, Ohio local time on August 1, 1999),
or, if the conditions specified in Articles 13 and 14 have not been fulfilled or
waived by such date, on the last business day of the month in which the
fulfillment
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or waiver of such conditions occurs or at such other place or on such other day
as the Buyer and the Seller shall agree upon in writing. Such date is herein
called the "Closing Date." If all of the conditions specified in Articles 13 and
14 shall have been fulfilled or waived in writing by the Buyer or by the Seller,
as the case may be, on or by the Closing Date, then, on the Closing Date, the
Buyer and the Seller shall make the following deliveries.
15.2 DELIVERIES BY THE BUYER. Subject to the terms and conditions of
this Agreement, at the Closing, the Buyer shall deliver or cause to be delivered
to the Seller:
(a) the Purchase Price required by Section 4.1 of this
Agreement;
(b) the Assumption Agreement;
(c) the Services Agreement;
(d) the Leased Real Property Assignment and Assumption
Agreements;
(e) the Buyer Guaranty;
(f) the certificates referred to in Section 14.3 and Section
14.4; and
(g) any other documents required to be delivered by Buyer under
this Agreement or any Related Agreement.
15.3 DELIVERIES BY THE SELLER. Subject to the terms and conditions of
this Agreement, at the Closing, the Seller shall deliver or cause to be
delivered to the Buyer:
(a) a general assignment and bill of sale in the form set forth
on the Corresponding Exhibit;
(b) assignments of the Seller's ownership rights to each of the
Proprietary Rights in form mutually satisfactory to counsel for the
Buyer and the Seller hereunder and in recordable form to the extent
necessary to assign such rights;
(c) a limited warranty deed of transfer for the Massillon
Facility and a transfer deed for the Hamilton Facility, in each case
subject to the Real Property Permitted Exceptions and each in form
acceptable for filing with and recording in the records of the
appropriate office or land registry office of the township, county,
state or province where such real estate is located, and such other
documents required to be delivered by the Seller under Article 11;
(d) the Services Agreement;
(e) the Brunswick Landlord Consent;
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(f) the Leased Real Property Assignment and Assumption
Agreements;
(g) the certificates referred to in Section 13.5 and Section
13.6;
(h) separate assignments or other appropriate instruments of
transfer to the Buyer of any of the Transferred Assets not
appropriately transferred by the documents referred to in clauses (a)
through (h) above; and
(i) any other documents required to be delivered by Seller under
this Agreement or any Related Agreement.
15.4 RIGHTS TO POSSESSION. The Buyer's right to possession of the
Transferred Assets shall commence at the close of business on the Closing Date,
and the Buyer or the Buyer Subsidiaries shall take possession of the Transferred
Assets at the places they are located on the Closing Date.
ARTICLE 16
SALES AND TRANSFER TAXES
The Seller and the Buyer shall share equally all sales, use, transfer
and documentary taxes and recording and filing fees, if any, including, without
limitation, all provincial land transfer taxes, provincial sales taxes, other
than Canadian Goods and Services Taxes under Part IX of the Excise Tax Act
(Canada), and any other charges applicable to the transfer of the Transferred
Assets and the assumption of the Assumed Liabilities provided for by this
Agreement. The Buyer's and the Seller's respective obligations with respect to
the GST Legislation are set forth in Section 9.1.
ARTICLE 17
BULK SALES
The Buyer hereby waives compliance by the Seller with any applicable
bulk sales or bulk transfer law applicable in any jurisdiction where the
Transferred Assets are located, and the Seller hereby agrees that the provisions
of Section 19.1 shall apply to any losses, damages, costs, charges or expenses
which the Buyer may sustain as a consequence of the Seller not complying with
such bulk sales or bulk transfer laws.
ARTICLE 18
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
18.1 SURVIVAL. The representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing only for the
applicable period set forth in this Article 18. All
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of the representations and warranties of the Seller and the Buyer contained in
this Agreement and all unasserted claims and causes of action with respect
thereto shall terminate upon expiration of the eighteenth month following the
Closing Date, except that:
(a) the representations and warranties in Section 5.11 (Tax
Matters), shall terminate upon the expiration of the applicable
statute of limitations;
(b) the representations and warranties in Section 5.12
(Environmental Matters) shall terminate upon the expiration of 36
months following the Closing Date; and
(c) the representations and warranties in Section 5.1
(Organization, Existence and Standing of the Seller), Section 5.2
(Corporate Authority), Section 5.6(a) (Owned Real Property), Section
5.7 (Title to Personal Property), Section 6.1 (Organization, Existence
and Standing of the Buyer), and Section 6.2 (Corporate Authority)
shall survive indefinitely.
The covenants and agreements contained in this Agreement which do not
have specific time periods of applicability shall survive the Closing Date
indefinitely. Covenants and agreements contained in this Agreement which have
specific time periods of applicability shall survive the Closing Date for the
periods set forth therein.
18.2 NOTICE OF CLAIM. No party shall have an obligation to indemnify
the other for breach of any representation, warranty, covenant or agreement
unless notice of a claim for indemnification with respect to such breach has
been submitted to the Indemnifying Party (as defined in Section 19.4) in
accordance with Article 19 prior to the end of the applicable survival period.
ARTICLE 19
INDEMNIFICATION
19.1 INDEMNIFICATION OF THE BUYER. Subject to Article 12, Article 18
and to compliance with Sections 19.3, 19.4, 19.10 and 19.11 of this Agreement,
the Seller agrees to indemnify the Buyer and the Buyer Subsidiaries against any
loss, cost, liability or expense (including, without limitation, costs and
expenses of investigation and litigation and, to the extent permitted by law,
actual attorney's fees) (collectively, "Indemnified Losses") incurred by the
Buyer or any Buyer Subsidiary by reason of (a) any breach of any representation,
warranty, covenant or agreement of the Seller (other than any such breach
relating to matters addressed in Section 5.12 or Article 12), or in any
certificate or other closing document furnished by the Seller, pursuant to this
Agreement, (b) the provision contained in Article 17, or (c) the assertion
against the Buyer or any Buyer Subsidiary of any of the Retained Liabilities or
liabilities retained or assumed by the Seller under Article 10.
19.2 INDEMNIFICATION OF THE SELLER. Subject to Article 12, Article 18
and to compliance with Sections 19.3, 19.4, 19.10 and 19.11 of this Agreement,
the Buyer agrees to indemnify the Seller and the Seller Subsidiaries against any
Indemnified Losses incurred by the Seller or any Seller Subsidiary by reason of
(a) any breach of any representation, warranty, covenant or agreement of the
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Buyer, or in any certificate or other closing document furnished by the Buyer,
pursuant to this Agreement, or (b) the assertion against the Seller or any
Seller Subsidiary of any of the Assumed Liabilities (other than those relating
to any Environmental Condition) or liabilities assumed by the Buyer under
Article 10.
19.3 ELIGIBLE CLAIM, THRESHOLD AMOUNT, PAYMENT. A Party may bring a
claim seeking indemnification (the "Indemnified Party") under the terms and
provisions of this Article 19 only if such claim exceeds $25,000 (an "Eligible
Claim"). Further, a Party may bring an Eligible Claim seeking indemnification
under the terms and provisions of this Article 19 only if such Eligible Claim,
either alone or when aggregated with other Eligible Claims for indemnification
by such party, exceeds 2% of the Purchase Price, as adjusted pursuant to Section
4.3 (the "Threshold Amount"). Until such time as a Party can bring an Eligible
Claim or Eligible Claims in the aggregate amount in excess of the Threshold
Amount, no right to indemnification under this Article 19 shall arise. In the
event that a Party brings an Eligible Claim or Eligible Claims for an amount in
excess of the Threshold Amount, such Party shall be entitled to indemnification
for the full amount of all Indemnified Losses up to the maximum amount referred
to in Section 19.10.
19.4 PROCEDURES FOR CLAIMS. Subject to Section 19.3, any Indemnified
Party shall provide written notice of any Eligible Claim to the Party from which
it seeks indemnification (the "Indemnifying Party") within 30 days of such Party
becoming aware of the existence of such Eligible Claim stating the amount
claimed to be due and payable or an estimate of the claim if contingent or
unliquidated, the basis of the claim and the provision or provisions of this
Agreement under which such claim is asserted. Within 30 calendar days after
receipt of such notice, the Indemnifying Party shall by written notice to the
Indemnified Party either (a) concede liability in whole as to the amount claimed
in such notice, (b) deny liability in whole as to such amount, or (c) concede
liability in part and deny liability in part. If the Parties are not able to
resolve any dispute over a claim brought under this Article 19 within 30 days
after the Indemnified Party receives written notice from the Indemnifying Party
denying liability in whole or in part, the Parties shall submit the dispute to
the dispute resolution procedure set forth in Article 22.
19.5 THIRD-PARTY CLAIMS.
(a) An Indemnifying Party shall have the right, exercisable by
written notice to the Indemnified Party within 30 days of receipt of written
notice from the Indemnified Party of the commencement of or assertion of any
lawsuit filed or instituted against the Indemnified Party asserting any claim
for which the Indemnifying Party may be responsible under this Agreement (each,
a "Third Party Claim"), to assume and conduct the defense of each Third Party
Claim with counsel selected by the Indemnifying Party and reasonably acceptable
to the Indemnified Party; provided, however, that such Third Party Claim
involves (and continues to involve) solely monetary damages (the "Litigation
Condition").
(b) If the Indemnifying Party does not assume the defense of such
Third Party Claim in accordance with this Section 19.5, the Indemnified Party
may continue to defend the Third Party Claim. If the Indemnifying Party has
assumed the defense of a Third Party Claim as provided in this Section 19.5, the
Indemnifying Party shall not be liable for any legal expenses subsequently
incurred
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by the Indemnified Party in connection with the defense thereof; provided,
however, that if (i) the Litigation Condition ceases to be met, or (ii) the
Indemnifying Party fails to take reasonable steps necessary to defend diligently
such Third Party Claim within 30 calendar days (or such shorter period as may be
required to defend diligently such Third Party Claim) after receiving written
notice from the Indemnified Party that the Indemnified Party believes the
Indemnifying Party has failed to take such steps, the Indemnified Party may
assume its own defense, and the Indemnifying Party shall be liable for all
reasonable costs or expenses paid or incurred in connection therewith.
(c) Without the Indemnified Party's prior written consent or
authorization, which consent or authorization will not be unreasonably withheld,
the Indemnifying Party shall not consent to a settlement of, or the entry of any
judgment arising from, any Third Party Claim which does not include as a term
thereof the giving by the claimant to the Indemnified Party of a release from
all liability in respect of such Third Party Claim. If the Indemnifying Party
does not assume the defense of any such Third Party Claim or litigation
resulting from such claim in accordance with the terms of this Section 19, the
Indemnified Party may defend against such claim or litigation in such manner as
it may deem appropriate, including settling such claim or litigation, after
giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate. If the Indemnifying Party seeks to
question the manner in which the Indemnified Party defended such Third Party
Claim or litigation resulting from such claim or the amount of or nature of any
such settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend such
claim in a reasonably prudent manner.
19.6 EXCLUSIVE REMEDY. Except as otherwise expressly provided for in
this Agreement, following the Closing, the indemnification provided by this
Article 19 shall be the exclusive remedy for the Buyer or the Seller, as the
case may be, with respect to this Agreement (other than those matters addressed
by Article 12) and the transactions contemplated by this Agreement, except
claims for fraud or intentional misrepresentation shall not be limited by the
provisions in this Article 19.
19.7 PAYMENT OF AMOUNTS. If any amount is determined to be due and
owing to a Party as a result of any occurrence which gives rise to
indemnification obligations under this Section 19, such amount shall be paid by
the Indemnifying Party to the Indemnified Party in immediately available funds.
All indemnification payments under this Article 19 (or under Article 12 as set
forth therein) shall be deemed adjustments to the Purchase Price.
19.8 TAX AND/OR INSURANCE OFFSET. The amount of any Indemnified Losses
suffered by an Indemnified Party shall be reduced by the net effect of any
tax-related benefits or insurance coverage which may be realized by such Party
following the date of such Indemnified Losses in respect of or as a result of
such Indemnified Losses or the facts or circumstances relating thereto.
Notwithstanding the foregoing, it is understood and agreed that the
determination of the net tax effect and/or insurance coverage benefit of any
Indemnified Losses, if any, shall not delay payment or indemnification of such
Indemnified Losses by the Indemnifying Party. All Indemnified Losses shall be
paid or reimbursed promptly upon determination; the Indemnified Party shall
reimburse the Indemnifying Party for the net tax effect benefit of such
Indemnified Losses, if any, upon the date
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of filing of the tax return with respect to which such tax benefit is realizable
or upon the date of recovery of any insurance proceeds.
19.9 NO INDEMNIFICATION FOR KNOWN BREACHES OF REPRESENTATIONS AND
WARRANTIES. Notwithstanding any provision to the contrary contained in this
Agreement, including Article 12 hereof, in the event that the Seller proves that
the Buyer had actual knowledge, on or before the Closing Date, of the specific
facts upon which a claim for indemnification by the Buyer is based, then the
Seller shall have no liability for any Indemnified Losses resulting from or
arising out of such claim.
19.10 MAXIMUM AMOUNT OF ANY INDEMNIFICATION. Notwithstanding anything
in this agreement to the contrary, no party shall be required to indemnify the
other for claims with respect to which indemnification (on a cumulative basis)
under this Article 19 would otherwise be available in excess of an amount equal
to 25% of the Purchase Price, as adjusted pursuant to Section 4.3.
19.11 INDEMNIFICATION WITH RESPECT TO CERTAIN LIABILITIES.
Notwithstanding anything in this Article 19 to the contrary, claims by the Buyer
against the Seller or any Seller Subsidiary in respect of the Retained
Liabilities, the Seller's liabilities under Article 10 or Article 17, whether
any of the foregoing liabilities are directly or indirectly related to any
representation or warranty herein, and claims by the Seller or any Seller
Subsidiary in respect of the Assumed Liabilities, or the Buyer's liabilities
under Article 10, whether any of the foregoing liabilities are directly or
indirectly related to any representation or warranty herein, shall not be
subject to any of the limitations on indemnification set forth in Sections 19.3
or 19.10, including, without limitation, those limitations relating to Eligible
Claims, the Threshold Amount or the maximum amount of indemnification.
ARTICLE 20
TERMINATION
20.1 GROUNDS. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned only under one of the following circumstances:
(a) At any time (by written notice delivered to the other
Party) prior to the Closing:
(i) By the Buyer (upon action by its Board of Directors) if
any of the conditions set forth in Article 13 of this Agreement
has become incapable of fulfillment on or before the Termination
Date;
(ii) By the Seller (upon action by its Board of Directors)
if any of the conditions set forth in Article 14 of this
Agreement has become incapable of fulfillment on or before the
Termination Date;
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(iii) By the Seller or the Buyer if the Closing has not
occurred on or prior to the Termination Date, unless the absence
of such occurrence shall be due to the delay or failure of the
Party seeking to terminate this Agreement (or its Subsidiaries or
Affiliates) to perform in all material respects each of its
obligations under this Agreement required to be performed by it
at or prior to the Closing; provided, however, that if the
Closing has not occurred by the Termination Date solely due to
the failure of the conditions set forth in Section 13.1 or 14.1
to be satisfied, then either of the Parties may extend the
Termination Date for such period of time as necessary to satisfy
such conditions, provided that such extension shall in no event
exceed 180 days after the date hereof without the prior written
consent of each of the parties;
(iv) By either the Buyer or the Seller, if a court of
competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order,
decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and through no
failure, delay or fault of or breach by the terminating Party (or
its Subsidiaries or Affiliates), and such order, decree, ruling
or other action shall have become final and nonappealable; or
(v) By the Buyer at any time if the Seller amends any of the
Corresponding Schedules pursuant to Section 7.10 and such
amendment reflects information that would have or has had a
Material Adverse Effect.
(b) At any time by the mutual written consent of both the
Buyer and the Seller.
20.2 EFFECT.
(a) If any of the conditions to the obligations of the Buyer in
Article 13 or of the Seller in Article 14 have not been satisfied prior to the
Termination Date, the Buyer or the Seller, as the case may be, shall have the
right either (i) to terminate this Agreement pursuant to, and with liability
allocated as set forth in, this Article 20, or (ii) to waive and release their
respective conditions and to proceed with the Closing and the consummation of
the transactions contemplated by this Agreement without liability or further
obligation with respect to the nonfulfillment of such condition.
(b) In the event that this Agreement is terminated as permitted by
Section 20.1, all obligations of the Seller and the Buyer hereunder shall
terminate without liability or further obligations, except as provided in
Section 20.3.
(c) Notwithstanding the foregoing, any confidentiality agreement
entered into by the Parties, and any other agreements between the Parties that
do not expressly provide for their termination, shall survive the termination of
this Agreement.
20.3 LETTER OF CREDIT. Contemporaneously with execution of this
Agreement, the Buyer will cause BankBoston, N.A. to issue a letter of credit in
favor of the Seller in the amount of
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$4,000,000. Such letter of credit will be in form and substance reasonably
satisfactory to the Seller. If the conditions set forth in Article 13 have been
satisfied and the Closing has failed to occur within the time required under
this Agreement because the Buyer has failed to perform its obligations under
this Agreement, then the Seller shall have the right to draw upon the letter of
credit. In such event, the amount drawn on the letter of credit shall be
retained by the Seller as liquidated damages, and not as a penalty, the parties
hereby acknowledging and agreeing that the amount of the Seller's actual damages
in such circumstances would be difficult, if not impossible, to ascertain, that
the amount of the letter of credit constitutes a reasonable estimate thereof and
that other than the right of termination set forth in Sections 20.1(a)(ii) or
20.1(a)(iii) hereof, such liquidated damages shall be the sole and exclusive
remedy of the Seller with respect thereto.
ARTICLE 21
EXPENSES
Subject to Article 20, Section 9.1, Section 11.1(b), and Article 16,
whether or not the transactions contemplated hereby are consummated, each of the
Parties will, except in the case of any breach of the terms and provisions of
this Agreement for which either the Buyer or the Seller, as the case may be, may
be entitled to indemnification under Article 19 hereof, pay its respective
expenses, income and other taxes and costs (including, without limitation, the
reasonable commissions, fees, disbursements and expenses of its investment
bankers, attorneys, accountants and consultants) incurred by it in negotiating,
preparing, closing and carrying out this Agreement and the Related Agreements
and the transactions contemplated hereby and thereby.
ARTICLE 22
DISPUTE RESOLUTION
22.1 NOTICE OF DISPUTE. In the event of a dispute between the Parties
arising out of or related to this Agreement (except for matters to be resolved
by the Independent Accountant), either Party may invoke the procedures specified
in this Article 22 by giving written notice to the other Party. Such written
notice will describe briefly the nature of the dispute, the approximate amount
of any monetary claim and shall identify an individual with authority to settle
the dispute on behalf of that Party. The Party receiving such notice shall have
ten days within which to designate an individual with authority to settle the
dispute on its behalf and to notify the other Party of its designation (the
individuals so designated shall be referred to as the "Authorized Individuals").
The Authorized Individuals shall be elected officers of the Parties if the
amount claimed exceeds $5,000,000.
22.2 INVESTIGATION; ADR. The Authorized Individuals shall make
whatever investigation each deems appropriate and promptly thereafter, but no
later than 30 days from the date of the original notice invoking these
procedures, shall commence discussions concerning resolution of the dispute. If
the dispute has not been resolved within 60 days from the date of the original
notice
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invoking these procedures, the Parties shall submit the matter to alternative
dispute resolution ("ADR") in accordance with the following mini-trial
procedure.
22.3 SELECTION OF NEUTRAL. The Parties shall have ten days from
expiration of the periods referred to in this Section 22.3 or the agreement of
the Parties to submit the matter to ADR, whichever occurs first, within which to
agree upon a mutually acceptable person not then or previously affiliated in any
manner with either Party (the "Neutral"). If no Neutral has been selected within
that time period, either Party may request the Center for Public Resources, or
if the Buyer has previously objected to the use of the Center for Public
Resources, the American Arbitration Association, to supply within ten days a
list of at least three potential Neutrals with qualifications as specified in
the request, or as agreed to jointly by the Parties. Within seven days of
receipt of the list, the Parties shall rank the proposed candidates
independently, exchange rankings (ranked numerically with one being the most
desired) and select as the Neutral the individual who receives the highest
combined ranking who is available to serve. If two or more individuals have the
highest ranking and the Parties do not agree within five days as to whom to
select, the organization that provided the list of individuals shall select the
Neutral from among those individuals with the highest ranking.
22.4 PREHEARING CONFERENCE. Within 30 days after appointment of the
Neutral, the Parties agree to meet with the Neutral for a prehearing conference.
At such conference, the Parties shall arrange for the exchange of information in
the possession of the other Party, including certain limited depositions where
appropriate, and the stipulation of uncontested facts. The Parties shall
establish the extent of and schedule for the production of relevant documents,
sworn depositions and the identification of witnesses. Should a dispute arise
over the extent of document production, appropriate witnesses or the scheduling
of any activity, including the hearing location and date, the Neutral shall make
a final determination after hearing each Party's position. At such prehearing
conference, or at a later scheduled conference as agreed to by both Parties, the
location and date for the hearing shall be set which shall not, unless both
Parties agree, be more than 120 days from the date of the initial prehearing
conference.
22.5 WRITTEN SUMMARY OF POSITION. One week prior to the scheduled
hearing, each Party shall deliver to the Neutral and to the other Party a
written summary of its views on the matter in dispute. The summary shall be no
longer than twenty double-spaced pages unless the Parties agree otherwise.
22.6 HEARING. At the hearing each Party shall be represented by the
Authorized Individuals and also by counsel. Each Party shall have an agreed-upon
time, not to exceed four hours, in order to present its case. The Authorized
Individuals shall hear the presentation but shall not participate in them. The
Neutral will be permitted to ask questions during the presentation by each side
and the Authorized Individuals may ask questions after the conclusion of the
other Party's presentation. At the conclusion of such presentations, the
Authorized Individuals, without counsel, shall meet with the Neutral to discuss
the case in order to reach a resolution. If no settlement is reached, the
Neutral will orally summarize the dispute, the strengths and weaknesses of both
Parties' positions and give his opinion as to how much the Party seeking
recovery or other relief would receive if the matter
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were resolved through litigation. There shall be no stenographic, visual or
audio record made of the hearing.
22.7 COMMITMENT TO ADR. The Parties agree to participate in the ADR
to its conclusion as designated by the Neutral and not to terminate negotiations
concerning resolution of the matters in dispute until at least two weeks
thereafter. Each Party agrees not to commence a lawsuit or seek other remedies
prior to the conclusion of the two-week post-hearing negotiation period;
provided, however, that notwithstanding anything to the contrary in this Article
22 or elsewhere in this Agreement, either Party may commence litigation on any
date after which the commencement of litigation would be barred by an applicable
statute of limitations or in order to request equitable relief to prevent
irreparable harm or other injury for which equitable relief is appropriate. In
such event, the Parties agree (except as prohibited by court order) to continue
to participate in the ADR to its conclusion.
22.8 FEES. The fees of, and reasonable costs incurred by, the Neutral
shall be shared equally by the Parties. The Neutral shall be disqualified as a
witness, consultant, expert or counsel for any Party with respect to the matters
in dispute and any related matters.
22.9 CONFIDENTIALITY. The ADR is a compromise negotiation for purposes
of the Federal Rules of Evidence and state rules of evidence. The entire
procedure is confidential. All conduct, statements, promises, offers, views and
opinions, whether oral or written, made in the course of the ADR by any of the
Parties, their agents, employees, representatives or other invitees to the ADR
and by the Neutral, who is the Parties' joint agent for purposes of these
compromise negotiations, are confidential and shall, in addition and where
appropriate, be deemed to be work product and privileged. Such conduct,
statements, promises, offers, views and opinions shall not be discoverable or
admissible for any purposes, except impeachment, in any litigation or other
proceeding involving the Parties and shall not be disclosed to anyone not an
agent, employee, expert, witness, or representative for any of the Parties.
Evidence otherwise discoverable or admissible is not excluded from discovery or
admission as a result of its use in the ADR, and the Parties may request any
discovery to which they would otherwise be entitled without regard to the
documents, depositions or other discovery that occurred as part of the ADR.
ARTICLE 23
MISCELLANEOUS
23.1 NOTICES. Any notice, request, instruction, consent or other
document to be given hereunder by either Party to the other Party shall be in
writing and will be deemed duly given (i) when personally delivered, (ii) upon
receipt of a telephonic facsimile transmission with a confirmed telephonic
transmission answer back, (iii) three days after having been deposited in the
United States mail, certified or registered, return receipt requested, postage
prepaid, or (iv) one business day after having been dispatched by a nationally
recognized overnight courier service, addressed to such Party
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at the following address (or at such other address or number as is given in
writing by either Party to the other) as follows:
If to the Buyer: TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07938
Attention: General Counsel
Facsimile No.: (908) 903-0209
If to the Seller: Eaton Corporation
1111 Superior Avenue
Cleveland, Ohio 44114
Attention: Office of the Secretary
Facsimile No.: (216) 479-7103
23.2 WAIVER. None of the terms or conditions of this Agreement may be
waived except in writing, specifically so stating, at any time by the Party
which is entitled to the benefits thereof. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of such provision at
any time in the future or a waiver of any other provision hereof.
23.3 CAPTIONS. The captions set forth in this Agreement are for
convenience only and shall not be considered as part of this Agreement, nor
affect in any way the meaning of the terms and provisions hereof.
23.4 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the Parties hereto; provided, however, that this
Agreement may not be assigned by any Party without the express written consent
of the other Party hereto, except that either Party may assign all or part of
its rights and obligations under this Agreement to one or more Subsidiaries of
such Party, but any such assignment will not release such Party of any of its
obligations. Effective as of the Closing, the Buyer and the Buyer Subsidiaries
may pledge, assign and grant to the Buyer's institutional lenders, for the
benefit of such lenders, a continuing security interest and lien on all of the
Buyer's or the Buyers Subsidiaries' right, title and interest in and to this
Agreement as security for the payment and performance of all obligations of the
Buyer or Buyer Subsidiaries to such lenders by reason of borrowings or the
guaranty of such borrowings, subject to any defense, claim or right of offset
the Seller may have against the Buyer.
23.5 ENFORCEABILITY. If any provision of this Agreement as applied to
any Party or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances, or the
validity or enforceability of this Agreement. The Parties intend this Agreement
to be enforced as written. If any such provision, or part thereof, however, is
held to be unenforceable because of the duration thereof or the area covered
thereby, the Seller and the Buyer agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision,
and/or to delete the specific words or phrases, and in its amended form such
provision
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shall then be enforceable and shall be enforced. If any provision of this
Agreement shall otherwise finally be determined to be unlawful, then such
provision shall be deemed to be severed from this Agreement and every other
provision of this Agreement shall remain in full force and effect.
23.6 NO THIRD-PARTY BENEFICIARIES OR RIGHT TO RELY. Notwithstanding
anything to the contrary in this Agreement, (a) nothing in this Agreement is
intended to or shall create for or grant to any Third Party (including without
limitation to any former, current or future employees or officers of any Party,
any Subsidiary or any labor union) any rights whatever, as a Third Party
beneficiary or otherwise, (b) no Third Party is entitled to rely on any of the
representations, warranties, covenants or agreements contained herein, and (c)
no Party hereto shall incur any liability or obligation to any Third Party
because of any reliance by such Third Party on any representation, warranty,
covenant or agreement herein.
23.7 COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each of which shall for all purposes be deemed to be an original
and all of which shall constitute one and the same agreement. A signature to
this Agreement delivered by telecopy or other artificial means shall be deemed
valid.
23.8 GOVERNING LAW. This Agreement shall in all respects be
interpreted, construed and governed by and in accordance with the local laws of
the State of Ohio, without regard to principles of conflict of laws.
23.9 TIME OF ESSENCE. Time shall be of the essence with respect to
this Agreement.
23.10 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the Parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
Party.
23.11 PUBLIC ANNOUNCEMENTS. The Buyer and the Seller shall agree on
the terms of the press releases to be issued upon the execution of this
Agreement and shall consult with each other before issuing any other press
releases with respect to this Agreement and the transactions contemplated
hereby, including without limitation, any termination of this Agreement for any
reason.
23.12 CURRENCY/METHOD OF PAYMENT. Unless otherwise specifically
provided herein, (a) all references to amounts of money shall be to lawful money
of the United States, and (b) all payments of money to be made by the Buyer or
the Seller, as the case may be, shall be made in immediately available funds.
23.13 SUBSEQUENT LEGAL FEES. In the event any action or proceeding is
initiated to enforce any of the terms and provisions of this Agreement, the
Party prevailing in said action shall be entitled to its reasonable attorney's
fees and costs.
23.14 EXCLUSIVE JURISDICTION AND CONSENT TO SERVICE OF PROCESS. The
Parties agree that any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, shall be
instituted in a federal or state court sitting in Cuyahoga County, Ohio,
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which shall be the exclusive jurisdiction and venue of said legal proceedings
and each Party hereto waives any objection which such Party may now or hereafter
have to the laying of venue of any such action, suit or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against such Party when
transmitted in accordance with the notice provision herein. Nothing contained
herein shall be deemed to affect the right of any Party hereto to serve process
in any manner permitted by law.
23.15 MISCELLANEOUS. As used in this Agreement, the Corresponding
Schedules, the Corresponding Exhibits and the Related Agreements and as required
by the context: the singular and plural shall be deemed to include each other
and each gender, to include all genders; the terms herein, hereof, and hereunder
or other similar terms refer to this Agreement or the Related Agreements, in
which they appear as a whole and not only to the particular sentence, paragraph,
subsection or section in which any such term is used except as expressly more
specifically limited; and words and phrases defined in this Agreement have the
same meaning in the Corresponding Schedules, Corresponding Exhibits and Related
Agreements unless specifically provided to the contrary in any thereof.
23.16 ENTIRE AGREEMENT; AMENDMENT. This Agreement, including all
Corresponding Schedules and Corresponding Exhibits hereto, together with the
Related Agreements and the Confidentiality Agreement dated April 28, 1999
between the Seller and the Buyer, constitute the sole understanding of the
Parties with respect to the matters contemplated hereby and thereby and
supersedes and renders null and void all other prior agreements and
understandings, oral or written, between the Parties with respect to such
matters. No amendment, modification or alteration of the terms or provisions of
this Agreement, including all Corresponding Schedules and Corresponding Exhibits
hereto, shall be binding unless the same shall be in writing, specifically so
stating, and duly executed by the Party against whom such would apply.
77
<PAGE> 87
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed and delivered by its duly authorized representatives as of the
date first written above.
EATON CORPORATION
BY: /s/ Robert J. McCloskey
--------------------------------
Name: Robert J. McCloskey
------------------------------
Title: Senior Vice President and
-----------------------------
Group Executive - Automotive
AND BY: /s/ E. R. Franklin
----------------------------
Name: Earl R. Franklin
------------------------------
Title: Secretary
-----------------------------
TRANSTECHNOLOGY CORPORATION
BY: /s/ Michael J. Berthelot
--------------------------------
Name: Michael J. Berthelot
------------------------------
Title: Chairman, President &
Chief Executive Officer
-----------------------------
<PAGE> 88
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
This Amendment No. 1 to Asset Purchase Agreement (the "Agreement") is
made this 31st day of August, 1999, between Eaton Corporation, an Ohio
corporation (the "Seller"), and TransTechnology Corporation, a Delaware
corporation (the "Buyer") and amends, supplements and modifies that certain
Asset Purchase Agreement dated as of July 9, 1999 between the parties hereto,
(the "Purchase Agreement"). Capitalized terms used but not otherwise defined
herein have the meanings ascribed to them in the Purchase Agreement.
1. A new Section 9.12 shall be added to the Purchase Agreement
which will read in its entirety as follows:
9.12 FICA AND UNEMPLOYMENT TAXES. Buyer agrees to be a successor
for purposes of payroll tax reporting and filings and thus carryover
the cumulative FICA and unemployment tax balances withheld from the
Transferred Employees (as defined in Section 10.1) pursuant to
applicable provisions of the Tax Code. Seller agrees to (1) provide
accurate data with respect to such tax balances to Buyer suitable for
proper tax filings and (2) indemnify Buyer for any loss, cost,
liability or expense (including, without limitation, costs and
expenses of investigation and litigation and, to the extent permitted
by law, actual attorney's fees) incurred as a result of any inaccurate
data provided by Seller with respect to such tax balances. The
indemnification provided pursuant to this Section 9.12 is subject to
the provisions of Article 19, except that it will not be subject to
any of the limitations on indemnification set forth in Sections 19.3
or 19.10, including, without limitation, those limitations relating to
Eligible Claims, the Threshold Amount or the maximum amount of
indemnification
2. Section 10.6(a) of the Purchase Agreement shall be amended by
deleting the following language in the first sentence of this Section:
"and each former employee (and, if applicable, the spouse and
beneficiaries of such former employee)".
3. Section 10.6(a) of the Purchase Agreement shall be further
amended by adding the following new sentence after the existing third sentence
of this Section:
"In addition, the Buyer's Investment Plan shall provide the
Investment Plan Participants with immediate eligibility as of the
Closing Date."
4. Section 15.1 of the Purchase Agreement shall be amended and
restated in its entirety to read as follows:
<PAGE> 89
"15.1 THE CLOSING DATE. The Closing shall take place at the
offices of the Seller, at Eaton Center, Cleveland, Ohio, at 10:00 a.m.
on the last business day of the month in which the fulfillment or
waiver of the conditions specified in Articles 13 and 14 occurs or at
such other place or on such other day as the Buyer and the Seller
shall agree upon in writing (the "Closing Date"). The Closing shall be
effective as of the close of business on the Closing Date. If all of
the conditions specified in Articles 13 and 14 shall have been
fulfilled or waived in writing by the Buyer or by the Seller, as the
case may be, on or by the Closing Date, then, on the Closing Date, the
Buyer and the Seller shall make the following deliveries."
5. Except as specifically provided herein, all terms, provisions
and conditions of the Purchase Agreement remain in full force and effect.
6. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original but all of which together will
constitute one and the same document. This Agreement, once executed, may be
delivered to either party through the use of facsimile transmission. Any and all
signatures of the parties appearing on any facsimile copies of the signature
page of this Agreement shall be deemed, unless otherwise proved, the lawful and
valid signature of the executing party.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
EATON CORPORATION
By: /s/ R.J. McCloskey
-------------------------------
Name: R.J. McCloskey
-----------------------------
Title: Senior Vice President
----------------------------
AND BY: /s/ E. R. Franklin
-------------------------------
Name: E. R. Franklin
-----------------------------
Title: Secretary
---------------------------
TRANSTECHNOLOGY CORPORATION
By: /s/ Gerald C. Harvey
-------------------------------
Name: Gerald C. Harvey
-----------------------------
Title: Vice President, Secretary
and General Counsel
----------------------------
2
<PAGE> 90
AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT
This Amendment No. 2 to Asset Purchase Agreement (the "Agreement") is
made this 31st day of August, 1999, between Eaton Corporation, an Ohio
corporation (the "Seller"), and TransTechnology Corporation, a Delaware
corporation (the "Buyer") and amends, supplements and modifies that certain
Asset Purchase Agreement dated as of July 9, 1999 between the parties hereto,
(the "Purchase Agreement"). Capitalized terms used but not otherwise defined
herein have the meanings ascribed to them in the Purchase Agreement.
1. Section 10.7(a) shall be amended by deleting the second to last
sentence of such Section and replacing it with the following new sentences:
With respect to the portion of a Savings Plan Participant's
accounts consisting, as of the day before the transfer, of plan loans
and/or investment in Eaton Corporation common stock, the transfer
contemplated by this Section 10.7 shall be made in the form of an in
kind transfer by the Seller's Savings Plan to the Buyer's Savings
Plan. With respect to Eaton Corporation common stock transferred in
kind under the preceding sentence: (i) Buyer shall cause the Buyer's
Savings Plan to allow the Savings Plan Participants, for a period of
eighteen (18) months after such transfer, and on at least four (4)
occasions during such period, to direct that all or a portion of the
amounts invested in their respective accounts in Eaton Corporation
common stock be invested in an alternative investment otherwise
available under the Buyer's Savings Plan; (ii) as soon as practicable
after the end of the eighteen month period described in clause (i)
above, the Buyer's Savings Plan shall require that any Eaton
Corporation common stock remaining in the Savings Plan Participant
accounts at the end of such period shall be liquidated and the
proceeds reinvested in an alternative investment otherwise available
under the Buyer's Savings Plan selected by the Savings Plan
Participants or, in the absence of a selection, the available default
investment alternative identified by the Seller; and (iii) to the
extent that either the Buyer or any Buyer Subsidiary is found liable
for breach of a fiduciary duty under ERISA with respect to the receipt
and/or holding of the Eaton Corporation common stock by the Buyer's
Savings Plan or with respect to the foregoing provisions of this
sentence or a claim to the effect that such a breach has occurred is
made: (A) Seller agrees to, and shall, defend, indemnify and hold
harmless the Buyer and the Buyer Subsidiaries and their respective
officers, directors, employees and agents and the trustee of Buyer's
Savings Plan from and against any and all claims, expenses,
liabilities, obligations and costs related thereto (including, without
limitation, attorneys fees and expenses); and (B) the Seller's
indemnification obligation under this sentence shall not be subject to
Section 19.3 or Section 19.10 and shall be disregarded entirely in
applying such Sections.
<PAGE> 91
2. A new Section 10.15 shall be added to the Purchase Agreement
which shall read in its entirety as follows:
10.15 RETIREMENT PLAN TRANSFER. Buyer and Seller agree to enter
into an agreement providing that, subject to actuarial
approval and agreement which will not be unreasonably
withheld, the assets and liabilities associated with the
Seller Plan Participants under the Seller Plan shall be
transferred to a new defined benefit plan established by
the Buyer (the "Buyer Plan"), with the assets so
transferred measured by the greater of: (a) the amount
required to be transferred under Code Section 414(1)
(determined using the assumptions used by the Pension
Benefit Guaranty Corporation with respect to plan
terminations occurring on the day before the Closing, such
assumptions being deemed reasonable under Tax Code
Regulation Section 1.414(1)-1(b)(9)); or (b) the projected
benefit obligation with respect to the Seller Plan
Participants, determined using the assumptions used by the
Seller's actuaries for financial statement purposes, except
that the discount rate that would otherwise be used for
such purposes (the reported yield of the Merrill Lynch
AAA-AA Corporate Bond Index (15+ years)) shall be updated
to be the discount rate in effect as of the last day of the
month coincident with or preceding the Closing Date,
rounded to the nearest one-quarter percent. For purposes of
this Section 10.15; (a) the term "Seller Plan" means the
Pension Plan for Eaton Corporation Employees; and (b) the
term "Seller Plan Participants" means each Division
Employee, Division Retiree, former division employee with
deferred vested benefits and any other person entitled to
benefits with respect to any of the foregoing individuals
who, immediately prior to the Closing Date are accruing or
most recently had accrued benefits under the portion of the
Seller Plan which previously separately existed as the
Eaton Corporation Pension Plan A-3 for Hourly Rate
Employees of the Engineered Fasteners Operations Massillon
Division ("Massillon Appendix") or are eligible to become
or may become participants or beneficiaries under the
Massillon Appendix. The agreement contemplated by this
Section 10.15 shall also provide that for individuals who
both (a) would be Seller Plan Participants but for the fact
that they had terminated employment prior to the Closing
Date without vested benefits; and (b) become employed by
the Buyer or a Buyer Subsidiary within one year after the
Closing Date with the right under the applicable plan terms
to have his/her lost credited service reinstated, the
liability for such individuals for such lost credited
service and corresponding amount of assets (determined in a
manner consistent with the foregoing methodology) shall be
transferred from the Seller Plan to the Buyer Plan in an
adjusting transfer.
2
<PAGE> 92
3. Except as specifically provided herein, all terms, provisions
and conditions of the Purchase Agreement remain in full force and effect.
4. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original but all of which together will
constitute one and the same document. This Agreement, once executed, may be
delivered to either party through the use of facsimile transmission. Any and all
signatures of the parties appearing on any facsimile copies of the signature
page of this Agreement shall be deemed, unless otherwise proved, the lawful and
valid signature of the executing party.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
EATON CORPORATION
By: /s/ David S. Barrie
---------------------------------
Name: David S. Barrie
-------------------------------
Title: Attorney-in-Fact
------------------------------
AND BY: /s/ William F. Hogsett
-----------------------------
Name: William F. Hogsett
-------------------------------
Title: Attorney-in-Fact
------------------------------
TRANSTECHNOLOGY CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------
Name: Gerald C. Harvey
-------------------------------
Title: Vice President, Secretary
and General Counsel
------------------------------
3
<PAGE> 1
SECOND
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of June 30, 1995
and amended and restated as of July 24, 1998
and further amended and restated as of
August 31, 1999
among
TRANSTECHNOLOGY CORPORATION,
TRANSTECHNOLOGY SEEGER-ORBIS GMBH,
TRANSTECHNOLOGY (GB) LIMITED,
THE LENDERS REFERRED TO HEREIN,
BANKBOSTON, N.A.,
acting through its London Branch,
as Sterling Fronting Bank,
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank,
ABN AMRO BANK N.V.,
as Syndication Agent
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation Agent
and
BANKBOSTON, N.A.
as Administrative Agent and Issuing Bank
Arranged by:
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE> 2
ii
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.......................................................1
1.1. Definitions..........................................................................1
1.2. Rules of Interpretation..............................................................26
2. THE REVOLVING CREDIT FACILITY.................................................................27
2.1. Commitment to Lend...................................................................27
2.2. Revolving Credit Commitment Fee......................................................27
2.3. Reduction of Total Revolving Credit Commitment.......................................28
2.4. The Revolving Credit Notes...........................................................28
2.5. Interest on Revolving Credit Loans...................................................28
2.6. Requests for Revolving Credit Loans..................................................29
2.7. Conversion Options...................................................................29
2.7.1. Conversion to Different Type of Revolving Credit Loan....................29
2.7.2. Continuation of Type of Revolving Credit Loan............................30
2.7.3. Eurocurrency Rate Loans..................................................30
2.8 Funds for Revolving Credit Loans.....................................................30
2.9. Maturity of Revolving Credit Loans...................................................31
2.10. Mandatory Repayments of Revolving Credit Loans......................................31
2.11. Optional Repayments of Revolving Credit Loans.......................................31
3. INTERNATIONAL CREDIT FACILITY.................................................................32
3.1. DM Facility Loans...................................................................32
3.2. Mandatory Repayments of DM Facility Loans...........................................32
3.3. Sterling Facility Loans.............................................................32
3.4. Mandatory Repayments of Sterling Facility Loans.....................................33
3.5. Interest on International Facility Loans............................................33
3.6. Requests for DM Eurocurrency Loans..................................................34
3.7. Requests for Sterling Eurocurrency Loans............................................34
3.8. Evidence of DM Facility Loans.......................................................35
3.9. Evidence of Sterling Facility Loans.................................................35
3.10. Maturity of DM Facility Loans.......................................................35
3.11. Maturity of Sterling Facility Loans.................................................35
3.12. Optional Repayment of International Facility Loans..................................36
3.13. DM Facility Commitment Fee..........................................................36
3.14. Sterling Facility Commitment Fee....................................................37
4. THE TERM LOAN..................................................................................37
4.1. Commitment to Lend..................................................................37
4.2. The Term Notes......................................................................37
4.3. Schedule of Installment Payments of Principal of Term Loan..........................38
4.4. Optional Prepayment of Term Loan....................................................38
4.5. Interest on Term Loan...............................................................38
4.5.1 Interest Rates............................................................38
4.5.2 Notification by TransTechnology...........................................39
4.5.3. Amounts, etc..............................................................39
4.6. Mandatory Prepayments from Asset Sales or New Debt..................................39
4.7. Mandatory Prepayments from New Equity...............................................40
4.8. Mandatory Prepayments from Excess Cash Flow.........................................40
</TABLE>
<PAGE> 3
iii
<TABLE>
<CAPTION>
<S> <C>
4.9. Application of Mandatory Prepayments................................................40
5. LETTERS OF CREDIT..............................................................................40
5.1. Letter of Credit Commitments........................................................40
5.1.1. Commitment to Issue Letters of Credit....................................40
5.1.2. Letter of Credit Applications............................................41
5.1.3. Terms of Letters of Credit...............................................41
5.1.4. Reimbursement Obligations of Lenders.....................................41
5.1.5. Participations of Lenders................................................42
5.2. Reimbursement Obligation of TransTechnology.........................................42
5.3. Letter of Credit Payments...........................................................43
5.4. Obligations Absolute................................................................43
5.5. Reliance by Issuing Bank............................................................44
5.6. Letter of Credit Fee................................................................44
5.7. Resignation of Issuing Bank.........................................................45
6. CERTAIN GENERAL PROVISIONS.....................................................................45
6.1. Closing Fee.........................................................................45
6.2. Administrative Agent's Fee..........................................................45
6.3. Payment Provisions..................................................................46
6.3.1. Currency of Account......................................................46
6.3.2. Application of Interest Payments.........................................46
6.3.3. Judgment Currency........................................................46
6.3.4. Time of Payment..........................................................47
6.3.5. Payments by Administrative Agent.........................................47
6.3.6. No Offset, etc...........................................................47
6.4. Computations........................................................................48
6.5. Inability to Determine Eurocurrency Rate............................................48
6.6. Illegality..........................................................................49
6.7. Additional Costs, etc...............................................................49
6.8. Capital Adequacy....................................................................51
6.9. Certificate.........................................................................52
6.10. Indemnity...........................................................................52
6.11. Interest After Default..............................................................52
6.11.1. Overdue Amounts.........................................................52
6.11.2. Amounts Not Overdue.....................................................52
6.12. Fronting Bank Provisions............................................................53
6.12.1. Fronting Fee............................................................53
6.12.2. Indemnities.............................................................53
6.12.3. Resignation of Fronting Bank............................................54
6.12.4. Notice to Lenders.......................................................55
6.13. Limits on Number of Separate Eurocurrency Rate Loans................................55
7. COLLATERAL SECURITY AND GUARANTIES.............................................................55
7.1. Security of Borrowers...............................................................55
7.2. Guaranties and Security of Subsidiaries.............................................56
7.3. Pledges of Stock....................................................................56
7.4. Guarantees and Pledges of Assets of Foreign Subsidiaries............................56
8. REPRESENTATIONS AND WARRANTIES.................................................................57
8.1. Corporate Authority.................................................................57
</TABLE>
<PAGE> 4
iv
<TABLE>
<CAPTION>
<S> <C>
8.1.1. Incorporation; Good Standing.............................................57
8.1.2. Authorization............................................................57
8.1.3. Enforceability...........................................................57
8.2. Governmental Approvals..............................................................58
8.3. Title to Properties; Leases.........................................................58
8.4. Financial Statements and Projections................................................58
8.4.1. Financial Statements.....................................................58
8.4.2. Projections..............................................................58
8.5. No Material Changes, etc............................................................59
8.6. Franchises, Patents, Copyrights, etc................................................59
8.7. Litigation..........................................................................59
8.8. No Materially Adverse Contracts, etc................................................60
8.9. Compliance with Other Instruments, Laws, etc........................................60
8.10. Tax Status..........................................................................60
8.11. No Event of Default.................................................................60
8.12. Holding Company and Investment Company Acts.........................................60
8.13. Absence of Financing Statements, etc................................................61
8.14. Perfection of Security Interest.....................................................61
8.15. Certain Transactions................................................................61
8.16. Employee Benefit Plans..............................................................61
8.16.1. In General..............................................................61
8.16.2. Terminability of Welfare Plans..........................................62
8.16.3. Guaranteed Pension Plans................................................62
8.16.4. Multiemployer Plans.....................................................62
8.16.5. Compliance with Employment Benefit Laws.................................63
8.17. Use of Proceeds.....................................................................63
8.18. Environmental Compliance............................................................63
8.19. Subsidiaries, etc...................................................................64
8.20. Bank Accounts.......................................................................64
8.21. Year 2000 Compliance................................................................65
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.........................................................65
9.1. Punctual Payment....................................................................65
9.2. Maintenance of Offices..............................................................65
9.3. Records and Accounts................................................................66
9.4. Financial Statements, Certificates and Information..................................66
9.5. Notices.............................................................................67
9.5.1. Defaults.................................................................67
9.5.2. Environmental Events.....................................................68
9.5.3. Notification of Claims against Collateral................................68
9.5.4. Notice of Litigation and Judgments.......................................68
9.6. Corporate Existence; Maintenance of Properties......................................69
9.7. Insurance...........................................................................69
9.8. Taxes...............................................................................69
9.9. Inspection of Properties and Books, etc.............................................70
9.9.1. General..................................................................70
9.9.2. Environmental Assessments................................................70
9.9.3. Communications with Accountants..........................................71
9.10. Compliance with Laws, Contracts, Licenses, and Permits..............................71
9.11. Employee Benefit Plans..............................................................71
</TABLE>
<PAGE> 5
v
<TABLE>
<CAPTION>
<S> <C>
9.12. Use of Proceeds.....................................................................72
9.13. Additional Mortgaged Property.......................................................72
9.14. Bank Accounts.......................................................................72
9.15. Interest Rate Protection............................................................72
9.16. Further Assurances..................................................................73
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...................................................73
10.1. Restrictions on Indebtedness........................................................73
10.2. Restrictions on Liens...............................................................74
10.3. Restrictions on Investments.........................................................76
10.4. Distributions.......................................................................77
10.5. Merger, Consolidation and Disposition of Assets.....................................77
10.5.1. Mergers and Acquisitions................................................77
10.5.2. Disposition of Assets...................................................78
10.6. Sale and Leaseback..................................................................78
10.7. Compliance with Environmental Laws..................................................78
10.8. Subordinated Debt...................................................................79
10.10. Bank Accounts......................................................................80
10.11. Operating Leases...................................................................80
10.12. SO OHG Partnership Agreement.......................................................80
10.13. Maintenance of Business............................................................80
11. FINANCIAL COVENANTS OF THE BORROWERS..........................................................80
11.1. Consolidated EBITDA to Consolidated Total Interest Expense..........................80
11.2. Fixed Charge Coverage Ratio.........................................................81
11.3. Leverage Ratio......................................................................81
11.4. Senior Leverage Ratio...............................................................82
11.5. Minimum Net Worth...................................................................82
11.6. Capital Expenditures................................................................83
12. CLOSING CONDITIONS............................................................................83
12.1. Loan Documents......................................................................83
12.2. Certified Copies of Charter Documents...............................................84
12.3. Corporate Action....................................................................84
12.4. Incumbency Certificate..............................................................84
12.5. Validity of Liens...................................................................84
12.6. Perfection Certificates and UCC Search Results......................................84
12.7. Surveys.............................................................................85
12.8. Title Insurance, etc................................................................85
12.9. Certificates of Insurance...........................................................85
12.10. Bank Agency Agreements.............................................................85
12.11. Hazardous Waste Assessments........................................................85
12.12. Solvency Certificate...............................................................86
12.13. Opinions of Counsel................................................................86
12.14. Payment of Fees....................................................................86
12.15. Senior Subordinated Loans..........................................................86
12.16. Tinnerman Acquisition..............................................................86
12.17. Disbursement Instructions..........................................................86
12.18. Minimum EBITDA.....................................................................87
</TABLE>
<PAGE> 6
vi
<TABLE>
<CAPTION>
<S> <C>
12.19. Maximum Leverage Ratio.............................................................87
12.20. Compliance Certificate.............................................................87
13. CONDITIONS TO ALL BORROWINGS..................................................................87
13.1. Representations True; No Event of Default...........................................87
13.2. No Legal Impediment.................................................................88
13.4. Proceedings and Documents...........................................................88
14. EVENTS OF DEFAULT; ACCELERATION; ETC..........................................................88
14.1. Events of Default and Acceleration..................................................88
14.2. Termination of Commitment...........................................................92
14.3. Remedies............................................................................92
14.4. Distribution of Collateral Proceeds.................................................92
15. SETOFF........................................................................................93
16. THE AGENTS....................................................................................94
16.1. Authorization.......................................................................94
16.2. Employees and Agents................................................................95
16.3. No Liability........................................................................95
16.4. No Representations..................................................................95
16.5. Payments............................................................................96
16.5.1. Payments to Administrative Agent........................................96
16.5.2. Distribution by Administrative Agent....................................96
16.5.3. Delinquent Lenders......................................................96
16.6. Holders of Notes....................................................................97
16.7. Indemnity...........................................................................97
16.8. Agents as Lenders...................................................................98
16.9. Resignation of Administrative Agent.................................................98
16.10. Duties of Certain Agents...........................................................98
17. EXPENSES......................................................................................98
18. INDEMNIFICATION...............................................................................99
19. SURVIVAL OF COVENANTS, ETC....................................................................100
20. ASSIGNMENT AND PARTICIPATION..................................................................100
20.1. Conditions to Assignment............................................................100
20.2. Certain Representations and Warranties; Limitations;
Covenants.................................................................................101
20.3. Register............................................................................102
20.4. New Notes...........................................................................103
20.5. Participations......................................................................103
20.6. Disclosure..........................................................................104
20.7. Assignee or Participant Affiliated with TransTechnology.............................104
20.8. Miscellaneous Assignment Provisions.................................................104
20.9. Assignment by the Borrowers.........................................................105
20.10. Syndication........................................................................105
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
21. NOTICES, ETC..................................................................................105
22. GOVERNING LAW.................................................................................106
23. HEADINGS......................................................................................107
24. COUNTERPARTS..................................................................................107
25. ENTIRE AGREEMENT, ETC.........................................................................107
26. WAIVER OF JURY TRIAL..........................................................................107
27. CONSENTS, AMENDMENTS, WAIVERS, ETC............................................................107
27.1. Voting Procedures...................................................................107
27.2. Borrowers' Consent Not Required for Certain Amendments..............................109
27.3. Course of Dealing...................................................................109
28. SEVERABILITY..................................................................................109
29.1. Sharing of Information with Section 20 Subsidiary...................................110
29.2. Confidentiality.....................................................................110
29.3. Prior Notification..................................................................110
29.4. Other...............................................................................111
30. TRANSITIONAL ARRANGEMENTS.....................................................................111
30.1. Prior Credit Agreement Superseded...................................................111
30.2. Interest and Fees Under Prior Credit Agreement......................................111
</TABLE>
<PAGE> 8
List of Schedules and Exhibits
------------------------------
Exhibits
- --------
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Loan Request
Exhibit C - Form of Term Note
Exhibit D - Compliance Certificate
Exhibit E - Form of Assignment and Acceptance
Schedules
- ---------
Schedule 1 The Lenders; Revolving Credit Commitments
Schedule 4.3 Term Loan Amortization
Schedule 8.3 Title to Properties
Schedule 8.7 Litigation
Schedule 8.10 Tax Compliance
Schedule 8.16.5 Compliance with Employee Benefit Laws
Schedule 8.18 Environmental Compliance
Schedule 8.19 Subsidiaries
Schedule 8.20 Bank Accounts
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.3 Existing Investments
Schedule 10.5.2 Disposable Assets
<PAGE> 9
SECOND
AMENDED AND RESTATED
CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is made as of June
30, 1995, amended and restated as of July 24, 1998, and further amended and
restated as of August 31, 1999, by and among TRANSTECHNOLOGY CORPORATION, a
Delaware corporation having its principal place of business at 150 Allen Road,
Liberty Corner, New Jersey 07938, USA ("TRANSTECHNOLOGY"), TRANSTECHNOLOGY
SEEGER-ORBIS GMBH, a German limited liability company having its principal place
of business at Konigstein, Germany ("GMBH"), TRANSTECHNOLOGY (GB) LIMITED, an
English limited liability company (registered no. 3062174) having its registered
office at P.O. Box 6, Ferncliffe Road, Bingley, West Yorkshire BD16 2PL,
England, formerly known as Anderton International Limited ("LIMITED"),
BANKBOSTON, N.A. ("BANKBOSTON") and the other lending institutions listed on
SCHEDULE 1 (BankBoston and such other institutions, collectively, the
"LENDERS"), BANKBOSTON, N.A., acting through its London Branch, as Sterling
Fronting Bank (the "STERLING FRONTING BANK"), BHF-BANK AKTIENGESELLSCHAFT, as DM
Fronting Bank (the "DM FRONTING BANK"), BANKBOSTON, N.A., as issuing bank (in
such capacity, the "ISSUING BANK"), ABN AMRO BANK N.V., as Syndication Agent
(the "SYNDICATION AGENT"), THE FIRST NATIONAL BANK OF CHICAGO, as Documentation
Agent (the "DOCUMENTATION AGENT"), and BANKBOSTON, N.A., as Administrative Agent
for the Lenders, the Sterling Fronting Bank, the DM Fronting Bank and the
Issuing Bank (in such capacity, the "ADMINISTRATIVE AGENT").
WHEREAS, pursuant to the Amended and Restated Credit Agreement dated as
of June 30, 1995, as amended and restated as of July 24, 1998 (as further
amended, the "PRIOR CREDIT AGREEMENT"), by and among the Borrowers, the Lenders
(as defined therein) and BankBoston, as Administrative Agent, the Lenders party
thereto made loans to the Borrowers to make certain acquisitions and for general
corporate purposes; and
WHEREAS, the Borrowers have requested, among other things, to amend and
restate the Prior Credit Agreement, and the Lenders and the Administrative Agent
are willing to amend the Prior Credit Agreement on the terms and conditions set
forth herein;
NOW, THEREFORE, the Borrowers, the Lenders and the Administrative Agent
agree that on the Closing Date the Prior Credit Agreement and all Schedules and
Exhibits thereto are hereby amended and restated in their entirety as set forth
herein and in the Schedules and Exhibits hereto and shall remain in full force
and effect only as set forth herein.
<PAGE> 10
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1. DEFINITIONS AND RULES OF INTERPRETATION.
----------------------------------------
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
ACQUISITION CLOSING DATE. The date of completion of any Approved
Acquisition.
ACQUISITION DOCUMENTS. As to any Approved Acquisition, the purchase and
sale agreement with respect to such acquisition, and any other related documents
to be executed and/or delivered in connection therewith.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head
office located at 100 Federal Street, Boston, Massachusetts 02110, or at such
other location as the Administrative Agent may designate from time to time.
ADMINISTRATIVE AGENT'S SPECIAL COUNSEL. Bingham Dana LLP, or such other
counsel as may be approved by the Administrative Agent.
AFFILIATE. With respect to any Person, any other Person that would be
considered to be an affiliate of such Person under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if such Person were issuing securities.
AGENTS. Collectively, the Documentation Agent, the Syndication Agent
and the Administrative Agent.
APPLICABLE MARGIN.
(a) From the Closing Date until the date immediately preceding the
first Reset Date after the Closing Date, the Applicable Margin with respect to
Base Rate Loans shall be 1.50%, the Applicable Margin with respect to
Eurocurrency Rate Loans shall be 3.00%, and the Commitment Fee Rate shall be
0.50%. Subject to paragraphs (b) and (c) below, for each period commencing on a
Reset Date (beginning with the first Reset Date following the Closing Date)
through the date immediately preceding the next Reset Date (each such period, a
"RATE SETTING PERIOD"), the Applicable Margin shall be the applicable percentage
set forth in the chart below (the "INITIAL PRICING GRID"), based upon the
Leverage Ratio as determined for the Reference Period ended on the last day of
the fiscal quarter ended immediately preceding the commencement of the
applicable Rate Setting Period:
<PAGE> 11
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<TABLE>
<CAPTION>
@@
- -------------------------------------------------------------------------------------------
Applicable Margin
-----------------
Leverage Ratio Base Rate Eurocurrency Commitment
-------------- --------- ------------ ----------
Loans Rate Loans Fee Rate
----- ---------- --------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
2.50:1 or lower 0.25% 1.75% 0.375%
- -------------------------------------------------------------------------------------------
3.00:1 or lower, but higher 0.50% 2.00% 0.375%
than 2.50:1
- -------------------------------------------------------------------------------------------
3.50:1 or lower, but higher 0.75% 2.25% 0.375%
than 3.00:1
- -------------------------------------------------------------------------------------------
4.00:1 or lower, but higher 1.00% 2.50% 0.500%
than 3.50:1
- -------------------------------------------------------------------------------------------
4.50:1 or lower, but higher 1.25% 2.75% 0.500%
than 4.00:1
- -------------------------------------------------------------------------------------------
Higher than 4.50:1 1.50% 3.00% 0.500%
- -------------------------------------------------------------------------------------------
@@
</TABLE>
(b) Notwithstanding the foregoing but subject to paragraph (c) below,
in the event that the Placing Date occurs on or before the ninetieth (90th) day
following the Closing Date, then and for each Rate Setting Period commencing
thereafter the Applicable Margin shall be the applicable percentage set forth in
the chart below, based upon the Leverage Ratio as determined for the Reference
Period ended on the last day of the fiscal quarter ended immediately preceding
the commencement of the applicable Rate Selling Period:
<TABLE>
<CAPTION>
@@
----------------------------------------------------------------------
Applicable Margin
-----------------
Leverage Ratio Base Rate Eurocurrency
-------------- --------- ------------
Loans Rate Loans
----- ----------
<S> <C> <C>
----------------------------------------------------------------------
2.50:1 or lower 0.00% 1.50%
----------------------------------------------------------------------
3.00:1 or lower, but higher 0.25% 1.75%
than 2.50:1
----------------------------------------------------------------------
3.50:1 or lower, but higher 0.50% 2.00%
than 3.00:1
----------------------------------------------------------------------
4.00:1 or lower, but higher 0.75% 2.25%
than 3.50:1
----------------------------------------------------------------------
4.50:1 or lower, but higher 1.00% 2.50%
than 4.00:1
----------------------------------------------------------------------
Higher than 4.50:1 1.25% 2.75%
----------------------------------------------------------------------
@@
</TABLE>
(c) If no Compliance Certificate is delivered when required by
ss.9.4(c), then, for the period commencing on the next Reset Date following the
date on which such delivery was required through the date immediately following
the date of actual delivery to the Administrative Agent of such Compliance
Certificate, the Commitment Fee Rate shall be set at the highest applicable rate
set forth in the Initial Pricing Grid above, and the Applicable Margin shall be
set at the highest applicable margin set forth in the applicable chart above.
<PAGE> 12
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APPROVED ACQUISITION. The Tinnerman Acquisition and any other
acquisition by any member of the TransTechnology Group of the shares or of
substantially all of the assets of a corporation or business, as the case may
be, whose operations are substantially concentrated in the Business (such
corporation or business, the "TARGET"), PROVIDED THAT either (i) audited
financial statements for the Target are available for its most recently ended
fiscal year and have been delivered to the Administrative Agent and each of the
Lenders, and the aggregate consideration payable by the applicable member of the
TransTechnology Group either (A) does not, when aggregated with the amount of
Indebtedness being assumed by any members of the TransTechnology Group or
remaining outstanding after the Acquisition Closing Date with respect thereto,
exceed $30,000,000 on such Acquisition Closing Date, or (B) is payable in shares
of capital stock of TransTechnology, or (ii) such acquisition is approved in
writing prior to the closing date thereof by the Majority Lenders, and PROVIDED
FURTHER that in each case, each of the following conditions, if applicable, are
either fulfilled or are waived in writing by the Majority Lenders:
(a) the acquisition of the Target is to be concluded pursuant to
negotiated agreements with the Target or its owners or other
controlling interests and approved by the Target's board of
directors or other governing body, and not as a result of a
hostile tender or otherwise without the Target's acquiescence;
(b) upon completion of the proposed acquisition, the assets of the
Target shall be subject to no lien, encumbrance, mortgage,
pledge, charge, restriction or other security other than liens
which would be Permitted Liens hereunder and lessor's
interests under the Capitalized Leases of the Target being
assumed by the purchaser;
(c) no Default or Event of Default shall have occurred and be
continuing at the time of completion of the proposed
acquisition, and no Default or Event of Default would result
therefrom;
(d) without limiting the requirement in clause (c) above, (i) upon
completion of the proposed acquisition TransTechnology and its
Subsidiaries (including the Target from and after the proposed
date of completion of such acquisition) shall be in compliance
with the financial covenants set forth in section 11 following
acquisition of the Target assuming total outstanding amounts
of and interest rates on the Loans, to be the same as those in
effect on the applicable Acquisition Closing Date after
completion of such acquisition, and (ii) in the event that the
total consideration payable in connection with such
acquisition exceeds $15,000,000, TransTechnology shall have
delivered to the Administrative Agent prior to the applicable
Acquisition Closing Date PRO FORMA financial statements in
form and substance satisfactory to the Administrative Agent
evidencing such compliance, certified by the principal
financial or accounting officer of TransTechnology;
<PAGE> 13
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(e) the Administrative Agent shall have received documentation
(including, without limitation, legal opinions and other
documentation similar to that required to be delivered in
connection with the completion of this Credit Agreement)
satisfactory to it in its sole discretion granting first
priority liens in its favor, on behalf of the Lenders, on the
assets and, if applicable, the shares of the Target and on the
assets and, if applicable, the shares of any member of the
TransTechnology Group acquiring the Target's assets or shares,
as the case may be;
(f) if the Target's assets include any freehold interests in real
property, the Administrative Agent shall have received Phase
One environmental site assessments and appraisals of such real
property in form and substance reasonably satisfactory to the
Administrative Agent;
(g) upon completion of any proposed acquisition by purchase of the
shares or other equity interests of the Target, the Target
shall either be merged with and into TransTechnology or one of
its Subsidiaries, with TransTechnology or such Subsidiary as
the surviving entity, or, if the Target continues in existence
as a Subsidiary of TransTechnology or one of its Subsidiaries,
it shall do so in compliance with and subject to the
conditions set forth herein;
(h) the Target's operating income, determined in accordance with
generally accepted accounting principles, for the twelve (12)
months immediately preceding the proposed Acquisition Closing
Date shall be greater than zero; and
(i) the Administrative Agent and the Lenders shall have received
reasonably detailed written notice of the proposed acquisition
at least fifteen (15) Business Days' prior to the proposed
Acquisition Closing Date.
ARRANGER. BancBoston Robertson Stephens Inc.
ASSIGNMENT AND ACCEPTANCE. See ss.ss.20.1.1 and 20.1.2.
BALANCE SHEET DATE. March 31, 1999.
BANKBOSTON. See the preamble to this Credit Agreement.
BASE RATE. With respect to amounts denominated in Dollars, the Dollar
Base Rate; with respect to amounts denominated in Deutschmarks, the DM Base
Rate; and with respect to amounts denominated in Sterling, the Sterling Base
Rate, with each of the Dollar Base Rate, DM Base Rate and Sterling Base Rate
being referred to herein as a "Base Rate".
<PAGE> 14
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BASE RATE LOANS. Any Revolving Credit Loans, any International Facility
Loans and any portion of the Term Loan bearing interest calculated by reference
to a Base Rate.
BORROWERS. TransTechnology, GmbH and Limited, collectively, and each
individually being referred to as a "Borrower".
BRAZILIAN PLEDGE AGREEMENT. The Pledge of Quotas dated as of December
31, 1995, made by GmbH (as managing general partner of SO OHG) and Joao
Scivoletto in favor of the Administrative Agent with respect to the share
capital of the Brazilian Subsidiary, as amended and in effect from time to time.
BRAZILIAN SUBSIDIARY. Seeger-Reno Industria e Commercio Ltda., a
Brazilian corporation.
BUSINESS. The businesses engaged in by TransTechnology and its
Subsidiaries at the Closing Date, and businesses reasonably related or
incidental thereto.
BUSINESS DAY. Any day (other than a Saturday or Sunday) on which
banking institutions in Boston, Massachusetts, are open for the transaction of
banking business and, in the case of Eurocurrency Rate Loans, DM Loans and
Sterling Loans, also a day which is a Eurocurrency Business Day.
CANADIAN SECURITY DOCUMENTS. The General Security Agreement, the
Confirmation Security Agreement with respect to certain intellectual property
rights, and the Mortgage over all of the Real Estate of TransTechnology Canada,
each dated of even date herewith and made by TransTechnology Canada in favor of
the Administrative Agent, and each as amended and in effect from time to time.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); PROVIDED that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
CAPITAL EXPENDITURES. As to any Person, amounts paid or indebtedness
incurred by such Person in connection with the purchase or lease by such Person
of Capital Assets that would be required to be capitalized and shown on the
balance sheet of such Person in accordance with generally accepted accounting
principles.
CAPITALIZED LEASES. Leases (unless otherwise stated, under which
TransTechnology or any of its Subsidiaries is the lessee or obligor), the
discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.
CERCLA. See Section 8.18.
<PAGE> 15
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CHARGES OVER SHARES. The Charge over Shares, dated June 30, 1995, from
TTSO Inc. in favor of the Administrative Agent with respect to 65% of the share
capital of Limited, the Charge over Shares, dated June 30, 1995, from Limited in
favor of the Administrative Agent with respect to the entire share capital of
Anderton (Predecessors) Limited, and the Charge Over Shares, dated July 19,
1999, from Limited in favor of the Administrative Agent with respect to the
entire share capital of Ellison Holdings plc, each as amended and in effect from
time to time.
CLOSING DATE. The first date on which the conditions set forth in ss.12
have been satisfied and the Term Loan or any Revolving Credit Loan or
International Facility Loan is to be made or any Letter of Credit is to be
issued hereunder.
CODE. The Internal Revenue Code of 1986.
COLLATERAL. All of the property, rights and interests of
TransTechnology and its Subsidiaries that are or are intended to be subject to
the security interests and mortgages created by the Security Documents.
COLLATERAL ASSIGNMENT OF ACQUISITION AGREEMENT. Any assignment of
rights under any acquisition agreement by TransTechnology or any of its
Subsidiaries in favor of the Administrative Agent, for the benefit of the
Lenders, in each case in form and substance satisfactory to the Lenders and the
Administrative Agent.
COLLATERAL INSTRUMENT. Letters of credit, guarantees, indemnities and
performance bonds in form and substance satisfactory to a Fronting Bank issued
or to be issued by such Fronting Bank to or for the account of either GmbH or
Limited, as the case may be, pursuant to section 3.1 and section 3.3,
respectively.
COMMITMENT. As to any Lender, such Lender's Revolving Credit
Commitment, Term Commitment or commitment to participate in the International
Facility Loans, as the case may be.
COMMITMENT FEE RATE. For each Rate Setting Period, the rate per annum
set forth in the Initial Pricing Grid under the column headed "Commitment Fee
Rate" with respect to the Leverage Ratio applicable to such Rate Setting Period.
COMMITMENT PERCENTAGE. With respect to each Lender, the percentage set
forth on SCHEDULE 1 hereto as such Lender's percentage of (a) the aggregate
Revolving Credit Commitments of all of the Lenders, and (b) the Term Loan.
COMPLIANCE CERTIFICATE. The certificate delivered pursuant to
section 9.4(c).
CONSOLIDATED OR Consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of TransTechnology and
its Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED ADJUSTED EBITDA. With respect to any Reference Period,
Earnings Before Interest and Taxes for such Reference Period, before provision
for
<PAGE> 16
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any depreciation and amortization PLUS, to the extent that during such Reference
Period any Approved Acquisition shall have been completed, the Earnings Before
Interests and Taxes, before provision for any depreciation or amortization,
attributable to the operations of the applicable Target during the period prior
to the applicable Acquisition Closing Date included in such Reference Period,
but only to the extent evidenced by audited financial statements of the Target
or as otherwise approved in writing by the Administrative Agent and the Majority
Lenders prior to such Acquisition Closing Date, PROVIDED that such Earnings
before Interest and Taxes may include the amount of any cost savings directly
attributable to such Approved Acquisition, to the extent that such savings are
either (i) recognized by Regulation S-X under the Securities Exchange Act of
1934, or (ii) approved in writing by the Administrative Agent and the Majority
Lenders prior to such Acquisition Closing Date, all as determined in accordance
with generally accepted accounting principles.
CONSOLIDATED EBITDA. With respect to any Reference Period, Earnings
Before Interest and Taxes for such Reference Period, before provision for any
depreciation and amortization, as determined in accordance with generally
accepted accounting principles.
CONSOLIDATED EXCESS CASH FLOW. With respect to TransTechnology and its
Subsidiaries and any particular fiscal period, an amount equal to (a)
Consolidated Operating Cash Flow for such period LESS (b) the sum of (i)
Consolidated Total Interest Expense for such period, PLUS (ii) any mandatory
repayments or prepayments (whether scheduled or otherwise) of principal on any
Indebtedness of TransTechnology or any of its Subsidiaries paid or due and
payable during such period PLUS (iii) any voluntary repayments or prepayments of
principal on any Indebtedness of TransTechnology or any of its Subsidiaries made
during such period, except for repayments of Revolving Credit Loans made other
than in connection with a permanent reduction or termination of the Total
Revolving Credit Commitment pursuant to section 2.3, PLUS (iv) an amount equal
to the amount of repayments of Revolving Credit Loans and Unpaid Reimbursement
Obligations as may be necessary to ensure that, as of the last day of such
fiscal period, the aggregate amount of Revolving Credit Availability PLUS the
total amount of cash and cash equivalents held by TransTechnology and its
Subsidiaries exceeds $15,000,000, PLUS (v) to the extent not otherwise deducted
from Consolidated EBITDA in the calculation of Consolidated Operating Cash Flow
for such period, an amount equal to the costs (including amounts payable as
purchase price and fees and expenses of professional advisers) actually incurred
by TransTechnology and its Subsidiaries during such fiscal period with respect
to any Approved Acquisition.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of TransTechnology and its Subsidiaries, after deduction of all
expenses, taxes and other proper charges, determined in accordance with
generally accepted accounting principles.
<PAGE> 17
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CONSOLIDATED NET WORTH. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, LESS, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
CONSOLIDATED OPERATING CASH FLOW. For any period, an amount equal to
(a) Consolidated EBITDA for such period, LESS (b) the sum of (i) cash payments
for all income taxes paid during such period, PLUS (ii) Capital Expenditures
made during such period to the extent permitted by section 11.6, PLUS (iii)
amounts included in Consolidated EBITDA for such period and attributable to
gains on asset sales during such period, to the extent such asset sales are
permitted by section 10.5, PLUS (iv) Distributions made during such period, to
the extent permitted by section 10.4.
CONSOLIDATED TOTAL ASSETS. All assets of TransTechnology and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest required to be paid or accrued by TransTechnology and its
Subsidiaries during such period on all Indebtedness of TransTechnology and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of
Subordinated Debt or Capitalized Leases and including commitment fees, agency
fees, facility fees and similar fees or expenses in connection with the
borrowing of money, but EXCLUDING the non-cash amortization of fees paid with
respect to the Prior Credit Agreement, or pursuant to sections 6.1 and 6.2 under
the Credit Agreement on the Closing Date.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of TransTechnology and
its Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of TransTechnology and its
Subsidiaries, whether or not so classified.
CONVERSION REQUEST. A notice given by a Borrower to the Administrative
Agent or a Fronting Bank, as the case may be, of such Borrower's election to
convert or continue a Loan in accordance with section 2.7.
COPYRIGHT MORTGAGES. Any Copyright Mortgage and Security Agreements
made by TransTechnology or any of its Subsidiaries in favor of the
Administrative Agent and in form and substance satisfactory to the Lenders and
the Administrative Agent.
COUNTER INDEMNITY. Any indemnity or counter indemnity from GmbH or
Limited, as the case may be, in favor of the DM Fronting Bank or the Sterling
Fronting Bank, as applicable, with respect to any Collateral Instrument issued
to or for the account of either GmbH or Limited, in the standard form of
indemnity or counter indemnity used by such Fronting Bank or in such other form
and substance as may be satisfactory to such Fronting Bank and including
(without limitation) any
<PAGE> 18
-10-
letter of credit application incorporating indemnification language satisfactory
to such Fronting Bank.
CREDIT AGREEMENT. This Second Amended and Restated Credit Agreement,
including the Schedules and Exhibits hereto.
DEBENTURES. The Debenture dated January 3, 1996 made by Limited in
favor of the Administrative Agent, the Debenture dated June 30, 1995 made by
Anderton (Predecessors) Limited in favor of the Administrative Agent, and any
Debenture made by Ellison Holdings plc or any of its Subsidiaries in favor of
the Administrative Agent after the Closing Date pursuant to and in accordance
with that certain letter agreement dated July 19, 1999, in each case as amended
and in effect from time to time.
DEFAULT. See section 14.1.
DEUTSCHMARKS or DM. Deutschmarks in lawful currency of the Federal
Republic of Germany, or any unit of currency replacing the Deutschmark as the
lawful currency of the Federal Republic of Germany in accordance with European
laws or regulations.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of TransTechnology, other
than dividends payable solely in shares of common stock of TransTechnology; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of TransTechnology, directly or indirectly through a Subsidiary of
TransTechnology or otherwise; the return of capital by TransTechnology to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of TransTechnology.
DM BASE RATE. The annual rate of interest announced from time to time
by the DM Fronting Bank as its "base rate" for loans denominated in
Deutschmarks.
DM EQUIVALENT. On any date of determination, with respect to an amount
denominated in Deutschmarks, such amount of Deutschmarks, and with respect to an
amount denominated in Sterling or Dollars, the amount of Deutschmarks which
could be purchased with that amount of Sterling or Dollars, as the case may be,
at the spot rate of exchange quoted by the DM Fronting Bank in the Frankfurt
Foreign Exchange Market at or about 11:00 a.m. (Frankfurt time) on the date of
determination for the purchase of Deutschmarks with Sterling or Dollars, as the
case may be.
DM EUROCURRENCY LOAN. See section 3.1
DM EUROCURRENCY RATE. For any Interest Period with respect to a DM
Loan, the rate of interest equal to the rate per annum (rounded upwards to the
nearest 1/16 of one percent) at which the DM Fronting Bank is offered deposits
in Deutschmarks two (2) Eurocurrency Business Days prior to the beginning of
such Interest Period in the Frankfurt interbank market for delivery on the first
day of
<PAGE> 19
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such Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the DM Loan to which such Interest Period applies,
divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
DM FACILITY LOANS. The DM Eurocurrency Loans and the DM Overdraft
Advances, collectively.
DM FRONTING BANK. Initially, the head office in Frankfurt, Germany, of
BHF-BANK Aktiengesellschaft, in its capacity as DM Fronting Bank, and thereafter
such office as may be appointed as successor DM Fronting Bank in accordance with
section 6.12.3.
DM LOAN. Any International Facility Loan which is denominated in
Deutschmarks.
DM OVERDRAFT ADVANCE. See section 3.1.
DOCUMENTATION AGENT. See the preamble of this Credit Agreement.
DOLLAR BASE RATE. The higher of (i) the annual rate of interest
announced from time to time by the Administrative Agent at its Head Office in
Boston, Massachusetts, as its "base rate" for loans denominated in Dollars, and
(ii) one-half of one percent (1/2%) above the Federal Funds Effective Rate. For
the purposes of this definition, "FEDERAL FUNDS EFFECTIVE RATE" shall mean for
any day, the rate per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three funds brokers of recognized
standing selected by the Administrative Agent.
DOLLAR EQUIVALENT. On any date of determination, with respect to an
amount denominated in Dollars, such amount of Dollars, and with respect to an
amount denominated in Sterling or Deutschmarks, the amount of Dollars which
could be purchased with that amount of Sterling or Deutschmarks, as the case may
be, at the spot rate of exchange quoted by the Fronting Bank in the London
Foreign Exchange Market at or about 11:00 a.m. (London time) on the date of
determination for the purchase of Dollars with Sterling or Deutschmarks, as the
case may be.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DOMESTIC LENDING OFFICE. Initially, the office of each Lender
designated as such in SCHEDULE 1 hereto and thereafter, such other office of
such Lender, if any, located within the United States that will be making or
maintaining Base Rate Loans.
<PAGE> 20
-12-
DOMESTIC SUBSIDIARIES. Those Subsidiaries of TransTechnology which are
incorporated in or organized under the laws of any state, district or territory
of the United States, Canada or the Commonwealth of Puerto Rico.
DRAWDOWN DATE. The date on which any Revolving Credit Loan or any
International Facility Loan or the Term Loan is made or is to be made, and the
date on which any Loan or is converted or continued in accordance with section
2.7, as the case may be.
EARLY PLACING DATE. The date no later than the ninetieth (90th) day
following the Closing Date upon which TransTechnology shall have completed the
placing of at least $125,000,000 in aggregate principal amount of Subordinated
Debt.
EARNINGS BEFORE INTEREST AND TAXES. The consolidated earnings (or loss)
from the operations of TransTechnology and its Subsidiaries for any period,
after all expenses and other proper charges but before payment or provision for
any income taxes or interest expense for such period, determined in accordance
with generally accepted accounting principles, after eliminating therefrom all
non-recurring items of income (or loss) resulting from the discontinuation of
operations to the extent that all assets characterized as belonging to or being
employed in such operations are also excluded from Consolidated Total Assets
pursuant to the definition thereof.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $5,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $500,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $5,000,000,000, PROVIDED that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; (v) a Lender or an
Affiliate of a Lender; and (vi) if, but only if, any Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company, investment fund or other financial institution or other Person
approved by the Administrative Agent, such approval not to be unreasonably
withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
section 3(3) of ERISA maintained or contributed to by TransTechnology or any
ERISA Affiliate, other than a Multiemployer Plan.
ENGLISH GUARANTEES. The Deed of Guarantee and Indemnity, dated June 30,
1995, made by Limited in favor of the Administrative Agent, and the Deed of
Guarantee of Indemnity, June 30, 1995, made by Anderton (Predecessors) Limited
<PAGE> 21
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in favor of the Administrative Agent, each as amended and in effect from time to
time.
ENGLISH SECURITY DOCUMENTS. The Debentures and the Charges over Shares,
as in effect from time to time.
ENVIRONMENTAL LAWS. See section 8.18(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
TransTechnology under section 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EUROCURRENCY BUSINESS DAY. Any day (other than a Saturday or Sunday) on
which commercial banks are open for international business (including dealings
in Dollar, Deutschmark and Sterling deposits) in London, England and
Frankfurt-am-Main, Germany.
EUROCURRENCY RATE. With respect to amounts denominated in Dollars, the
Eurodollar Rate; with respect to amounts denominated in Deutschmarks, the DM
Eurocurrency Rate; with respect to amounts denominated in Sterling, the Sterling
Eurocurrency Rate.
EUROCURRENCY RATE LOANS. Any Revolving Credit Loans, any International
Facility Loans, and any portion of the Term Loan bearing interest calculated by
reference to a Eurocurrency Rate.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurocurrency
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
EURODOLLAR LENDING OFFICE. Initially, the office of each Lender
designated as such in SCHEDULE 1 hereto, and thereafter, such other office of
such Lender, if any, that shall be making or maintaining Eurocurrency Rate Loans
denominated in Dollars.
EURODOLLAR RATE. For any Interest Period with respect to a Eurocurrency
Rate Loan denominated in Dollars, the rate of interest equal to (i) the
arithmetic average of the rates per annum for the Reference Bank (rounded
upwards to the nearest 1/16 of one percent) of the rate at which the Reference
Bank's Eurodollar
<PAGE> 22
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Lending Office is offered Dollar deposits two Eurocurrency Business Days prior
to the beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted, for delivery on the first
day of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurocurrency Rate Loan to which such
Interest Period applies, divided by (ii) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
EVENT OF DEFAULT. See section 14.1.
FEE LETTER. The letter agreement or agreements between BankBoston, the
Arranger and TransTechnology dated or to be dated on or prior to the Closing
Date with respect to the amount of certain fees payable or to be paid by the
Borrowers jointly and severally (but, in the case of GmbH, subject to Section 30
of the GmbH Act of Germany) under or in respect of this Credit Agreement.
FOREIGN SUBSIDIARIES. Those Subsidiaries of TransTechnology other than
the Domestic Subsidiaries.
FRONTED LOANS. The International Facility Loans, with each (and any
portion of each) being individually a "FRONTED LOAN".
FRONTING BANKS. The DM Fronting Bank and the Sterling Fronting Bank,
collectively, and each individually a "FRONTING BANK".
FUNDED INDEBTEDNESS. At any time of determination, the aggregate
principal amount of all funded Indebtedness for borrowed money (including, for
the avoidance of doubt, all Subordinated Debt of TransTechnology and any of its
Subsidiaries), PLUS all obligations, contingent and otherwise, to reimburse the
issuer in respect of any letter of credit, performance bonds, bankers'
acceptances, guarantees or other similar instruments, PLUS Capitalized Leases,
of TransTechnology and its Subsidiaries.
FUNDING ACCOUNT. See section 2.8.1.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (i) When used in section 11,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
TransTechnology reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of TransTechnology adopting the same principles, PROVIDED that in
each case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
<PAGE> 23
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accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
GERMAN MORTGAGE. The Real Estate Mortgages dated as of February 28,
1996 and May 30, 1996, together with the German Security Agreement, dated June
23, 1998, entered into by SO OHG in favor of the DM Fronting Bank, as agent for
the Administrative Agent and for the benefit of the Lenders, with respect to the
real property at:
(a) Wiesbadener Strasse/Fischbacher Strasse, Konigstein,
Germany (Folio 19-615);
(b) Wiesbadener Strasse, Konigstein, Germany
(Folio 21-699); and
(c) Frittlingen, Germany (Folio 1349);
as amended in effect from time to time.
GERMAN PLEDGE AGREEMENTS. The Pledge of Shares made by TTSO Inc. in
favor of the Administrative Agent with respect to the share capital of GmbH, and
the pledge of Partnership Interests by GmbH in favor of the Administrative Agent
with respect to its interest as managing general partner of SO OHG, in each case
as amended and in effect from time to time.
GERMAN SECURITY DOCUMENTS. The Pledges as to Equipment and Inventory
and the Assignment of Accounts Receivable dated December 28, 1995 and June 23,
1998, by SO OHG in favor of the DM Fronting Bank, as agent for the
Administrative Agent and for the benefit of the Lenders, with respect to all of
the equipment, inventory and accounts receivable of SO OHG, as amended and in
effect from time to time, the German Mortgage, and the German Pledge Agreements.
GMBH. See the preamble to this Credit Agreement.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by TransTechnology
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
GUARANTIES. The Parent Guaranty, the Subsidiary Guaranty and the
English Guarantees.
GUARANTOR. Each Subsidiary of TransTechnology which is a party to the
Subsidiary Guaranty or the English Guarantees.
HAZARDOUS SUBSTANCES. See Section 8.18(b).
<PAGE> 24
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INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit, performance bonds,
bankers' acceptances, guarantees or other similar instruments; but EXCLUDING all
liabilities in respect of Operating Leases.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. Section 24, Seventh).
INITIAL PRICING GRID. See the definition of APPLICABLE MARGIN.
INTEREST PAYMENT DATE. (i) As to any Base Rate Loan, the first day
after the last day of the Interest Period with respect thereto; and (ii) as to
any Eurocurrency Rate Loan in respect of which the Interest Period is (A) 3
months or less, the last day of such Interest Period, and (B) more than 3
months, the date that is 3 months from the first day of such Interest Period
and, in addition, the last day of such Interest Period.
INTEREST PERIOD. With respect to each Loan, (i) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the following periods, as selected by the relevant Borrower of such Loan in a
Loan Request: (A) for any Base Rate Loan, a calendar quarter, and (B) for any
Eurocurrency Rate Loan, 1, 2, 3 or 6 months; and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Loan and ending on the last day of one of the periods set forth above, as
selected by the relevant Borrower of such Loan in a Conversion Request; PROVIDED
that all of the foregoing provisions relating to Interest Periods are subject to
the following:
(a) if any Interest Period with respect to a Eurocurrency Rate
Loan would otherwise end on a day that is not a Eurocurrency Business
Day, that Interest Period shall be extended to the next succeeding
Eurocurrency Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Eurocurrency Business Day;
<PAGE> 25
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(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the relevant Borrower shall fail to give notice as
provided in ss.2.7, such Borrower shall be deemed to have requested a
conversion of the affected Eurocurrency Rate Loan to a Base Rate Loan
and the continuance of all Base Rate Loans as Base Rate Loans on the
last day of the then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan
that begins on the last Eurocurrency Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurocurrency Business Day of a calendar month; and
(e) any Interest Period relating to any Eurocurrency Rate Loan
that would otherwise extend beyond the Revolving Credit Loan Maturity
Date shall end on the Revolving Credit Loan Maturity Date.
INTEREST RATE PROTECTION DOCUMENTS. The documents evidencing the
interest rate cap or swap arrangements entered into by TransTechnology pursuant
to Section 9.15, as such arrangements and the related documents may be amended,
modified, varied or supplemented from time to time.
INTERNATIONAL FACILITY AMOUNT. At any time of determination, the Dollar
Equivalent at such time of the sum of the Total DM Facility Usage and the Total
Sterling Facility Usage.
INTERNATIONAL FACILITY LOANS. The DM Facility Loans made or to be made
by the DM Fronting Bank to GmbH and the Sterling Facility Loans made or to be
made by the Sterling Fronting Bank to Limited, in each case pursuant to Section
3, and all liabilities of GmbH and Limited (whether contingent or otherwise)
incurred or to be incurred in connection with the issuance of Collateral
Instruments and delivery of Counter Indemnities pursuant to Section 3.
INTERNATIONAL FACILITY LOAN REQUEST. See Sections 3.6 and 3.7.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
<PAGE> 26
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repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LENDERS. The Lenders referred to on SCHEDULE 1 hereto, and, unless the
context otherwise requires, also the Fronting Banks and the Issuing Bank,
collectively, and each individually being referred to as a "Lender".
LETTER OF CREDIT. See Section 5.1.1.
LETTER OF CREDIT APPLICATION. See Section 5.1.1.
LETTER OF CREDIT FEES. See Section 5.6.
LETTER OF CREDIT PARTICIPATION. See Section 5.1.4.
LEVERAGE RATIO. As of any date of testing, the ratio of Funded
Indebtedness outstanding at such date to Consolidated Adjusted EBITDA,
calculated for a Reference Period ended on the last day of the fiscal quarter
ending on such date or most recently ended prior to such date, as the case may
be.
LIMITED. See the preamble to this Credit Agreement.
LOAN DOCUMENTS. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Interest Rate Protection Documents, the
Counter Indemnities and the Security Documents, together with any other
documents from time to time entered into and identified therein as a "Loan
Document" hereunder.
LOAN REQUEST. A Revolving Credit Loan Request or an International
Facility Loan Request.
LOANS. The Revolving Credit Loans, the International Facility Loans and
the Term Loan.
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
holding at least fifty-one percent (51%) of the outstanding principal amount of
the Revolving Credit Notes and the Term Notes (if any), taken together, and if
no such amounts are outstanding, two or more Lenders whose aggregate Commitments
constitute at least fifty-one percent (51%) of the aggregate of the Commitments
of all of the Lenders.
MAXIMUM DM AMOUNT. The maximum principal amount of International
Facility Loans denominated in Deutschmarks available to GmbH from the DM
Fronting Bank, as such amount may be reduced from time to time in accordance
<PAGE> 27
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with the terms and provisions of this Credit Agreement. At the Closing Date,
prior to the drawdown of any International Facility Loans, the Maximum DM Amount
shall be the DM Equivalent of $10,000,000.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
MAXIMUM INTERNATIONAL FACILITY AMOUNT. The aggregate amount of the
Maximum DM Amount PLUS the Maximum Sterling Amount.
MAXIMUM STERLING AMOUNT. The maximum principal amount of International
Facility Loans denominated in Sterling available to Limited from the Sterling
Fronting Bank, as such amount may be reduced from time to time in accordance
with the terms and provisions of this Credit Agreement. At the Closing Date,
prior to the drawdown of any International Facility Loans, the Maximum Sterling
Amount shall be the Sterling Equivalent of $20,000,000.
MORTGAGED PROPERTY. Any Real Estate which is subject to the German
Mortgage, the Debentures or any other Mortgage.
MORTGAGES. The several mortgages and deeds of trust from
TransTechnology and its Subsidiaries to the Administrative Agent with respect to
the fee and certain leasehold interests of TransTechnology and its Subsidiaries
in the Real Estate, in each case as amended and in effect from time to time.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by TransTechnology or any
ERISA Affiliate.
NET CASH PROCEEDS. If from a sale of assets or of equity, the cash
proceeds received from such sale, net of all costs of sale, underwriting or
brokerage costs, and taxes paid or payable as a result thereof by
TransTechnology and its Subsidiaries, and if from the incurring of Indebtedness,
the cash proceeds received from such incurring of Indebtedness, net of all costs
thereof incurred and fees and all expenses payable in connection therewith, and
taxes paid or payable as a result thereof, by TransTechnology and its
Subsidiaries.
NOTES. The Revolving Credit Notes and the Term Notes.
OBLIGATIONS. All indebtedness, obligations and liabilities of any of
TransTechnology and its Subsidiaries to any of the Lenders and the
Administrative Agent, individually or collectively, existing on the date of this
Credit Agreement or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Credit Agreement or any of the other Loan
Documents or in respect of any of the Loans made or Reimbursement Obligations
incurred or any of the Notes, Letter of Credit
<PAGE> 28
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Applications, Letters of Credit, the Interest Rate Protection Documents, Counter
Indemnities or other instruments at any time evidencing any thereof.
OPERATING LEASES. Leases (unless otherwise stated, under which
TransTechnology or any of its Subsidiaries is the lessee or obligor) of any
property, whether real, personal or mixed, which are not Capitalized Leases.
OUTSTANDING. With respect to any Loan or the Loans, the aggregate
unpaid principal thereof as of any date of determination.
PARENT GUARANTY. The Guaranty, dated as of June 30, 1995, made by
TransTechnology in favor of the Administrative Agent, pursuant to which
TransTechnology guaranties to the Lenders and the Administrative Agent the
payment and performance of the Obligations of GmbH and Limited, as amended and
in effect from time to time.
PARTNERSHIP AGREEMENT. The partnership agreement of SO OHG entered into
between TTSOB and GmbH, as in effect on October 27, 1995.
PATENT ASSIGNMENT. The Patent Assignment, dated as of June 30, 1995
made by TransTechnology and its Subsidiaries in favor of the Administrative
Agent, as amended and in effect from time to time, and any other Patent
Assignments made by TransTechnology or any of its Subsidiaries in favor of the
Administrative Agent and in form and substance satisfactory to the Lenders and
the Administrative Agent.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERFECTION CERTIFICATES. The Perfection Certificates as defined in the
Security Agreements.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by Section 10.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PLACING DATE. The date upon which TransTechnology shall have completed
the placing of at least $100,000,000 in aggregate principal amount of
Subordinated Debt.
PRIOR CREDIT AGREEMENT. See the preamble to this Credit Agreement.
PROJECTIONS. See Section 8.4.3.
RATE SETTING PERIOD. See the definition of "APPLICABLE MARGIN".
<PAGE> 29
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REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by TransTechnology or any of its Subsidiaries.
RECORD. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
REFERENCE BANK. BankBoston.
REFERENCE PERIOD. A period of four (4) consecutive fiscal quarters.
REIMBURSEMENT OBLIGATION. TransTechnology's obligation to reimburse the
Administrative Agent, the Issuing Bank and the Lenders on account of any drawing
under any Letter of Credit as provided in Section 5.2.
RELATED FUND. With respect to any Lender that is an investment fund
that invests in commercial loans, any other such fund that is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
RENTAL OBLIGATIONS. All present or future obligations of
TransTechnology or any of its Subsidiaries under any rental agreements or leases
of real or personal property, other than (i) obligations that can be terminated
by the giving of notice without liability to TransTechnology or such Subsidiary
in excess of the liability for rent due as of the date on which such notice is
given and under which no penalty or premium is paid as a result of any such
termination, and (ii) obligations in respect of Capitalized Leases.
RESET DATE. The first Business Day of the month immediately following
the month in which a Compliance Certificate is required to be delivered by
TransTechnology pursuant to Section 9.4(c).
REVOLVING CREDIT AVAILABILITY. At any time of reference thereto, the
amount by which the Total Revolving Credit Commitment as in effect at such time
exceeds the aggregate of (a) the outstanding amount of Revolving Credit Loans at
such time (after giving effect to all amounts requested) PLUS (b) the sum of the
Maximum Drawing Amount, all Unpaid Reimbursement Obligations and the
International Facility Amount at such time.
REVOLVING CREDIT COMMITMENT. With respect to each Lender, (a)
initially, the amount set forth on column 2 of SCHEDULE 1 hereto, and (b) in the
event the Early Placing Date shall have occurred and all of the Senior
Subordinated Loans and the Term Loan shall have been repaid in full, the amount
set forth on column 3 of SCHEDULE 1 hereto, as the amount of such Lender's
commitment to make Revolving Credit Loans to TransTechnology, to participate in
the issuance, extension and renewal of Letters of Credit for the account of
TransTechnology, and to indemnify the Fronting Banks in accordance with Section
6.12.2, as the same may be reduced from time to time, or if such commitment is
terminated pursuant to the provisions hereof, zero.
<PAGE> 30
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REVOLVING CREDIT LOAN MATURITY DATE. August 31, 2004.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by
the Lenders to TransTechnology pursuant to Section 2.
REVOLVING CREDIT LOAN REQUEST. See Section 2.6.
REVOLVING CREDIT NOTE RECORD. A Record with respect to a Revolving
Credit Note.
REVOLVING CREDIT NOTES. See Section 2.4.
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Lender, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
SECURITY AGREEMENTS. The several Security Agreements, dated as of June
30, 1995, between TransTechnology and its Subsidiaries and the Administrative
Agent, as amended and in effect from time to time.
SECURITY DOCUMENTS. The Guaranties, the Security Agreements, the
Mortgages, the Patent Assignments, the Trademark Assignments, the Copyright
Mortgages, the German Security Documents, the English Security Documents, the
Canadian Security Documents, the Collateral Assignments of Acquisition
Agreements, the Brazilian Pledge Agreement, and the Stock Pledge Agreements, and
any other documents or instruments from time to time securing any of the
Obligations or evidencing such security.
SENIOR FUNDED INDEBTEDNESS. At any time of determination, the aggregate
principal amount of all funded Indebtedness for borrowed money (other than
Subordinated Debt), PLUS all obligations, contingent and otherwise, to reimburse
the issuer in respect of any letters of credit, performance bonds, bankers'
acceptances, guarantees or other similar instruments, PLUS Capitalized Leases,
of TransTechnology and its Subsidiaries.
SENIOR LEVERAGE RATIO. As of any date of testing, the ratio of Senior
Funded Indebtedness outstanding at such date to Consolidated Adjusted EBITDA,
calculated for a Reference Period ended on the last day of the fiscal quarter
ended on such date or most recently ended prior to such date, as the case may
be.
SENIOR SUBORDINATED LOAN AGREEMENT. The $75,000,000 Senior Subordinated
Note Purchase Agreement, dated of even date herewith, by and among the Company,
the Lenders and Holders referred to therein and BankBoston, N.A., as
Administrative Agent for such Lenders and Holders.
SENIOR SUBORDINATED LOAN DOCUMENTS. Collectively, the Senior
Subordinated Loan Agreement, the Subordinated Guaranty, and each of the Notes,
the Warrant Agreement, the Warrants, the Warrant Holders' Agreement, the
Registration Rights
<PAGE> 31
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Agreement, the Exchange Escrow Agreement and the Indenture, each as defined in
the Senior Subordinated Loan Agreement.
SENIOR SUBORDINATED LOANS. Amounts outstanding under the Senior
Subordinated Loan Agreement, as such amounts may be converted in accordance with
the terms thereof.
SO OHG. Seeger-Orbis GmbH & Co. OHG, a German general commercial
partnership, at least ninety-nine percent (99%) of whose partnership interests
are held by GmbH and the remainder of whose partnership interests are held by
TTSOB.
STERLING or (POUND). Pounds sterling in the lawful currency of the
United Kingdom of Great Britain and Northern Ireland.
STERLING BASE RATE. The annual rate of interest announced from time to
time by the Sterling Fronting Bank as its "base rate" for loans denominated in
Sterling.
STERLING EQUIVALENT. On any date of determination, with respect to an
amount denominated in Sterling, such amount of Sterling, and with respect to an
amount denominated in Deutschmarks or Dollars, the amount of Sterling which
could be purchased with that amount of Deutschmarks or Dollars, as the case may
be, at the spot rate of exchange quoted by the Sterling Fronting Bank in the
London Foreign Exchange Market at or about 11:00 a.m. (London time) on the date
of determination for the purchase of Sterling with Deutschmarks or Dollars, as
the case may be.
STERLING EUROCURRENCY LOAN. See Section 3.3.
STERLING EUROCURRENCY RATE. For any Interest Period with respect to a
Sterling Loan, the rate of interest equal to the rate per annum (rounded upwards
to the nearest 1/16 of one percent) at which the Sterling Fronting Bank is
offered deposits in Sterling two (2) Eurocurrency Business Days prior to the
beginning of such Interest Period in the London interbank market for delivery on
the first day of such Interest Period for the number of days comprised therein
and in an amount comparable to the amount of the Sterling Loan to which such
Interest Period applies, divided by (ii) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
STERLING FACILITY LOANS. The Sterling Eurocurrency Loans and the
Sterling Overdraft Advances, collectively.
STERLING FRONTING BANK. Initially, the London Branch of BankBoston, in
its capacity as Sterling Fronting Bank; and thereafter such office as may be
appointed as may be appointed as successor Sterling Fronting Bank in accordance
with Section 6.12.3.
STERLING LOAN. Any International Facility Loan which is denominated in
pounds Sterling.
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STERLING OVERDRAFT ADVANCE. See Section 3.3.
STOCK PLEDGE AGREEMENTS. The Stock Pledge Agreements, dated as of June
30, 1995, between TransTechnology and certain of the Guarantors on the one hand
and the Administrative Agent on the other hand with respect to each of the
Domestic Subsidiaries of TransTechnology, as amended and in effect from time to
time.
SUBORDINATED DEBT. Unsecured Indebtedness of TransTechnology or any of
its Subsidiaries in an amount, containing other terms and conditions, and
expressly subordinated and made junior to the payment and performance in full of
the Obligations, pursuant to a written instrument containing subordination
provisions, in each respect satisfactory to and approved by the Majority Lenders
and the Administrative Agent in writing.
SUBORDINATED GUARANTY. The Subordinated Guaranty dated of even date
herewith entered into by TransTechnology's Domestic Subsidiaries in favor of the
Administrative Agent and the Lenders under and as defined in the Senior
Subordinated Note Purchase Agreement with respect to the Senior Subordinated
Loans.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
SUBSIDIARY GUARANTY. The Guaranty, dated as of June 30, 1995, made by
each Domestic Subsidiary in favor of the Lenders and the Administrative Agent,
pursuant to which each Domestic Subsidiary guaranties to the Lenders and the
Administrative Agent the payment and performance of the Obligations, as amended
and in effect from time to time.
SURVEY. In relation to a Mortgaged Property, an instrument survey of
such Mortgaged Property acceptable to the Administrative Agent.
SYNDICATION AGENT. See the preamble of this Credit Agreement.
TERM LOAN. The term loan made or to be made by the Lenders to
TransTechnology on the Closing Date in the aggregate principal amount of
$50,000,000 pursuant to Section 4.1.
TERM LOAN MATURITY DATE. August 31, 2004.
TERM NOTE RECORD. A Record with respect to a Term Note.
TERM NOTES. See Section 4.2.
TINNERMAN ACQUISITION. The acquisition by TransTechnology or certain
Subsidiaries of TransTechnology of substantially all of Eaton Corporation's
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Engineered Fastener Division pursuant to and in accordance with the Tinnerman
Acquisition Agreement.
TINNERMAN ACQUISITION AGREEMENT. The Asset Purchase Agreement dated as
of July 9, 1999 by and between TransTechnology and Eaton Corporation.
TINNERMAN ACQUISITION DOCUMENTS. The Tinnerman Acquisition Agreement
and each of the other documents entered into by TransTechnology or any of its
Subsidiaries pursuant thereto.
TITLE INSURANCE COMPANY. Commonwealth Title Insurance Company.
TITLE POLICY. In relation to each Mortgaged Property located in the
United States of America, an ALTA standard form title insurance policy issued by
the Title Insurance Company (with such reinsurance or co-insurance as the
Administrative Agent may require, any such reinsurance to be with direct access
endorsements) in such amount as may be determined by the Administrative Agent
insuring the priority of the Mortgage of such Mortgaged Property and that
TransTechnology or one of its Subsidiaries holds marketable fee simple title to
such Mortgaged Property, subject only to the encumbrances permitted by such
Mortgage and which shall not contain exceptions for mechanics liens or persons
in occupancy (except as may be permitted by such Mortgage), shall not insure
over any matter except to the extent that any such affirmative insurance is
acceptable to the Administrative Agent in its sole discretion, and shall contain
such endorsements and affirmative insurance as the Administrative Agent in its
discretion may require.
TOTAL DM FACILITY USAGE. See Section 3.1.
TOTAL REVOLVING CREDIT COMMITMENT. The sum of the Revolving Credit
Commitments of the Lenders, as in effect from time to time, being (a)
$200,000,000 on the Closing Date and (b) $250,000,000, if the Revolving Credit
Commitments of the Lenders are increased pursuant to clause (b) of the
definition thereof.
TOTAL SHAREHOLDERS' EQUITY. At any time of determination, the total
shareholders' equity of the TransTechnology Group at such time, determined in
accordance with generally accepted accounting principles.
TOTAL STERLING FACILITY USAGE. See Section 3.3.
TRADEMARK ASSIGNMENTS. The Trademark Assignment dated as of June 30,
1995, made by TransTechnology and certain of its Subsidiaries in favor of the
Administrative Agent, as amended and in effect from time to time, and any other
Trademark Assignments made by TransTechnology or any of its other subsidiaries
in favor of the Administrative Agent and in form and substance satisfactory to
the Lenders and the Administrative Agent.
TRANSTECHNOLOGY CANADA. TransTechnology Canada Corporation, an Ontario
corporation.
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TRANSTECHNOLOGY GROUP. TransTechnology and all of its Subsidiaries on a
consolidated basis.
TTSO INC. TransTechnology Seeger Inc., a Delaware corporation, formerly
known as TransTechnology Seeger-Orbis Inc.
TTSOB. Seeger-Orbis Beteiligungsgesellschaft mbH, a German limited
liability company and a wholly-owned subsidiary of GmbH.
TYPE. As to any Revolving Credit Loan or International Facility Loan,
or any portion of the Term Loan, its nature as a Base Rate Loan or a
Eurocurrency Rate Loan.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Administrative Agent in the ordinary course of its business as a letter
of credit issuer and in effect at the time of issuance of such Letter of Credit.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which
TransTechnology does not reimburse the Administrative Agent and the Lenders on
the date specified in, and in accordance with, Section 5.2.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
YEAR 2000 PROBLEM. See Section 8.21.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
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(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "section" refers to that section
of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
------------------------------
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Lenders severally agrees to lend to
TransTechnology and TransTechnology may borrow, repay, and reborrow from time to
time between the Closing Date and the Revolving Credit Loan Maturity Date upon
notice by TransTechnology to the Administrative Agent given in accordance with
ss.2.6, such sums in Dollars as are requested by TransTechnology up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Lender's Revolving Credit Commitment in effect at
such time MINUS such Lender's Commitment Percentage of the sum of (a) the
Maximum Drawing Amount, (b) all Unpaid Reimbursement Obligations, and (c) the
International Facility Amount, PROVIDED that the sum of the outstanding amount
of the Revolving Credit Loans (after giving effect to all amounts requested)
PLUS the Maximum Drawing Amount, all Unpaid Reimbursement Obligations, and the
International Facility Amount shall not at any time exceed the Total Revolving
Credit Commitment. The Revolving Credit Loans shall be made pro rata in
accordance with each Lender's Commitment Percentage. Each request for a
Revolving Credit Loan hereunder shall constitute a representation and warranty
by TransTechnology that the conditions set forth in Section 12 and Section 13,
in the case of the initial Revolving Credit Loans to be made on the Closing
Date, and ss.13, in the case of all other Revolving Credit Loans, have been
satisfied on the date of such request.
2.2. REVOLVING CREDIT COMMITMENT FEE. TransTechnology agrees to pay to
the Administrative Agent for the accounts of the Lenders in accordance with
their respective Commitment Percentages a commitment fee calculated at the
Commitment Fee Rate per annum on the average daily amount during each calendar
quarter or portion thereof from the Closing Date to the Revolving Credit Loan
Maturity Date by which the Total Revolving Credit Commitment, MINUS the sum of
(a) the Maximum Drawing Amount, (b) all Unpaid Reimbursement Obligations and (c)
the Maximum International Facility Amount, exceeds the outstanding amount of
Revolving Credit Loans during such calendar quarter. The revolving credit
commitment fee shall be payable quarterly in arrears on the first
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day of each calendar quarter with respect to the immediately preceding calendar
quarter, commencing on the first such date following the date hereof, with a
final payment on the Revolving Credit Loan Maturity Date or any earlier date on
which the Revolving Credit Commitments shall terminate.
2.3. REDUCTION OF TOTAL REVOLVING CREDIT COMMITMENT. Trans-Technology
shall have the right at any time and from time to time upon five (5) Business
Days prior written notice to the Administrative Agent to reduce by $1,000,000 or
an integral multiple thereof or terminate entirely the Total Revolving Credit
Commitment, whereupon the Revolving Credit Commitments of the Lenders shall be
reduced PRO RATA in accordance with their respective Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of TransTechnology delivered pursuant to this Section
2.3, the Administrative Agent will notify the Lenders of the substance thereof.
Upon the effective date of any such reduction or termination, TransTechnology
shall pay to the Administrative Agent for the respective accounts of the Lenders
the full amount of any commitment fee then accrued on the amount of the
reduction. No reduction or termination of the Revolving Credit Commitments may
be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of TransTechnology in substantially the
form of EXHIBIT A hereto (each a "REVOLVING CREDIT NOTE"), dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Lender in a principal amount equal to
such Lender's Revolving Credit Commitment in effect at such time, or, if less,
the outstanding amount of all Revolving Credit Loans made by such Lender, plus
interest accrued thereon, as set forth below. TransTechnology irrevocably
authorizes each Lender to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Lender's Revolving Credit Note, an appropriate
notation on such Lender's Revolving Credit Note Record reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on such Lender's
Revolving Credit Note Record shall be PRIMA FACIE evidence of the principal
amount thereof owing and unpaid to such Lender, but the failure to record, or
any error in so recording, any such amount on such Lender's Revolving Credit
Note Record shall not limit or otherwise affect the obligations of
TransTechnology hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided
in section 6.11, the Revolving Credit Loans shall bear interest as follows:
(a) each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at a rate per annum equal to
the sum of (i) the Dollar Base Rate PLUS (ii) the Applicable Margin
with respect to Base Rate Loans as in effect from time to time; and
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(b) each Eurocurrency Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at a rate per annum
equal to the sum of (i) the Eurodollar Rate determined for such
Interest Period PLUS (ii) the Applicable Margin with respect to
Eurocurrency Rate Loans as in effect from time to time.
TransTechnology promises to pay interest on each Revolving Credit Loan
in arrears on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. TransTechnology shall give to
the Administrative Agent telephonic notice, confirmed in writing in the form of
EXHIBIT B hereto, of each Revolving Credit Loan requested hereunder (a
"REVOLVING CREDIT LOAN REQUEST") no later than 1:00 p.m. (Boston time) (a) on
the proposed Drawdown Date of any Base Rate Loan, or (b) on the third (3rd)
Eurocurrency Business Day prior to the proposed Drawdown Date of any
Eurocurrency Rate Loan. Each Revolving Credit Loan Request shall specify (i) the
principal amount of the Revolving Credit Loan requested, (ii) the proposed
Drawdown Date of such Revolving Credit Loan, (iii) the Interest Period for such
Revolving Credit Loan, and (iv) the Type of such Revolving Credit Loan. Promptly
upon receipt of any such notice, the Administrative Agent shall notify each of
the Lenders thereof. Each Revolving Credit Loan Request shall be irrevocable and
binding on TransTechnology and shall obligate TransTechnology to accept the
Revolving Credit Loan requested from the Lenders or, as the case may be, from
the Administrative Agent on behalf of the Lenders, on the proposed Drawdown Date
therefor. Each Revolving Credit Loan Request shall be in a minimum aggregate
amount of $100,000, or an integral multiple thereof.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
TransTechnology may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
PROVIDED that (a) with respect to any such conversion of a Revolving
Credit Loan to a Base Rate Loan, TransTechnology shall give the
Administrative Agent at least one (1) Business Day prior written notice
of such election; (b) with respect to any such conversion of a Base
Rate Loan to a Eurocurrency Rate Loan, TransTechnology shall give the
Administrative Agent at least three (3) Eurocurrency Business Days
prior written notice of such election; (c) with respect to any such
conversion of a Eurocurrency Rate Loan into a Revolving Credit Loan of
another Type, such conversion shall only be made on the last day of the
Interest Period with respect thereto and (d) no Loan may be converted
into a Eurocurrency Rate Loan when any Default or Event of Default has
occurred and is continuing. All or any part of outstanding Revolving
Credit Loans of any Type may be converted into a Revolving Credit Loan
of another Type as provided herein, PROVIDED that any partial
conversion shall be in an aggregate principal amount of $1,000,000 or a
whole multiple thereof. Each Conversion Request relating to the
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conversion of a Revolving Credit Loan to a Eurocurrency Rate Loan shall
be irrevocable by TransTechnology.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by TransTechnology with the notice
provisions contained in Section 2.7.1; PROVIDED that no Eurocurrency
Rate Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating
thereto ending during the continuance of any Default or Event of
Default of which officers of the Administrative Agent active upon
TransTechnology's account have actual knowledge. In the event that
TransTechnology fails to provide any such notice with respect to the
continuation of any Eurocurrency Rate Loan as such, then such
Eurocurrency Rate Loan shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period relating thereto. The
Administrative Agent shall notify the Lenders promptly when any such
automatic conversion contemplated by this Section 2.7 is scheduled to
occur.
2.7.3. EUROCURRENCY RATE LOANS. Any conversion to or from
Eurocurrency Rate Loans shall be in such amounts and be made pursuant
to such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurocurrency Rate Loans having the same
Interest Period shall not be less than $5,000,000 or a whole multiple
of $1,000,000 in excess thereof.
2.8 FUNDS FOR REVOLVING CREDIT LOANS. Not later than 2:00 p.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, upon receipt
of the documents required by Sections 12 and 13 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Administrative
Agent will make available in immediately available funds the amount of the
requested Revolving Credit Loans by transferring such amount into
TransTechnology's account with the Administrative Agent's Head Office,
identified as the "TransTechnology Funding Account" (the "FUNDING ACCOUNT").
2.9. MATURITY OF REVOLVING CREDIT LOANS. TransTechnology promises to
pay on the Revolving Credit Loan Maturity Date, and there shall become
absolutely due and payable on the Revolving Credit Loan Maturity Date, all of
the Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
2.10. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time
the sum of the outstanding amount of the Revolving Credit Loans, the Maximum
Drawing Amount, all Unpaid Reimbursement Obligations and the International
Facility Amount exceeds the Total Revolving Credit Commitment then
TransTechnology shall immediately pay the amount of such excess to the
Administrative Agent for the respective accounts of the Lenders for application:
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first, to any Unpaid Reimbursement Obligations; second, to the Revolving Credit
Loans; third, to the International Facility Loans; and fourth, to provide to the
Administrative Agent cash collateral for Reimbursement Obligations as
contemplated by Section 5.2(b) and (c). Each payment of any Unpaid Reimbursement
Obligations or prepayment of Revolving Credit Loans shall be allocated among the
Lenders, in proportion, as nearly as practicable, to each Reimbursement
Obligation or (as the case may be) the respective unpaid principal amount of
each Lender's Revolving Credit Note, with adjustments to the extent practicable
to equalize any prior payments or repayments not exactly in proportion.
2.11. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. Trans-Technology
shall have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, PROVIDED that any full or partial prepayment of the outstanding amount
of any Eurocurrency Rate Loans pursuant to this Section 2.11 may be made only on
the last day of the Interest Period relating thereto, unless all costs in
connection with such prepayment are paid in full simultaneously with such
prepayment pursuant to Section 6.10. Each partial prepayment of the Revolving
Credit Loans shall be in an integral multiple of $100,000, shall (in the case of
Eurocurrency Rate Loans) be accompanied by the payment of accrued interest on
the principal prepaid to the date of prepayment, and shall be applied, in the
absence of instruction by TransTechnology, first to the principal of Base Rate
Loans, and then to the principal of Eurocurrency Rate Loans. Each partial
prepayment shall be allocated among the Lenders, in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Lender's
Revolving Credit Note, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
3. INTERNATIONAL CREDIT FACILITY.
------------------------------
3.1. DM FACILITY LOANS. Subject to the terms and conditions set forth
in this Credit Agreement, (a) the DM Fronting Bank agrees to lend to GmbH and
GmbH may borrow, repay, and reborrow from time to time between the Closing Date
and the Revolving Credit Loan Maturity Date either (i) upon notice by GmbH to
the DM Fronting Bank given in accordance with section 3.6, Loans in Deutschmarks
for a specified Interest Period to bear interest at the rate specified in
Section 3.5(c) below (the "DM EUROCURRENCY LOANS"), or (ii) by means of
overdraft advances on GmbH's DM current account with the DM Fronting Bank (the
"DM OVERDRAFT ADVANCES"), and (b) the DM Fronting Bank agrees to issue
Collateral Instruments to or for the account of GmbH upon the DM Fronting Bank's
receipt of a duly-completed and executed Counter Indemnity from GmbH in respect
of each such Collateral Instrument, in form and substance satisfactory to the DM
Fronting Bank, PROVIDED THAT the aggregate amount of all liabilities of GmbH in
respect of all such Counter Indemnities (whether contingent or otherwise) PLUS
the total amount of DM Eurocurrency Loans and DM Overdraft Advances outstanding
at any one time (after giving effect to all amounts requested) (such aggregate
amount being referred to herein as "TOTAL DM FACILITY USAGE") shall not exceed
the DM Equivalent at such time of $10,000,000. Each request for a DM
Eurocurrency Loan, each application to the DM Fronting Bank for a Collateral
Instrument, and each acceptance of a DM
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Overdraft Advance under this Section 3.1 shall constitute a representation and
warranty by GmbH that the conditions set forth in Section 12 and Section 13, in
the case of the initial DM Facility Loans or Collateral Instruments (if any) to
be made or issued on the Closing Date, and Section 13, in the case of all other
DM Facility Loans or Collateral Instruments, have been satisfied on the date of
such request or acceptance, as the case may be.
3.2. MANDATORY REPAYMENTS OF DM FACILITY LOANS. If at any time, for any
reason whatsoever, including without limitation fluctuations in currency rates,
Total DM Facility Usage exceeds by more than 5% the DM Equivalent at such time
of $10,000,000, then GmbH shall immediately pay the excess amount for
application first, to reduce the outstanding amount of DM Overdraft Advances,
second, to provide to the DM Fronting Bank cash cover in respect of any
outstanding Counter Indemnities in favor of the DM Fronting Bank, and third, to
prepay any DM Eurocurrency Loans then outstanding.
3.3. STERLING FACILITY LOANS. Subject to the terms and conditions set
forth in this Credit Agreement, (a) the Sterling Fronting Bank agrees to lend to
Limited and Limited may borrow, repay, and reborrow from time to time between
the Closing Date and the Revolving Credit Loan Maturity Date either (i) upon
notice by Limited to the Sterling Fronting Bank given in accordance with Section
3.7, Loans in Sterling for a specified Interest Period to bear interest at the
rate specified in Eurocurrency Loan, each application to the DM Fronting Bank
for a Collateral Instrument, and each acceptance of a DM 3.5(d) below (the
"STERLING EUROCURRENCY LOANS"), or (ii) by means of overdraft advances on
Limited's Sterling current account with the Sterling Fronting Bank (the
"STERLING OVERDRAFT ADVANCES"), and (b) the Sterling Fronting Bank agrees to
issue Collateral Instruments to or for the account of Limited upon the Sterling
Fronting Bank's receipt of a duly-completed and executed Counter Indemnity from
Limited in respect of each such Collateral Instrument, in form and substance
satisfactory to the Sterling Fronting Bank, PROVIDED that the aggregate amount
of all liabilities of Limited in respect of all such Counter Indemnities
(whether contingent or otherwise) plus the total amount of Sterling Eurocurrency
Loans and Sterling Overdraft Advances outstanding at any one time (after giving
effect to all amounts requested) (such aggregate amount being referred to herein
as "TOTAL STERLING FACILITY USAGE") shall not exceed the Sterling Equivalent at
such time of $20,000,000. Each request for a Sterling Eurocurrency Loan, each
application to the Sterling Fronting Bank for a Collateral Instrument and each
acceptance of a Sterling Overdraft Advance under this Section 3.3 shall
constitute a representation and warranty by Limited that the conditions set
forth in Section 12 and Section 13, in the case of the initial Sterling Facility
Loans or Collateral Instruments (if any) to be made or issued on the Closing
Date, and Section 13, in the case of all other Sterling Facility Loans or
Collateral Instruments, have been satisfied on the date of such request or
acceptance, as the case may be.
3.4. MANDATORY REPAYMENTS OF STERLING FACILITY LOANS. If at any time,
for any reason whatsoever, including without limitation fluctuations in currency
rates, Total Sterling Facility Usage exceeds by more than 5% the Sterling
Equivalent at such time of $20,000,000, then Limited shall immediately pay the
excess amount for application first, to reduce the outstanding amount of
Sterling Overdraft Advances, second to provide to the Sterling Fronting Bank
cash collateral
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in respect of any outstanding Counter Indemnities, and third, to prepay any
Sterling Eurocurrency Loans then outstanding.
3.5. INTEREST ON INTERNATIONAL FACILITY LOANS. Except as otherwise
provided in Section 6.11, the International Facility Loans shall bear interest
as follows:
(a) with respect to DM Overdraft Advances, interest shall be
payable by GmbH on the day-to-day balance in GmbH's current account
maintained with the DM Fronting Bank at a rate per annum equal to the
sum of (i) the DM Base Rate PLUS (ii) the Applicable Margin with
respect to Base Rate Loans as in effect from time to time; and shall be
deducted from such current account on the last Eurocurrency Business
Day of each calendar month or on such other monthly date as the DM
Fronting Bank may reasonably require such payments;
(b) with respect to Sterling Overdraft Advances, interest
shall be payable by Limited on the day-to-day balance in Limited's
current account maintained with the Sterling Fronting Bank at a rate
per annum equal to the sum of (i) the Sterling Base Rate PLUS (ii) the
Applicable Margin with respect to Eurocurrency Rate Loans as in effect
from time to time; and shall be deducted from such current account on
the last Eurocurrency Business Day of each calendar month or on such
other monthly date as the Sterling Fronting Bank may reasonably require
such payments;
(c) each DM Eurocurrency Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at a rate per annum
equal to the sum of (i) the DM Eurocurrency Rate determined for such
Interest Period PLUS (ii) the Applicable Margin with respect to
Eurocurrency Rate Loans as in effect from time to time. GmbH promises
to pay interest, in accordance with Section 6.3.2, on each DM
Eurocurrency Loan in arrears on each Interest Payment Date with respect
thereto; and
(d) each Sterling Eurocurrency Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at a rate per
annum equal to the sum of (i) the Sterling Eurocurrency Rate determined
for such Interest Period PLUS (ii) the Applicable Margin with respect
to Eurocurrency Rate Loans as in effect from time to time. Limited
promises to pay interest, in accordance with Section 6.3.2, on each
Sterling Eurocurrency Loan in arrears on each Interest Payment Date
with respect thereto.
3.6. REQUESTS FOR DM EUROCURRENCY LOANS. GmbH shall give to the DM
Fronting Bank written notice substantially in the form of EXHIBIT B hereto (or
telephonic notice confirmed in a writing in the form of EXHIBIT B hereto) of
each DM Eurocurrency Loan requested hereunder (an "INTERNATIONAL FACILITY LOAN
REQUEST") no less than two (2) Eurocurrency Business Days prior to the proposed
Drawdown Date of such Eurocurrency Rate Loan. Each such notice shall specify (a)
the
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principal amount of the Loan requested, (b) the proposed Drawdown Date of such
Loan, (c) the Interest Period for such Loan and (d) the Type of such Loan. Each
International Facility Loan Request for a DM Eurocurrency Loan shall be
irrevocable and binding on GmbH and shall obligate GmbH to accept the DM
Eurocurrency Loan requested on the proposed Drawdown Date therefor. Each such
International Facility Loan Request shall be in a minimum aggregate amount of
the DM Equivalent of $100,000 or an integral multiple thereof.
3.7. REQUESTS FOR STERLING EUROCURRENCY LOANS. Limited shall give to
the Sterling Fronting Bank written notice substantially in the form of EXHIBIT B
hereto (or telephonic notice confirmed in a writing in the form of EXHIBIT B
hereto) of each Sterling Eurocurrency Loan requested hereunder (also referred to
herein as an "INTERNATIONAL FACILITY LOAN REQUEST") no less than two (2)
Eurocurrency Business Days prior to the proposed Drawdown Date of such
Eurocurrency Rate Loan. Each such notice shall specify (a) the principal amount
of the Loan requested, (b) the proposed Drawdown Date of such Loan, (c) the
Interest Period for such Loan and (d) the Type of such Loan. Each International
Facility Loan Request for a Sterling Eurocurrency Loan shall be irrevocable and
binding on Limited and shall obligate Limited to accept the Sterling
Eurocurrency Loan requested on the proposed Drawdown Date therefor. Each such
International Facility Loan Request shall be in a minimum aggregate amount of
the Sterling Equivalent of $100,000 or an integral multiple thereof.
3.8 EVIDENCE OF DM FACILITY LOANS. The obligations of GmbH to repay all
amounts borrowed by it as DM Eurocurrency Loans and DM Overdraft Advances, all
interest thereon and all other amounts payable by it in respect thereof shall be
evidenced by this Credit Agreement, it being the intention of the parties hereto
that GmbH's obligations with respect to the DM Facility Loans owed by it is
evidenced only as stated herein and not by separate promissory notes or other
instruments.
3.9. EVIDENCE OF STERLING FACILITY LOANS. The obligations of Limited to
repay all amounts borrowed by it as Sterling Eurocurrency Loans and Sterling
Overdraft Advances, all interest thereon and all other amounts payable by it in
respect thereof shall be evidenced by this Credit Agreement, it being the
intention of the parties hereto that Limited's obligations with respect to the
Sterling Facility Loans owed by it is evidenced only as stated herein and not by
separate promissory notes or other instruments.
3.10. MATURITY OF DM FACILITY LOANS. GmbH promises to pay on the
Revolving Credit Loan Maturity Date, or such earlier date as the Total Revolving
Credit Commitment shall terminate or the obligations with respect to the
International Facility Loans shall be accelerated in accordance with Section 14,
and there shall become absolutely due and payable on the Revolving Credit Loan
Maturity Date or such earlier date, all of the DM Facility Loans outstanding on
such date, together with any and all accrued and unpaid interest thereon, and to
provide on such date cash cover satisfactory to the DM Fronting Bank for the
aggregate
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amount of all liabilities of GmbH (whether contingent or otherwise) in respect
of all Counter Indemnities in favor of the DM Fronting Bank outstanding on such
date.
3.11. MATURITY OF STERLING FACILITY LOANS. Limited promises to pay on
the Revolving Credit Loan Maturity Date, or such earlier date as the Total
Revolving Credit Commitment shall terminate or the obligations with respect to
the International Facility Loans shall be accelerated in accordance with Section
14, and there shall become absolutely due and payable on the Revolving Credit
Loan Maturity Date or such earlier date, all of the Sterling Facility Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon, and to provide on such date cash cover satisfactory to the Sterling
Fronting Bank for the aggregate amount of all liabilities of Limited (whether
contingent or otherwise) in respect of all Counter Indemnities in favor of the
Sterling Fronting Bank outstanding on such date.
3.12. OPTIONAL REPAYMENT OF INTERNATIONAL FACILITY LOANS. GmbH and
Limited shall each have the right, at their election, to repay the outstanding
amount of the DM Facility Loans and Sterling Facility Loans, as applicable as a
whole or in part, at any time without penalty or premium, PROVIDED that any full
or partial prepayment of the outstanding amount of any Eurocurrency Rate Loans
pursuant to this Section 3.12 may be made only on the last day of the Interest
Period relating thereto, unless all costs in connection with such prepayment are
paid in full simultaneously with such prepayment pursuant to Section 6.10. GmbH
shall give the DM Fronting Bank, no later than 10:00 a.m., Frankfurt time, at
least three (3) Eurocurrency Business Days prior written notice of any proposed
prepayment pursuant to this Section 3.12 of DM Facility Loans which are Base
Rate Loans, and four (4) Eurocurrency Business Days notice of any proposed
prepayment pursuant to this Section 3.12 of DM Facility Loans which are
Eurocurrency Rate Loans, in each case specifying the proposed date of prepayment
of such DM Facility Loans and the principal amount to be prepaid. Each such
partial prepayment of the DM Facility Loans shall be in an integral multiple of
DM50,000. Limited shall give the Sterling Fronting Bank, no later than 10:00
a.m., London time, at least three (3) Eurocurrency Business days prior written
notice of any proposed prepayment pursuant to this Section 3.12 of Sterling
Facility Loans which are Base Rate Loans, and four (4) Eurocurrency Business
Days notice of any proposed prepayment pursuant to this Section 3.12 of Sterling
Facility Loans which are Eurocurrency Rate Loans, in each case specifying the
proposed date of prepayment of such Sterling Facility Loans and the principal
amount to be prepaid. Each such partial prepayment of the Sterling Facility
Loans shall be in an integral multiple of (pound)50,000. Any prepayment pursuant
to this Section 3.12 shall be accompanied by the payment of accrued interest on
the principal prepaid to the date of prepayment, and shall be applied, in the
absence of instruction by GmbH or Limited, as the case may be, first to
outstanding interest on such International Facility Loans, second to the
principal of International Facility Loans which are Base Rate Loans, third to
provide to each of the Fronting Banks cash cover in respect of any outstanding
Counter Indemnities in favor of such Fronting Bank, and fourth to the principal
of International Facility Loans which are Eurocurrency Rate Loans.
Notwithstanding anything in this Credit Agreement to the contrary, there shall
be an interval of not
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less than two (2) weeks between each prepayment by GmbH or Limited under this
Section 3.12.
3.13. DM FACILITY COMMITMENT FEE. GmbH agrees to pay to the DM Fronting
Bank, for payment by it to the Administrative Agent for the accounts of the
Lenders in accordance with their respective Commitment Percentages, a commitment
fee calculated at the Commitment Fee Rate per annum on the average daily amount
during each calendar quarter or portion thereof from the Closing Date to the
Revolving Credit Loan Maturity Date by which the Maximum DM Amount exceeds Total
DM Facility Usage during such calendar quarter. Such DM facility commitment fee
shall be payable, in the applicable amount of Deutschmarks or the Dollar
Equivalent thereof on the date of such payment, quarterly in arrears on the
first day of each calendar quarter with respect to the immediately preceding
calendar quarter, commencing on the first such date following the date hereof,
with a final payment on the Revolving Credit Loan Maturity Date or any earlier
date on which the Revolving Credit Commitments shall terminate.
3.14. STERLING FACILITY COMMITMENT FEE. Limited agrees to pay to the
Sterling Fronting Bank, for payment by it to the Administrative Agent for the
accounts of the Lenders in accordance with their respective Commitment
Percentages, a commitment fee calculated at the Commitment Fee Rate per annum on
the average daily amount during each calendar quarter or portion thereof from
the Closing Date to the Revolving Credit Loan Maturity Date by which the Maximum
Sterling Amount exceeds Total Sterling Facility Usage during such calendar
quarter. Such Sterling facility commitment fee shall be payable, in the
applicable amount of Sterling or the Dollar Equivalent thereof on the date of
such payment, quarterly in arrears on the first day of each calendar quarter
with respect to the immediately preceding calendar quarter, commencing on the
first such date following the date hereof, with a final payment on the Revolving
Credit Loan Maturity Date or any earlier date on which the Revolving Credit
Commitments shall terminate.
4. THE TERM LOAN.
4.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each Lender agrees to lend to TransTechnology on the
Closing Date the amount of its Commitment Percentage of the principal amount of
$50,000,000.
4.2. THE TERM NOTES. The Term Loan shall be evidenced by separate
promissory notes of TransTechnology in substantially the form of EXHIBIT C
hereto (each a "TERM NOTE"), dated the Closing Date and completed with
appropriate insertions. One Term Note shall be payable to the order of each
Lender in a principal amount equal to such Lender's Commitment Percentage of the
Term Loan and representing the obligation of TransTechnology to pay to such
Lender such principal amount or, if less, the outstanding amount of such
Lender's Commitment Percentage of the Term Loan, plus interest accrued thereon,
as set forth below. TransTechnology irrevocably authorizes each Lender to make
or cause to be made a
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notation on such Lender's Term Note Record reflecting the original principal
amount of such Lender's Commitment Percentage of the Term Loan and, at or about
the time of such Lender's receipt of any principal payment on such Lender's Term
Note, an appropriate notation on such Lender's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Lender's Term Note Record
shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid
to such Lender, but the failure to record, or any error in so recording, any
such amount on such Lender's Term Note Record shall not affect the obligations
of TransTechnology hereunder or under any Term Note to make payments of
principal of and interest on any Term Note when due.
4.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN.
TransTechnology promises to pay to the Administrative Agent for the account of
the Lenders the principal amount of the Term Loan in 20 (twenty) consecutive
quarterly payments in the amounts set forth on SCHEDULE 4.3 hereto, such
installments to be due and payable on the first Business Day following the last
day of each calendar quarter set forth on SCHEDULE 4.3 hereto, commencing with
the first Business Day following December 31, 1999, with a final payment on the
Term Loan Maturity Date in an amount equal to the unpaid balance of the Term
Loan.
4.4. OPTIONAL PREPAYMENT OF TERM LOAN. TransTechnology shall have the
right at any time to prepay the Term Notes on or before the Term Loan Maturity
Date, as a whole, or in part, upon not less than five (5) Business Days prior
written notice to the Administrative Agent, without premium or penalty, PROVIDED
that (i) each partial prepayment shall be in the principal amount of $100,000 or
an integral multiple thereof, (ii) no portion of the Term Loan bearing interest
at the Eurodollar Rate may be prepaid pursuant to this Section 4.4 except on the
last day of the Interest Period relating thereto, and (iii) each partial
prepayment shall be allocated among the Lenders, in proportion, as nearly as
practicable, to the respective outstanding amount of each Lender's Term Note,
with adjustments to the extent practicable to equalize any prior prepayments not
exactly in proportion. Any prepayment of principal of the Term Loan shall
include all interest accrued to the date of prepayment and shall be applied
against the scheduled installments of principal due on the Term Loan in the
inverse order of maturity. No amount repaid with respect to the Term Loan may be
reborrowed.
4.5. INTEREST ON TERM LOAN.
4.5.1 INTEREST RATES. Except as otherwise provided in Section
6.11, the Term Loan shall bear interest during each Interest Period
relating to all or any portion of the Term Loan at the following rates:
(a) To the extent that all or any portion of the Term
Loan bears interest during such Interest Period based on the
Base Rate, the Term Loan or such portion shall bear interest
during such Interest Period at the Base Rate PLUS the
Applicable Margin.
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(b) To the extent that all or any portion of the Term
Loan bears interest during such Interest Period based on the
Eurodollar Rate, the Term Loan or such portion shall bear
interest during such Interest Period at the Eurodollar Rate
PLUS the Applicable Margin.
TransTechnology promises to pay interest on the Term Loan or any
portion thereof outstanding during each Interest Period in arrears on
each Interest Payment Date applicable to such Interest Period.
4.5.2 NOTIFICATION BY TRANSTECHNOLOGY. TransTechnology shall
notify the Administrative Agent, such notice to be irrevocable, at
least three (3) Eurodollar Business Days prior to the Drawdown Date of
the Term Loan if all or any portion of the Term Loan is to bear
interest based on the Eurodollar Rate. After the Term Loan has been
made, the provisions of Section 2.7 shall apply MUTATIS MUTANDIS with
respect to all or any portion of the Term Loan so that TransTechnology
may have the same interest rate options with respect to all or any
portion of the Term Loan as it would be entitled to with respect to the
Revolving Credit Loans.
4.5.3. AMOUNTS, ETC. Any portion of the Term Loan bearing
interest based on the Eurodollar Rate relating to any Interest Period
shall be in the amount of $500,000 or a greater integral multiple of
$100,000. No Interest Period relating to the Term Loan or any portion
thereof bearing interest based on the Eurodollar Rate shall extend
beyond the date on which a regularly scheduled installment payment of
the principal of the Term Loan is to be made unless a portion of the
Term Loan at least equal to such installment payment has an Interest
Period ending on such date or is then bearing interest based on the
Base Rate.
4.6. MANDATORY PREPAYMENTS FROM ASSET SALES OR NEW DEBT. In the event
that any member of the TransTechnology Group shall either (a) incur any
Indebtedness after the Closing Date which is either permitted pursuant to
Section 10.1(f) or is incurred in an amount and on terms and conditions
previously agreed in writing by the Administrative Agent and the Majority
Lenders, or (b) sell any of its assets (other than inventory sold in the
ordinary course of business) or group of related assets, whether by sale of such
assets or sale of the stock of any member of the TransTechnology Group, where
such asset sale is either permitted pursuant to Section 10.5.2 or is previously
consented to in writing by the Administrative Agent and the Majority Lenders,
then, so long as the Leverage Ratio on the date of receipt by any member of the
TransTechnology Group of the Net Cash Proceeds of such new Indebtedness or such
asset sale, as the case may be (without giving effect to the incurrence of such
Indebtedness or the sale of such assets), is greater than 3.25:1,
TransTechnology shall prepay the Term Loan as soon as practicable and in any
event within thirty (30) days after the date of such receipt in an amount equal
to (i) 100% of the Net Cash Proceeds of such new Indebtedness, PROVIDED,
HOWEVER, that, upon the issuance by TransTechnology of any Subordinated Debt,
the Net Cash Proceeds from the issuance of such Indebtedness shall be applied
first to the repayment of the Senior Subordinated Loans, and only applied in
repayment of the
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Term Loan in accordance with Section 4.9 upon payment in full of the Senior
Subordinated Loans and all amounts outstanding with respect thereto under the
Senior Subordinated Loan Documents, and (ii) 100% of the Net Cash Proceeds of
such asset sale, but only to the extent that the aggregate amount of Net Cash
Proceeds of all such asset sales received by TransTechnology and its
Subsidiaries during any fiscal year ending after the date hereof exceeds
$5,000,000.
4.7. MANDATORY PREPAYMENTS FROM NEW EQUITY. In the event that any
member of the TransTechnology Group shall after the Closing Date sell or issue
any shares of its stock, options (other than stock options awarded to employees
and directors pursuant to incentive compensation plans operated by members of
the TransTechnology Group) or warrants for the purchase of its stock or other
equity or equity instruments, then, so long as the Leverage Ratio on the date of
completion of such sale or issuance (without giving effect to such sale or
issuance or the application of proceeds thereof) is greater than 3.25:1,
TransTechnology shall prepay the Term Loan as soon as practicable and in any
event within thirty (30) days after the completion of the sale or issuance of
such new equity in an amount equal to 100% of the Net Cash Proceeds to the
TransTechnology Group of such sale or issuance of new equity.
4.8. MANDATORY PREPAYMENTS FROM EXCESS CASH FLOW. For each fiscal year
ending on or after March 31, 2000, so long as the Leverage Ratio as at the end
of such fiscal year is greater than 3.25:1, TransTechnology shall prepay the
Term Loan in an amount equal to 50% of the Consolidated Excess Cash Flow for
such fiscal year, such mandatory prepayment to be due and payable ninety (90)
days after the end of each such fiscal year.
4.9. APPLICATION OF MANDATORY PREPAYMENTS. Subject to the provisions of
Section 4.6(i) above, all mandatory prepayments of the Term Loan pursuant to
Sections 4.6 - 4.8 shall be applied to payment of installments on the Term Loan
in the inverse order of maturity in accordance with the provisions of Section
4.4.
5. LETTERS OF CREDIT.
5.1. LETTER OF CREDIT COMMITMENTS.
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by
TransTechnology of a letter of credit application on the Issuing Bank's
customary form (a "LETTER OF CREDIT APPLICATION"), the Issuing Bank on
behalf of the Lenders and in reliance upon the agreement of the Lenders
set forth in Section 5.1.4 and upon the representations and warranties
of TransTechnology contained herein, agrees, in its individual
capacity, to issue, extend and renew for the account of TransTechnology
one or more standby or documentary letters of credit (individually, a
"LETTER OF CREDIT"), in such form as may be requested from time to time
by TransTechnology and agreed to by the Issuing Bank; PROVIDED,
HOWEVER, that, after giving effect to such request, (a) the sum of the
aggregate Maximum Drawing Amount and all Unpaid
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Reimbursement Obligations shall not exceed $5,000,000 at any one time,
and (b) the aggregate outstanding amount of the Revolving Credit Loans,
plus the Maximum Drawing Amount, PLUS all Unpaid Reimbursement
Obligations, PLUS the International Facility Amount shall not exceed
the Total Revolving Credit Commitment; and PROVIDED FURTHER that, after
the Issuing Bank shall have received notice in writing of the
occurrence of an Event of Default and until it has received written
notice of the cure or waiver of such Event of Default, the Issuing Bank
shall not be obliged to issue any such Letter of Credit unless the
Majority Lenders shall have consented to such issuance in writing.
5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Issuing Bank.
In the event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit Agreement, then
the provisions of this Credit Agreement shall, to the extent of any
such inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (i)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (ii) have an expiry date no later
than the date which is thirty (30) days (or, if the Letter of Credit is
confirmed by a confirmer or otherwise provides for one or more
nominated persons, sixty (60) days) prior to the Revolving Credit Loan
Maturity Date. Each Letter of Credit so issued, extended or renewed
shall be subject to the Uniform Customs.
5.1.4. REIMBURSEMENT OBLIGATIONS OF LENDERS. Each Lender
severally agrees that it shall be absolutely liable, without regard to
the occurrence of any Default or Event of Default or any condition
precedent other than that set forth in the proviso to this Section
5.1.4, to reimburse the Issuing Bank or the Administrative Agent, as
the case may be, on demand, to the extent of such Lender's Commitment
Percentage, for the amount of each draft paid by the Issuing Bank or
the Administrative Agent under each Letter of Credit to the extent that
such amount is not reimbursed by TransTechnology pursuant to Section
5.2 (such agreement for a Lender being called herein the "LETTER OF
CREDIT PARTICIPATION" of such Lender) PROVIDED, HOWEVER, that to the
extent that any Letter of Credit shall have been issued by the Issuing
Bank during the continuance of an Event of Default of which the Issuing
Bank had prior written notice, then the Lenders shall only be liable to
reimburse the Issuing Bank or the Administrative Agent, as applicable,
in accordance with this Section 5.1.4 with respect to any draft under
such Letter of Credit paid by the Issuing Bank or the Administrative
Agent and not reimbursed by TransTechnology if the issuance of such
Letter of Credit shall have been approved by the Majority Lenders
pursuant to and in accordance with Section 5.1.1 above.
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5.1.5. PARTICIPATIONS OF LENDERS. Each such payment made by a
Lender shall be treated as the purchase by such Lender of a
participating interest in TransTechnology's Reimbursement Obligation
under Section 5.2 in an amount equal to such payment. Each Lender shall
share in accordance with its participating interest in any interest
which accrues pursuant to Section 5.2.
5.2. REIMBURSEMENT OBLIGATION OF TRANSTECHNOLOGY. In order to induce
the Issuing Bank to issue, extend and renew each Letter of Credit and the
Lenders to participate therein, TransTechnology hereby agrees to reimburse or
pay to the Administrative Agent, for the account of the Issuing Bank or (as the
case may be), the Administrative Agent or the Lenders, with respect to each
Letter of Credit issued, extended or renewed by the Issuing Bank hereunder,
(a) except as otherwise expressly provided in Section 5.2(b)
and (c), on each date that any draft presented under such Letter of
Credit is honored by the Issuing Bank, or the Issuing Bank otherwise
makes a payment with respect thereto, (i) the amount paid by the
Issuing Bank under or with respect to such Letter of Credit, and (ii)
the amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by the Issuing Bank, the Administrative Agent or
any Lender in connection with any payment made by the Issuing Bank or
any Lender under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Revolving Credit Commitment to an amount less than the Maximum Drawing
Amount, an amount equal to such difference, which amount shall be held
by the Issuing Bank for the benefit of the Lenders, the Administrative
Agent and the Issuing Bank as cash collateral for all Reimbursement
Obligations, and
(c) upon the termination of the Total Revolving Credit
Commitment, or the acceleration of the Reimbursement Obligations with
respect to all Letters of Credit in accordance with Section 14, an
amount equal to the then Maximum Drawing Amount on all Letters of
Credit, which amount shall be held by the Issuing Bank for the benefit
of the Lenders, the Administrative Agent and the Issuing Bank as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Head Office (for the account of the Issuing Bank or (as
the case may be) the Administrative Agent or the Lenders) in immediately
available funds. Interest on any and all amounts remaining unpaid by
TransTechnology under this Section 5.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 5.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Administrative Agent (for the account of the Issuing Bank or (as
the case may be) the Administrative Agent or the Lenders) on demand at the rate
specified in Section 6.11 for overdue principal on the Revolving Credit Loans.
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5.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Issuing
Bank shall notify TransTechnology of the date and amount of the draft presented
or demand for payment and of the date and time when it expects to pay such draft
or honor such demand for payment. If TransTechnology fails to make payment to
the Administrative Agent as provided in Section 5.2 on or before the date that
such draft is paid or other payment is made by the Issuing Bank, the Issuing
Bank may at any time thereafter notify the Administrative Agent and the Lenders
of the amount of any such Unpaid Reimbursement Obligation. No later than 3:00
p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Lender shall make available to the Issuing Bank, at its Head
Office, in immediately available funds, such Lender's Commitment Percentage of
such Unpaid Reimbursement Obligation, together with an amount equal to the
product of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average interest rate paid by the Issuing Bank for
federal funds acquired by the Issuing Bank during each day included in such
period, times (ii) the amount equal to such Lender's Commitment Percentage of
such Unpaid Reimbursement Obligation, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date the Issuing
Bank paid the draft presented for honor or otherwise made payment to the date on
which such Lender's Commitment Percentage of such Unpaid Reimbursement
Obligation shall become immediately available to the Issuing Bank, and the
denominator of which is 360. The responsibility of the Issuing Bank to
TransTechnology and to the Administrative Agent and the Lenders shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit.
5.4. OBLIGATIONS ABSOLUTE. TransTechnology's obligations under this
Section 5 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which TransTechnology may have or have had against the Issuing Bank, the
Administrative Agent, any Lender or any beneficiary of a Letter of Credit.
TransTechnology further agrees with the Issuing Bank, the Administrative Agent
and the Lenders that the Issuing Bank, the Administrative Agent and the Lenders
shall not be responsible for, and TransTechnology's Reimbursement Obligations
under Section 5.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among TransTechnology, the beneficiary of any Letter
of Credit or any financing institution or other party to which any Letter of
Credit may be transferred or any claims or defenses whatsoever of
TransTechnology against the beneficiary of any Letter of Credit or any such
transferee. The Issuing Bank, the Administrative Agent and the Lenders shall not
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. TransTechnology agrees that any action
taken or omitted by any of the Issuing Bank, the Administrative Agent or any
Lender under or in connection with each Letter of Credit and the related drafts
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and documents, if done in good faith, shall be binding upon TransTechnology and
shall not result in any liability on the part of the Issuing Bank, the
Administrative Agent or any Lender to TransTechnology.
5.5. RELIANCE BY ISSUING BANK. To the extent not inconsistent with
Section 5.4, the Issuing Bank shall be entitled to rely, and shall be fully
protected in relying upon, any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Issuing Bank. The Issuing Bank
shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or concurrence of the
Majority Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Issuing Bank shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and all future holders of the Revolving Credit Notes or of a Letter of
Credit Participation.
5.6. LETTER OF CREDIT FEE. TransTechnology shall pay a fee (in each
case, a "LETTER OF CREDIT FEE") to the Issuing Bank in respect of each Letter of
Credit, calculated as a percentage per annum of the face amount of such Letter
of Credit equal to the sum of (a) the then Applicable Margin with respect to
Eurocurrency Rate Loans, PLUS (b) one-quarter of one percent (0.25%), PLUS the
Administrative Agent's customary issuance, amendment, negotiation or document
examination fee. Such Letter of Credit Fees, with the exception of (i) such
issuance, amendment, negotiation or document examination fees and (ii) an amount
equal to one-quarter of one percent (0.25%) of the face amount of the applicable
Letter of Credit, which shall be retained by the Issuing Bank for its own
account, shall be for the accounts of the Lenders in accordance with their
respective Commitment Percentages. Such Letter of Credit Fees shall be payable
quarterly in arrears on the first day of each calendar quarter with respect to
the immediately preceding calendar quarter or portion thereof, commencing on the
first such date following the date of issuance of a Letter of Credit, as well as
(with respect to any applicable issuance, amendment negotiation or document
examination fees) at such other time or times as such charges are customarily
made by the Issuing Bank.
5.7. RESIGNATION OF ISSUING BANK. The Issuing Bank may resign at any
time by giving sixty (60) days prior written notice thereof to the Lenders and
TransTechnology. Upon any such resignation, the Majority Lenders shall have the
right to appoint a successor Issuing Bank. Unless a Default or Event of Default
shall have occurred and be continuing, such successor Issuing Bank shall be
reasonably acceptable to TransTechnology. If no successor Issuing Bank shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Issuing Bank's giving of
notice
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of resignation, then the retiring Issuing Bank may, on behalf of the Lenders,
appoint a successor Issuing Bank, which shall be a financial institution having
a rating of not less than A or its equivalent by Standard & Poor's Corporation.
Upon the acceptance of any appointment as Issuing Bank hereunder by a successor
Issuing Bank, such successor Issuing Bank shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of the
retiring Issuing Bank, and, after arranging for the replacement of, reissuance
of or issuance of back-up Letters of Credit with respect to all outstanding
Letters of Credit in a manner satisfactory to the Majority Lenders, the retiring
Issuing Bank shall be discharged from its duties and obligations hereunder.
After any retiring Issuing Bank's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Issuing Bank.
6. CERTAIN GENERAL PROVISIONS.
6.1. CLOSING FEE. The Borrowers (but, in the case of GmbH, subject to
Section 30 of the GmbH Act of Germany) jointly and severally agree to pay on the
Closing Date to the Administrative Agent for its own account a closing fee in
the amount agreed in the Fee Letter.
6.2. ADMINISTRATIVE AGENT'S FEE. The Borrowers jointly and severally
(but, in the case of GmbH, subject to Section 30 of the GmbH Act of Germany)
agree to pay to the Administrative Agent annually in advance, on the Closing
Date and on each subsequent anniversary thereof, for the Administrative Agent's
own account, an Administrative Agent's fee in the amount agreed in the Fee
Letter, PROVIDED that the payment of such fee on the Closing Date shall be
adjusted to give credit for any prior payment of Agent's fees under the Prior
Credit Agreement for any period following the Closing Date.
6.3. PAYMENT PROVISIONS.
6.3.1. CURRENCY OF ACCOUNT. Dollars are the currency of
account and payment for each and every sum at any time due from the
Borrowers hereunder, PROVIDED that:
(i) each repayment of a Loan or a part thereof shall
be made in the currency in which such Loan is denominated at
the time of that repayment;
(ii) each payment in respect of a Letter of Credit
shall, except as otherwise provided herein, be made in the
currency in which such Letter of Credit is denominated;
(iii) each payment of interest shall be made in the
currency in which the sum in respect of which such interest is
payable is denominated;
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(iv) each payment in respect of costs and expenses
shall be made in the currency in which the same were incurred;
and
(v) any amount expressed to be payable in a currency
other than Dollars shall be paid in that other currency.
6.3.2. APPLICATION OF INTEREST PAYMENTS. Interest and
commissions payable by the Borrowers shall be paid as follows:
(a) as to interest and commissions due with respect to the
International Facility Loans, to the Fronting Banks, for the account of
the respective Fronting Banks, PROVIDED that (i) to the extent that a
Lender has paid to such 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 Fronted Loan (including,
without limitation, any interest accruing at rates calculated in
accordance with Section 6.11) shall thereafter accrue for the account
of such Lender, and (ii) the Fronting Banks shall pay all amounts of
interest received by them in an amount equal to the Applicable Margin
to the Administrative Agent for the account of the Lenders in the
proportion of the Lenders' respective Commitment Percentages; and
(b) as to interest due with respect to Revolving Credit Loans,
to the Administrative Agent for the account of the Lenders in the
proportion of the Lenders' respective Commitment Percentages.
6.3.3. JUDGMENT CURRENCY. If any sum due from a Borrower under
this Credit Agreement or any order or judgment given or made in
relation hereto has to be converted from the currency (the "FIRST
CURRENCY") in which the same is payable hereunder or under such order
or judgment into another currency (the "SECOND CURRENCY") for the
purpose of (i) making or filing a claim or proof against such Borrower,
(ii) obtaining an order or judgment in any court or other tribunal or
(iii) enforcing any order or judgment given or made in relation hereto,
such Borrower shall indemnify and hold harmless each of the Persons to
whom such sum is due from and against any loss suffered as a result of
any discrepancy between (A) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second
currency and (B) the rate or rates of exchange at which such Person may
in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
6.3.4. TIME OF PAYMENT. On each date on which this Credit
Agreement requires an amount to be paid by any of the Borrowers or any
of the Lenders hereunder, such Borrower or, as the case may be, such
Lender shall make the same available to the Administrative Agent, the
DM Fronting Bank or the Sterling Fronting Bank, as the case may be, to
such account as the Administrative Agent or such Fronting Bank shall
have notified to any of the Borrowers or to such Lender, as the case
may be. Each such payment
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which is made for the account of a Person other than the Administrative
Agent shall be made in time to enable the Administrative Agent to make
available such other Person's portion thereof for value the same day.
6.3.5. PAYMENTS BY ADMINISTRATIVE AGENT. Where a sum is to be
paid hereunder to the Administrative Agent for the account of another
Person, the Administrative Agent shall not be obliged to make the same
available to that other Person until the Administrative Agent has been
able to establish to its satisfaction that it has actually received
such sum, but if the Administrative Agent does so and it proves to be
the case that the Administrative Agent has not actually received the
sum it paid out, then the Person to whom such sum was so made available
shall on request refund the same to the Administrative Agent, together
with an amount sufficient to reimburse the Administrative Agent for any
amount it may have been required to pay out by way of interest on
moneys borrowed to fund the sum in question during the period beginning
on the due date for payment thereof and ending on the date on which it
receives the same.
6.3.6. NO OFFSET, ETC. All payments by the Borrowers hereunder
and under any of the other Loan Documents shall be made without setoff
or counterclaim and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless any of the Borrowers is compelled by law to make such deduction
or withholding. If any such obligation is imposed upon a Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, such Borrower will make such deduction or withholding,
will pay the full amount deducted or withheld to the applicable
authority, and will also pay to the Administrative Agent, for the
account of the Lenders or (as the case may be), the Issuing Bank, the
applicable Fronting Bank or Banks or the Administrative Agent, on the
date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount as shall be necessary to
enable the Lenders, the Issuing Bank, the applicable Fronting Bank or
Banks or the Administrative Agent (as the case may be) to receive the
same net amount in the same currency which the Lenders, the Issuing
Bank, the applicable Fronting Bank or Banks or the Administrative Agent
would have received on such due date had no such obligation been
imposed upon such Borrower. Each Borrower so affected will deliver,
within thirty (30) days of any such deduction or payment, to the
Administrative Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by
such Borrower hereunder or under such other Loan Document.
6.4. COMPUTATIONS. All computations of interest on Eurocurrency Rate
Loans shall, unless otherwise expressly provided herein, be based on a 360-day
year and paid for the actual number of days elapsed. All computations of
interest on
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Base Rate Loans, commitment fees, Letter of Credit Fees or other fees shall,
unless otherwise expressly provided herein, be based on a 365-day year and paid
for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurocurrency Rate
Loans, whenever a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
shall be extended to the next succeeding Business Day, and interest shall accrue
during such extension. The outstanding amount of the Revolving Credit Loans as
reflected on the Revolving Credit Note Records from time to time shall be
considered correct and binding on TransTechnology unless within five (5)
Business Days after receipt of any notice by the Administrative Agent or any of
the Lenders of such outstanding amount, the Administrative Agent or such Lender
shall notify such Borrower to the contrary.
6.5. INABILITY TO DETERMINE EUROCURRENCY RATE. In the event, prior to
the commencement of any Interest Period relating to any Eurocurrency Rate Loan,
(a) the DM Fronting Bank shall determine, with respect to any DM Facility Loan
which is a Eurocurrency Rate Loan, (b) the Sterling Fronting Bank shall
determine with respect to any Sterling Facility Loan which is Eurocurrency Rate
Loan, or (c) the Administrative Agent shall determine or be notified by the
Majority Lenders, with respect to any other Loan which is a Eurocurrency Rate
Loan, that adequate and reasonable methods do not exist for ascertaining the
applicable Eurocurrency Rate that would otherwise determine the rate of interest
to be applicable to such Eurocurrency Rate Loan, the applicable Fronting Bank or
the Administrative Agent, as the case may be, shall forthwith give notice of
such determination (which shall be conclusive and binding on the Borrowers and
the Lenders) to the applicable Borrower(s) and (in the case of the
Administrative Agent) to the applicable Lender(s). In such event (i) any Loan
Request or Conversion Request with respect to Eurocurrency Rate Loans shall be
automatically withdrawn and, to the fullest extent practicable, shall be deemed
a request for Base Rate Loans, (ii) each Eurocurrency Rate Loan will
automatically, on the last day of the then current Interest Period relating
thereto, become a Base Rate Loan, and (iii) the obligations of the applicable
Lender(s) or, as the case may be, Fronting Bank(s) to make Eurocurrency Rate
Loans shall be suspended until the Administrative Agent or, as the case may be,
the applicable Fronting Bank(s), or the Majority Lenders determine that the
circumstances giving rise to such suspension no longer exist, whereupon the
Administrative Agent or, as the case may be, the Administrative Agent upon the
instruction of the Majority Lenders or the applicable Fronting Bank(s), shall so
notify the applicable Borrower(s) and (in the case of the Administrative Agent)
the applicable Lender(s).
6.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Lender or Fronting Bank to
make or maintain Eurocurrency Rate Loans, such Lender, if so affected, shall
forthwith give notice of such circumstances to TransTechnology, the
Administrative Agent and the other Lenders, and such Fronting Bank, if so
affected, shall forthwith give notice of such circumstances to the Borrowers and
the Administrative Agent. Thereupon (i) the commitment of such Lender or
Fronting Bank to make Eurocurrency Rate Loans
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or convert Loans of another Type to Eurocurrency Rate Loans shall forthwith be
suspended, and (ii) such Lender's or Fronting Bank's Loans then outstanding as
Eurocurrency Rate Loans, if any, shall be converted automatically to Base Rate
Loans on the last day of each Interest Period applicable to such Eurocurrency
Rate Loans or within such earlier period as may be required by law. The
Borrowers hereby jointly and severally agree promptly to pay the Administrative
Agent for the account of such Lender or Fronting Bank upon demand by such Lender
or Fronting Bank, any additional amounts necessary to compensate such Lender or
Fronting Bank for any costs incurred by such Lender or Fronting Bank in making
any conversion in accordance with this ss.6.6, including any interest or fees
payable by such Lender or Fronting Bank to lenders of funds obtained by it in
order to make or maintain its Eurocurrency Rate Loans hereunder.
6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Administrative Agent by any central bank
or other fiscal, monetary or other authority (whether or not having the force of
law), shall:
(a) subject any Lender or Fronting Bank, the Issuing Bank, or
the Administrative Agent to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, any Letters of Credit, such
Lender's Commitment, the Loans or any payment of interest or fees
payable with respect to any Loans (other than taxes based upon or
measured by the income or profits of such Lender, Issuing Bank,
Fronting Bank or Administrative Agent, or bank franchise taxes), but
including any tax or withholding applicable to any payment to be made
by a Fronting Bank to the Administrative Agent pursuant to Section
6.3.2(a), or by any Lender to the Administrative Agent for the account
of a Fronting Bank pursuant to Section 6.12.2, or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits or bank franchise taxes) of
payments to any Lender of the principal of or the interest on any Loans
or any other amounts payable to any Lender or the Administrative Agent
under this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of any office of any
Lender (including any Fronting Bank or the Issuing Bank), and
including, without limitation, any MLA costs with
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respect to Sterling Facility Loans or indemnification obligations of
any Lender with respect thereto, or
(d) impose on any Lender (including any Fronting Bank or the
Issuing Bank) or the Administrative Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, such Lender's Commitment,
or any class of loans, letters of credit or commitments of which any of
the Loans or such Lender's Commitment forms a part, and the result of
any of the foregoing is
(i) to increase the cost to any such Lender of
making, funding, issuing, renewing, extending or maintaining
any of the Loans or such Lender's Commitment or any Letter of
Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such
Lender or the Administrative Agent hereunder on account of
such Lender's Commitment, any Letter of Credit or any of the
Loans, or
(iii) to require such Lender or the Administrative
Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the
amount of which payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such
Lender or the Administrative Agent from the Borrowers
hereunder,
then, and in each such case, within fifteen (15) days after demand made by such
Lender or Fronting Bank or (as the case may be) the Administrative Agent or the
Issuing Bank at any time and from time to time and as often as the occasion
therefor may arise, the Borrowers will (but, in the case of GmbH, subject to
Section 30 of the GmbH Act of Germany) jointly and severally pay to such Lender,
Fronting Bank, Administrative Agent or Issuing Bank such additional amounts as
will be sufficient to compensate such Lender, Fronting Bank, Administrative
Agent or Issuing Bank, as the case may be, for such additional cost, reduction,
payment or foregone interest or Reimbursement Obligation or other sum.
6.8. CAPITAL ADEQUACY. If after the date hereof any Lender (including
any Fronting Bank and the Issuing Bank) or the Administrative Agent determines
that (i) the adoption of or change in any law, governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law)
regarding capital requirements for Lenders or Lender holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (ii) compliance by such Lender or
the Administrative Agent or any corporation controlling such Lender, or the
Administrative Agent with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect
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of reducing the return on such Lender's, or the Administrative Agent's
commitment with respect to any Loans or Letters of Credit to a level below that
which such Lender or the Administrative Agent could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or the
Administrative Agent's then existing policies with respect to capital adequacy
and assuming full utilization of such entity's capital) by any amount deemed by
such Lender or (as the case may be) the Administrative Agent to be material,
then such Lender or the Administrative Agent may notify the Borrowers of such
fact. To the extent that the amount of such reduction in the return on capital
is not reflected in the Base Rate, TransTechnology agrees to pay such Lender or
(as the case may be) the Administrative Agent for the amount of such reduction
in the return on capital as and when such reduction is determined upon
presentation by such Lender or (as the case may be) the Administrative Agent of
a certificate in accordance with ss.6.9 hereof. Each Lender and the
Administrative Agent shall allocate such cost increases among its customers in
good faith and on an equitable basis.
6.9. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Sections 6.7 or 6.8 and a brief explanation of such amounts
which are due, submitted by any Lender (including any Fronting Bank and the
Issuing Bank) or the Administrative Agent to the Borrowers, shall be conclusive,
absent manifest error, that such amounts are due and owing.
6.10. INDEMNITY. The Borrowers jointly and severally (but, in the case
of GmbH, subject to Section 30 of the GmbH Act of Germany) agree to indemnify
each Lender and to hold each Lender harmless from and against any loss, cost or
expense (including loss of anticipated profits) that such Lender may sustain or
incur as a consequence of (i) default by any of the Borrowers in payment of the
principal amount of or any interest on any Eurocurrency Rate Loans as and when
due and payable, including any such loss or expense arising from interest or
fees payable by such Lender to lenders of funds obtained by it in order to
maintain its Eurocurrency Rate Loans, (ii) default by any of the Borrowers in
making a borrowing or conversion after such Borrower has given (or is deemed to
have given) a Loan Request, notice or a Conversion Request relating thereto, or
(iii) the making of any payment of a Eurocurrency Rate Loan or the making of any
conversion of any such Loan to a Base Rate Loan on a day that is not the last
day of the applicable Interest Period with respect thereto, including interest
or fees payable by such Lender to lenders of funds obtained by it in order to
maintain any such Loans.
6.11. INTEREST AFTER DEFAULT.
6.11.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest compounded monthly and payable on demand
at a rate per annum equal to the sum of (i) two percent (2%) per annum,
PLUS (ii) the Applicable Margin with respect to Eurocurrency Rate Loans
PLUS (iii) the Base Rate, until such amount shall be paid in full
(after as well as before judgment).
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6.11.2. AMOUNTS NOT OVERDUE. During the continuance of a
Default or an Event of Default, the principal of the Revolving Credit
Loans, the Term Loan and the International Facility Loans not overdue
shall, until such Default or Event of Default has been cured or
remedied or such Default or Event of Default has been waived by the
Majority Lenders pursuant to Section 27, bear interest at a rate per
annum equal to the greater of (i) two percent (2%) above the rate of
interest otherwise applicable to such Loans pursuant to Section 2.5 or
Section 3.5, and (ii) the rate of interest applicable to overdue
principal pursuant to Section 6.11.1.
6.12. FRONTING BANK PROVISIONS.
6.12.1. FRONTING FEE. The Borrowers jointly and severally
agree to pay to the Fronting Banks for the account of the Fronting
Banks a fronting fee calculated at the rate of one-quarter of one
percent (1/4%) per annum on the average principal amount of Fronted
Loans outstanding (including amounts requested) during each calendar
quarter or portion thereof from the Closing Date to the Revolving
Credit Loan Maturity Date. The fronting fee shall be payable quarterly
in arrears on the first day of each calendar quarter with respect to
the immediately preceding calendar quarter, commencing on the first
such date following the date hereof, with a final payment on the
Revolving Credit Loan Maturity Date or any earlier date on which a
Fronting Bank's commitment to make Fronted Loans shall terminate.
6.12.2. INDEMNITIES. Each of the Lenders severally undertakes
to keep the Fronting Banks indemnified as follows:
(a) Each Lender irrevocably and unconditionally undertakes to
pay to the Administrative Agent for the account of each Fronting Bank,
on demand made by such Fronting Bank through the Administrative Agent:
(i) such Lender's Commitment Percentage of each
amount which is expressed to be payable by any of the
Borrowers to or for the account of such Fronting Bank by way
of the payment, repayment or prepayment of any International
Facility Loan and which the applicable Borrower fails to pay
together with interest which has accrued with respect thereto,
and
(ii) such additional amount as shall be necessary to
reimburse such Fronting Bank for its cost of funding the
amount payable by such Lender as mentioned in sub-clause (i)
above during the period beginning on the date the amount was
due from the applicable Borrower and ending on the date demand
is made on such Lender for payment of the same,
and agrees that neither the Fronting Banks nor the Administrative Agent
shall be obliged to make any demand on or take any proceedings against
any
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of the Borrowers or any other person before making demand on such
Lender hereunder.
(b) Each Lender irrevocably and unconditionally undertakes to
pay to the Administrative Agent for the account of each Fronting Bank
on demand made by such Fronting Bank through the Administrative Agent
at any time after an Event of Default has occurred and is continuing
and has not been waived, its Commitment Percentage of the Dollar
Equivalent on the date of such payment of any outstanding International
Facility Loan made by such Fronting Bank, and any such payment shall be
in satisfaction pro tanto of the undertakings of such Lender contained
in clause (a) above.
(c) If a Lender fails to make payment on the due date therefor
of any amount due from it for the account of a Fronting Bank pursuant
to clauses (a) or (b) above (a "RELEVANT AMOUNT") then (i) such Lender
shall be deemed to be Delinquent Lender pursuant to Section 16.5.3, and
(ii) until such Fronting Bank has received payment of the relevant
amount in full (and without prejudice to any other rights or remedies
of the Administrative Agent or such Fronting Bank in respect of such
failure) such Fronting Bank shall be entitled to receive any interest
which such Delinquent Lender would otherwise have been entitled to
receive in respect of the Loan in respect of which the relevant amount
is payable and (iii) such Delinquent Lender shall have no right to vote
as a Lender hereunder or under any of the other Loan Documents, and,
for so long as such Lender remains a Delinquent Lender under this
Section 6.12.2, the determination of the Majority Lenders shall for all
purposes of this Credit Agreement and the other Loan Documents be made
without regard to the interest of such Delinquent Lender in the Loans
to the extent of such participation.
(d) The Borrowers jointly and severally, irrevocably and
unconditionally (but, in the case of GmbH, subject to Section 30 of the
GmbH Act of Germany), undertake (i) to reimburse to each Lender any
amount paid by such Lender pursuant to this Section 6.12.2, and such
amount shall be immediately due from the Borrowers to such Lender on
the day such amount is paid by such Lender to the Administrative Agent,
and shall accrue interest from such date until the date of payment in
full of such amount (including all accrued and unpaid interest thereon)
at the rate of interest applicable to overdue principal pursuant to
Section 6.11.1, and (ii) to indemnify and hold each Lender harmless
against all actions, proceedings, liabilities, claims, demands, costs
and expenses of whatsoever nature and howsoever occurring which such
Lender may properly incur, suffer or sustain by reason of its payment
of such amount, including without limitation any losses (in Dollars)
arising from fluctuations in currency rates between the date of any
payment to the Administrative Agent by such Lender pursuant to clauses
(a) or (b) above, and the date of such Lender's receipt of payment
pursuant to this clause (d).
6.12.3. RESIGNATION OF FRONTING BANK. The DM Fronting Bank or
the Sterling Fronting Bank may resign at any time by giving sixty (60)
days
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prior written notice thereof to the Lenders and TransTechnology. Upon
any such resignation, the Majority Lenders shall have the right to
appoint a successor DM Fronting Bank or Sterling Fronting Bank, as the
case may be. Unless a Default or Event of Default shall have occurred
and be continuing, such successor Fronting Bank shall be reasonably
acceptable to TransTechnology. If no successor Fronting Bank shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Fronting Bank's
giving of notice of resignation, then the retiring Fronting Bank may,
on behalf of the Banks, appoint a successor Fronting Bank, which shall
be a financial institution having a rating of not less than A or its
equivalent by Standard & Poor's Ratings Group, and having either the
ability to fund DM Loans from a lending office located in Germany, if
the retiring Fronting Bank is the DM Fronting Bank, or the ability to
fund Sterling Loans from a lending office located in England, if the
retiring Fronting Bank is the Sterling Fronting Bank. Upon the
acceptance of any appointment as a Fronting Bank hereunder by a
successor Fronting Bank, such successor Fronting Bank shall thereupon
succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the retiring Fronting Bank, and the retiring
Fronting Bank shall be discharged from its duties and obligations
hereunder. After any retiring Fronting Bank's resignation, the
provisions of this Credit Agreement and the other Loan Documents shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as a Fronting Bank.
6.12.4. NOTICE TO LENDERS.
The Administrative Agent will notify each of the Lenders as
to such Lender's balance of all Fronted Loans outstanding at least once
each month, and, upon a Lender's reasonable request, at any other time.
6.13. LIMITS ON NUMBER OF SEPARATE EUROCURRENCY RATE LOANS. No more
than ten (10) separate Eurocurrency Rate Loans (whether outstanding with respect
to the Revolving Credit Loans, the Term Loan or International Facility Loans)
may be outstanding under this Credit Agreement at any one time. Notwithstanding
the foregoing, during the period commencing on the Closing Date and ending on
the date which is the earlier of (i) sixty (60) days after the Closing Date and
(ii) the date on which the Administrative Agent notifies TransTechnology in
writing that syndication of the Loans hereunder has been completed, there shall
be no more than three (3) Eurocurrency Rate Loans in effect, the Interest
Periods of which shall be no longer than one (1) month, and each of which shall
terminate no later than the sixtieth (60th) day after the Closing Date.
7. COLLATERAL SECURITY AND GUARANTIES.
7.1. SECURITY OF BORROWERS. Subject to Sections 7.3 and 7.4, all of the
Obligations shall be secured by a perfected first priority security interest
(subject only to Permitted Liens entitled to priority under applicable law) in
all of the assets of TransTechnology, whether now owned or hereafter acquired,
pursuant to the
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terms of the Security Documents to which TransTechnology is a party. The
Obligations of GmbH shall be secured by a security interest (subject only to
Permitted Liens entitled to priority under applicable law) in all of the assets
of GmbH and SO OHG, whether now owned or hereafter acquired, pursuant to the
terms of the German Security Documents. The Obligations of Limited shall be
secured by a first priority fixed and floating charge over all of the assets of
Limited, whether now owned or hereafter acquired, pursuant to the terms of the
Debenture.
7.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. Each of the Domestic
Subsidiaries shall guarantee the payment and performance of the Obligations
pursuant to the terms of the Guaranties or of guaranties in similar form to the
Subsidiary Guaranty. The obligations of each of the Guarantors shall be in turn
secured by a perfected first priority security interest (subject only to
Permitted Liens entitled to priority under applicable law) in all of the assets
of each such Guarantor, whether now owned or hereafter acquired, pursuant to the
terms of the Security Documents to which each such Guarantor is a party.
7.3. PLEDGES OF STOCK. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, including without
limitation the German Pledge Agreement and the Charges Over Shares, to the
extent that any pledge, lien, security interest, charge, mortgage or other
encumbrance over any shares of a Foreign Subsidiary granted by TransTechnology
or any of its Domestic Subsidiaries extends or purports to extend to any shares
in excess of 65% of the aggregate issued and outstanding shares of capital stock
of such Foreign Subsidiary, neither the Administrative Agent nor any of the
Lenders shall exercise any rights it may have or purport to have with respect to
such excess shares. Notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents, in the event that TransTechnology or any of
the Domestic Subsidiaries delivers to the Administrative Agent or, as the case
may be, a Fronting Bank acting on behalf of the Administrative Agent,
certificates or other instruments representing greater than 65% of the aggregate
issued and outstanding shares of capital stock of such Foreign Subsidiary, the
shares in excess of 65% of such Foreign Subsidiary's capital stock shall not be
subject to any pledge, lien, security interest, charge, mortgage or other
encumbrance under this Agreement or any of the other Loan Documents but shall be
held in the custody of the Administrative Agent or such Fronting Bank for and on
behalf of TransTechnology or such Domestic Subsidiary, as applicable, until such
time as TransTechnology or such Domestic Subsidiary shall have delivered to the
Administrative Agent certificates or other instruments representing 65% of the
aggregate issued and outstanding shares of capital stock of such Foreign
Subsidiary, at which time the Administrative Agent or such Fronting Bank shall
release the original certificates or other instruments delivered to it to
TransTechnology or the applicable Domestic Subsidiary.
7.4. GUARANTEES AND PLEDGES OF ASSETS OF FOREIGN SUBSIDIARIES.
Not-withstanding anything to the contrary contained herein or in any of the
other Loan Documents, no guarantee entered into by any Foreign Subsidiary,
including without limitation either of the English Guarantees, shall be
construed in any way as a guarantee of, and no pledge, lien, security interest,
charge, mortgage or other
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encumbrance over any assets of a Foreign Subsidiary shall be construed in any
way to secure, any obligation of TransTechnology or any of its Domestic
Subsidiaries.
8. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to the
Lenders and the Administrative Agent, at the Closing Date and on each
Acquisition Closing Date after giving effect to the Approved Acquisition
occurring thereon, as follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. Each of the Borrowers and
its respective Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of its place of
incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (iii) is in good standing as a foreign corporation
and is duly authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or
financial condition of such Borrower or Subsidiary.
8.1.2. AUTHORIZATION. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the
Borrowers or any of their Subsidiaries are or are to become a party and
the transactions contemplated hereby and thereby (i) are within the
corporate authority of such Person, (ii) have been duly authorized by
all necessary corporate proceedings, (iii) do not conflict with or
result in any breach or contravention of any provision of law, statute,
rule or regulation to which any of the Borrowers or their Subsidiaries,
or any of the assets of any of the Borrowers or their Subsidiaries, are
subject or any judgment, order, writ, injunction, license or permit
applicable to any of the Borrowers or their Subsidiaries and (iv) do
not conflict with any provision of the corporate charter, bylaws or
memorandum and articles of association of, or any agreement or other
instrument binding upon, any of the Borrowers or their Subsidiaries.
8.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrowers or
any of their Subsidiaries are or are to become a party will result in
valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
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8.2. GOVERNMENTAL APPROVALS. Except as set forth on SCHEDULE 8.2
hereto, the execution, delivery and performance by each of the Borrowers and
their respective Subsidiaries of this Credit Agreement, the other Loan Documents
and the Acquisition Documents to which any of the Borrowers or any of their
Subsidiaries are or are to become a party and the transactions contemplated
hereby and thereby do not require the approval or consent of, or filing with,
any governmental agency or authority other than those already obtained.
8.3 TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 8.3
hereto, (a) TransTechnology and its respective Subsidiaries own all of the
assets reflected in the consolidated balance sheet of TransTechnology and its
Subsidiaries as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date) subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens, and (b) all of
TransTechnology's and its respective Subsidiaries' assets are reflected in the
consolidated balance sheet as at the Balance Sheet Date described in Section
8.4.1.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
8.4.1. FINANCIAL STATEMENTS. There has been furnished to each
of the Lenders a consolidated balance sheet of TransTechnology and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of TransTechnology and its Subsidiaries for the fiscal year
then ended, certified by Deloitte & Touche LLP. Such balance sheet and
statement of income have been prepared in accordance with generally
accepted accounting principles and fairly present the financial
condition of TransTechnology as at the close of business on the date
thereof and the results of operations for the fiscal year then ended.
There are no contingent liabilities of TransTechnology or any of its
Subsidiaries as of such date involving material amounts, known to the
officers of TransTechnology, which were not disclosed in such balance
sheet and the notes related thereto.
8.4.2. PROJECTIONS. There has been furnished to each of the
Lenders projections (dated July 23, 1999) of the annual operating
budgets of TransTechnology and its Subsidiaries on a consolidated
basis, balance sheets and cash flow statements for the 2000 to 2004
fiscal years (the "PROJECTIONS"), which fairly disclose all assumptions
made with respect to general economic, financial and market conditions
used in their formulation. To the knowledge of TransTechnology, no
facts exist that (individually or in the aggregate) would result in any
material change in any of the Projections. The Projections are based
upon reasonable estimates and assumptions, have been prepared on the
basis of the assumptions stated therein and reflect the reasonable
estimates of TransTechnology of the results of operations and other
information projected therein.
8.5. NO MATERIAL CHANGES, ETC.
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(a) Since the Balance Sheet Date there has occurred no materially
adverse change in the financial condition or business of TransTechnology or any
of its Subsidiaries or any material assets of TransTechnology or any of its
Subsidiaries as shown on or reflected in the consolidated balance sheet of
TransTechnology and its Subsidiaries as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of TransTechnology or any of its Subsidiaries or any
material assets of TransTechnology or any of its Subsidiaries.
(b) Each of the Borrowers and each of their Subsidiaries (before and
after giving effect to the transactions contemplated by this Credit Agreement
and the other Loan Documents) (i) is solvent, (ii) has assets having a fair
value in excess of its liabilities, (iii) has assets having a fair value in
excess of the amount required to pay its liabilities on existing debts as such
debts become absolute and matured, and (iv) has, and expects to continue to
have, access to adequate capital for the conduct of its business and the ability
to pay its debts from time to time incurred in connection with the operation of
its business as such debts mature.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrowers and
each of their Subsidiaries possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business substantially as now
conducted without known conflict with any rights of others.
8.7. LITIGATION. Except as set forth in SCHEDULE 8.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against any of the Borrowers or their Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of any of the Borrowers or
their Subsidiaries or materially impair the right of any of the Borrowers or
their Subsidiaries to carry on business substantially as now conducted by them,
or result in any substantial liability not adequately covered by insurance, or
for which adequate reserves are not maintained on the consolidated balance sheet
of the Borrowers and their Subsidiaries, or which question the validity of this
Credit Agreement or any of the other Loan Documents, or any action taken or to
be taken pursuant hereto or thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers nor
any of their Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of any of the Borrowers or their Subsidiaries.
None of the Borrowers nor any of their Subsidiaries is a party to any contract
or agreement that is in default or has or is expected, in the judgment of the
Borrowers' officers, to have any materially adverse effect on the business of
any of the Borrowers or their Subsidiaries.
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8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Borrowers nor any of their Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, act, statute, license, rule, regulation or other law, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of any of the Borrowers or their Subsidiaries.
8.10. TAX STATUS. Except as disclosed on SCHEDULE 8.10 hereto, each of
the Borrowers and its Subsidiaries (i) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject, (ii) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Borrowers know of no basis for any
such claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the
Borrowers nor any of their Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor
are any of the Borrowers or their Subsidiaries an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940.
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage, lease or
other document filed or recorded with any filing records, registry or other
public office, or otherwise, that purports to cover, affect or give notice of
any present or possible future lien on, or security interest in, any assets or
property of any of the Borrowers or their Subsidiaries or any rights relating
thereto, except with respect to Permitted Liens.
8.14. PERFECTION OF SECURITY INTEREST. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Administrative Agent's security interests in and
charges over the Collateral. The Collateral and the Administrative Agent's
rights with respect to the Collateral are not subject to any material setoff,
claims, withholdings or other defenses. The Borrowers or their Subsidiaries, as
specified in the Security
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Documents, are the owners of the Collateral free from any lien, security
interest, encumbrance and any other claim or demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which any of the Borrowers or their Subsidiaries or any officer,
director or employee of such Borrower or Subsidiary makes payments in the
ordinary course of business upon terms no less favorable than such Borrowers,
Subsidiaries, officers, directors or employees could obtain from third parties,
none of the officers, directors, or employees of any of the Borrowers or their
Subsidiaries is presently a party to any transaction with any of the Borrowers
or their Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of any Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. TransTechnology has heretofore delivered to the
Administrative Agent the most recently completed annual report, Form
5500, with all required attachments, and actuarial statement required
to be submitted under ss.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, Part 6 of
ERISA, or as provided in the Tinnerman Acquisition Agreement). Except
as provided in the Tinnerman Acquisition Agreement, TransTechnology or
an ERISA Affiliate, as appropriate, may terminate each such Plan at any
time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of TransTechnology or such
ERISA Affiliate without liability to any Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of Section 302(f) of ERISA, or otherwise, has been
timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by
TransTechnology or any ERISA
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Affiliate with respect to any Guaranteed Pension Plan and there has not
been any ERISA Reportable Event, or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan
by the PBGC. Except with respect to the Guaranteed Pension Plan to be
established by TransTechnology as described in, and to the extent
provided in, the Tinnerman Acquisition Agreement, based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of Section 4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
8.16.4. MULTIEMPLOYER PLANS. Other than (a) the Electronics
Local 431 Pension Fund relating to employees of Seeger Inc., a
Subsidiary of TransTechnology, and (b) the Western Pennsylvania
Teamster and Employers Pension Fund relating to employees of
TransTechnology's Breeze-Industrial division, neither TransTechnology
nor any ERISA Affiliate is a member of any Multiemployer Plan. Neither
TransTechnology nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer
Plan under Section 4201 of ERISA or as a result of a sale of assets
described in Section 4204 of ERISA. Neither TransTechnology nor any
ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of Section
4241 or Section 4245 of ERISA or that any Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA.
8.16.5. COMPLIANCE WITH EMPLOYMENT BENEFIT LAWS. Except as set
forth in SCHEDULE 8.16.5 hereto, none of the Borrowers nor any of their
Subsidiaries is in violation of any material provision of any
applicable pension, retirement funding or employee benefit legislation
in any jurisdiction.
8.17. USE OF PROCEEDS. The proceeds of the Loans shall be used to
refinance certain Indebtedness of the Borrowers under the Prior Credit
Agreement, to finance Approved Acquisitions and for working capital and general
corporate purposes of the Borrowers. TransTechnology will obtain Letters of
Credit solely for working capital and general corporate purposes. No portion of
any Loan is to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. No portion
of the proceeds of any Loans is to be used, and no portion of any Letter of
Credit is to be obtained, for the purpose of (a) knowingly purchasing, or
providing credit support for the purchase of, Ineligible Securities from a
Section 20 Subsidiary during any period in which such Section 20 Subsidiary
makes a market in such Ineligible Securities, (b) knowingly purchasing,
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or providing credit support for the purchase of, during the underwriting or
placement period, any Ineligible Securities being underwritten or privately
placed by a Section 20 Subsidiary, or (c) making, or providing credit support
for the making of, payments of principal or interest on Ineligible Securities
underwritten or privately placed by a Section 20 Subsidiary and issued by or for
the benefit of the Borrowers or any Subsidiary or other Affiliate of any of the
Borrowers.
8.18. ENVIRONMENTAL COMPLIANCE. Each of the Borrowers and their
Subsidiaries has taken all necessary steps to investigate the past and present
condition and usage of the Real Estate and the operations conducted thereon and,
based upon such diligent investigation, has determined that, except as set forth
on SCHEDULE 8.18 attached hereto:
(a) none of the Borrowers, their Subsidiaries or any operator
of the Real Estate or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law, license, rule
or regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any European Union, national, federal, state or local statute,
regulation, ordinance, order or decree relating to health, safety or
the environment (hereinafter "Environmental Laws"), which violation
would have a material adverse effect or the business, assets or
financial condition of any of the Borrowers or their Subsidiaries or
the consummation of the transactions referred to in this Agreement;
(b) the Borrowers and their Subsidiaries have conducted all
business operations on the Real Estate and continue to operate and
maintain their businesses in compliance in all material respects with
all applicable Environmental Laws and any other European Union,
national, federal, state and local laws, rules and regulation relating
to air emissions, water discharge, noise emissions, solid, or liquid
waste disposal, hazardous waste, or materials, or other environmental,
health or safety matters and there are no outstanding citations,
notices, or order of non-compliance issued to any of the Borrowers or
their Subsidiaries, or relating to the respective businesses, assets,
Real Estate, other property, leaseholds, or equipment of any of the
Borrowers or their Subsidiaries under any such laws, rules or
regulations; and
(c) None of the Borrowers and their Subsidiaries, any
Mortgaged Property and any of the other Real Estate is subject to any
applicable environmental law requiring the performance of Hazardous
Substances site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure
document or statement by virtue of the transactions set forth herein
and contemplated hereby, or as a
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condition to the recording of any Mortgage or to the effectiveness of
any other transactions contemplated hereby.
8.19. SUBSIDIARIES, ETC. A complete and correct list of the
Subsidiaries of each of the Borrowers and the jurisdictions of their
incorporation as of the Closing Date is set forth on SCHEDULE 8.19 hereto.
Except as set forth on SCHEDULE 8.19 hereto, none of the Borrowers nor any of
their Subsidiaries is engaged in any joint venture or partnership with any other
Person.
8.20. BANK ACCOUNTS. SCHEDULE 8.20 sets forth the account numbers and
location of all bank accounts of each of the Borrowers and their Subsidiaries.
8.21. YEAR 2000 COMPLIANCE. The Borrowers and their Subsidiaries have
undertaken a review, the extent of which the Borrowers believe to be
commercially reasonable, of their critical business and operational systems
which could be adversely affected by, and have developed a program to address on
a timely basis, the "Year 2000 Problem" (i.e., the risk that computer
applications used by the Borrowers or any of their Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999). Based upon such review and the
implementation of such program, the Borrowers reasonably believe that the "Year
2000 Problem" will not have any materially adverse effect on the business or
financial condition of the Borrowers or any of their Subsidiaries.
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Issuing Bank has any
obligation to issue, extend or renew any Letters of Credit:
9.1. PUNCTUAL PAYMENT. Each of the Borrowers will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Administrative Agent's fee, the fronting fee and all other amounts provided for
in this Credit Agreement and the other Loan Documents to which any of the
Borrowers or their Subsidiaries is a party, all in accordance with the terms of
this Credit Agreement and such other Loan Documents.
9.2. MAINTENANCE OF OFFICES.
(a) TransTechnology and each of its Domestic Subsidiaries (other than
TransTechnology Canada) will maintain its chief executive office in Liberty
Corner, New Jersey, or at such other place in the United States of America as
TransTechnology shall designate upon written notice to the Administrative Agent,
where notices, presentations and demands to or upon TransTechnology or such
Subsidiary in respect of the Loan Documents to which TransTechnology or such
Subsidiary is a party may be given or made.
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(b) GmbH will maintain its chief executive office in Konigstein,
Germany, or at such other place in Germany as GmbH shall designate upon written
notice to the Administrative Agent and the DM Fronting Bank, where notices,
presentations and demands to or upon GmbH in respect of the Loan Documents to
which GmbH is a party may be given or made.
(c) Limited will maintain its registered office either in Bingley or
Keighley, Yorkshire, England, or at such other place in England as Limited shall
designate upon written notice to the Administrative Agent and the Sterling
Fronting Bank, where notices, presentations and demands to or upon Limited in
respect of the Loan Documents to which Limited is a party may be given or made.
(d) TransTechnology Canada will maintain its chief executive office in
Hamilton, Ontario, or at such other place in Canada as TransTechnology Canada
shall designate upon written notice to the Administrative Agent, where notices,
presentations and demands to or upon TransTechnology Canada in respect of the
Loan Documents to which TransTechnology Canada is a party may be made or given.
9.3. RECORDS AND ACCOUNTS. Each of the Borrowers will, and will cause
each of its Subsidiaries to, (a) if such Borrower or Subsidiary is located in
the United States, keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) if such Borrower or Subsidiary is located
outside the United States, keep true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles in the country in which such Borrower
or Subsidiary, as the case may be, is located. Each of the Borrowers will
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION.
Trans-Technology will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than
one hundred (100) days after the end of each fiscal year of
TransTechnology, the consolidated balance sheet of TransTechnology and
its Subsidiaries and the consolidating balance sheet of TransTechnology
and its Subsidiaries, each as at the end of such year, and the related
consolidated and consolidating statements of income and consolidated
statement of cash flow for such year, each setting forth in comparative
form the figures for the previous fiscal year and all such consolidated
and consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and certified
(as to the consolidated statements) without qualification by Deloitte &
Touche LLP or by other independent certified public accountants
satisfactory to the Administrative Agent, together with a written
statement from such accountants to the effect that they have read a
copy of this Credit
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Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default, or, if such accountants shall have obtained knowledge of
any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default; PROVIDED that such
accountants shall not be liable to the Lenders for failure to obtain
knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
TransTechnology, copies of the unaudited consolidated balance sheet of
TransTechnology and its Subsidiaries and the unaudited consolidating
balance sheet of TransTechnology and its Subsidiaries, each as at the
end of such quarter, and the related consolidated and consolidating
statements of income and consolidated statement of cash flow for the
portion of TransTechnology's fiscal year then elapsed, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of TransTechnology that the information
contained in such financial statements fairly presents the financial
position of TransTechnology and its Subsidiaries on the date thereof
(subject to year-end adjustments);
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of
TransTechnology in substantially the form of EXHIBIT D hereto and
setting forth in reasonable detail computations evidencing compliance
with the covenants contained in Section 11 and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof,
copies of all material filed with the Securities and Exchange
Commission or sent to the stockholders of TransTechnology which is
either of a financial nature or addresses the Year 2000 Problem;
(e) by April 30 of each year, the annual budget of
TransTechnology and its Subsidiaries for the next fiscal year; and
(f) from time to time such other financial data and
information (including accountants' management letters) as the
Administrative Agent or any Lender may reasonably request.
9.5. NOTICES.
9.5.1. DEFAULTS. Each of the Borrowers will promptly notify
the Administrative Agent and each of the Lenders in writing of the
occurrence of any Default or Event of Default. If any Person shall give
any notice or take any other action in respect of a claimed default
(whether or not constituting
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an Event of Default) under this Credit Agreement or any other note,
evidence of indebtedness, indenture or other obligation to which or
with respect to which any of the Borrowers or their Subsidiaries is a
party or obligor, whether as principal, guarantor, surety or otherwise,
each of the Borrowers shall forthwith give written notice thereof to
the Administrative Agent and each of the Lenders, describing the notice
or action and the nature of the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. Each of the Borrowers will
promptly give notice to the Administrative Agent and each of the
Lenders (i) of any violation of any Environmental Law that any of the
Borrowers or their Subsidiaries reports in writing or is reportable by
such Person in writing (or for which any written report supplemental to
any oral report is made) to any federal, state or local environmental
agency and (ii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, or any federal, state or
local environmental agency or board, that has the potential to
materially affect the assets, liabilities, financial conditions or
operations of any of the Borrowers or their Subsidiaries, or the
Administrative Agent's mortgages, deeds of trust or security interests
pursuant to the Security Documents.
9.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. Each of the
Borrowers will, immediately upon becoming aware thereof, notify the
Administrative Agent and each of the Lenders in writing of any setoff,
claims (including, with respect to the Real Estate, environmental
claims), withholdings or other defenses to which any of the Collateral,
or the Administrative Agent's rights with respect to the Collateral,
are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. Each of the
Borrowers will, and will cause each of its Subsidiaries to, give notice
to the Administrative Agent and each of the Lenders in writing within
fifteen (15) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings
affecting any of the Borrowers or their Subsidiaries or to which any of
the Borrowers or their Subsidiaries is or becomes a party involving an
uninsured claim against any of the Borrowers or their Subsidiaries that
could reasonably be expected to have a materially adverse effect on any
of the Borrowers or their Subsidiaries and stating the nature and
status of such litigation or proceedings. Each of the Borrowers will,
and will cause each of its Subsidiaries to, give notice to the
Administrative Agent and each of the Lenders, in writing, in form and
detail satisfactory to the Administrative Agent, within ten (10) days
of any judgment not covered by insurance, final or otherwise, against
such Borrower or any of its Subsidiaries in an amount in excess of
$1,000,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. Each of the
Borrowers will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and franchises and
those of its Subsidiaries. Each of the Borrowers (i) will cause all of its
properties and those of its
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Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of such Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (iii) will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by them and in
related businesses; PROVIDED that nothing in this Section 9.6 shall prevent any
Borrower from discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such discontinuance is, in the
judgment of such Borrower, desirable in the conduct of its or their business and
that do not in the aggregate materially adversely affect the business of any of
the Borrowers and their Subsidiaries on a consolidated basis.
9.7. INSURANCE. Each of the Borrowers will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of the Security
Agreements, including provisions naming the Administrative Agent as additional
loss payee and providing for a minimum thirty (30) days' notice to the
Administrative Agent prior to cancellation. Each of the Borrowers will, and will
cause each of its Subsidiaries to, maintain insurance on the Mortgaged
Properties in accordance with the terms of the Mortgages. Upon reasonable
request from the Administrative Agent, the Borrowers shall furnish the
Administrative Agent from time to time with information concerning the
Borrowers' and their Subsidiaries' insurance, including (when requested) copies
of the certificates of insurance evidencing such insurance.
9.8. TAXES. Each of the Borrowers will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; PROVIDED that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if such contesting Borrower or Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and PROVIDED further that each of the
Borrowers and its Subsidiaries will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose any
lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
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9.9.1. GENERAL. Each of the Borrowers shall permit the
Lenders, through the Administrative Agent or any of the Lenders' other
designated representatives, to visit and inspect any of the properties
of such Borrower and any of its Subsidiaries, to examine the books of
account of such Borrower and its Subsidiaries (and to make copies
thereof and extracts therefrom), and to discuss the affairs, finances
and accounts of such Borrower and its Subsidiaries with, and to be
advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Administrative Agent or any
Lender may reasonably request. Upon the request of the Administrative
Agent, TransTechnology will obtain and deliver to the Administrative
Agent a report of an independent collateral auditor satisfactory to the
Administrative Agent (which may be affiliated with one of the Lenders)
setting forth such information regarding the Collateral as the
Administrative Agent may reasonably require. All such collateral value
reports shall be conducted and made at the expense of TransTechnology.
If an Event of Default shall have occurred and be continuing, each of
the Borrowers upon the request of the Administrative Agent, will obtain
and deliver to the Administrative Agent appraisal reports in form and
substance and from appraisers satisfactory to the Administrative Agent,
stating (i) the then current fair market, orderly liquidation and
forced liquidation values of all or any portion of the equipment or
real estate owned by such Borrower or any of its Subsidiaries and (ii)
the then current business value of such Borrower and its Subsidiaries.
All such appraisals shall be conducted and made at the expense of the
Borrower obtaining and delivering such appraisal reports.
9.9.2. ENVIRONMENTAL ASSESSMENTS. Whether or not an Event of
Default shall have occurred, the Administrative Agent may, from time to
time, in its discretion for the purpose of assessing and ensuring the
value of any Mortgaged Property, obtain one or more environmental
assessments or audits of such Mortgaged Property prepared by a
hydrogeologist, an independent engineer or other qualified consultant
or expert approved by the Administrative Agent to evaluate or confirm
(i) whether any Hazardous Materials are present in the soil or water at
such Mortgaged Property and (ii) whether the use and operation of such
Mortgaged Property complies with all Environmental Laws. Environmental
assessments may include without limitation detailed visual inspections
of such Mortgaged Property including any and all storage areas, storage
tanks, drains, dry wells and leaching areas, and the taking of soil
samples, surface water samples and ground water samples, as well as
such other investigations or analyses as the Administrative Agent deems
appropriate. All such environmental assessments shall be conducted at
the expense of TransTechnology.
9.9.3. COMMUNICATIONS WITH ACCOUNTANTS. Each of the Borrowers
authorizes the Administrative Agent and, if accompanied by the
Administrative Agent, the Lenders to communicate directly with such
Borrower's independent certified public accountants, PROVIDED that
TransTechnology shall have received advance notice of any such
communications, and authorizes such accountants to disclose to the
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Administrative Agent and the Lenders any and all financial statements
and other supporting financial documents and schedules including copies
of any management letter with respect to the business, financial
condition and other affairs of such Borrower or any of its
Subsidiaries. At the request of the Administrative Agent, each of the
Borrowers shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this section 9.9.3.
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. Each of
the Borrowers will, and will cause each of its Subsidiaries to, comply in all
material respects with (i) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its charter documents and, in the event such by-laws exist, its by-laws, (iii)
all agreements and instruments by which it or any of its properties may be bound
and (iv) all applicable decrees, orders, and judgments. If any authorization,
consent, approval, permit or license from any officer, agency or instrumentality
of any government shall become necessary or required in order that any of the
Borrowers or their Subsidiaries may fulfill any of its obligations hereunder or
any of the other Loan Documents to which such Borrower or Subsidiary is a party,
such Borrower will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
such Borrower or Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Administrative Agent and the Lenders with
evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. TransTechnology will (i) promptly upon
filing the same with the United States Department of Labor or Internal Revenue
Service, upon request of the Administrative Agent, furnish to the Administrative
Agent a copy of the most recent actuarial statement required to be submitted
under Section 103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Administrative Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under Sections
302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA.
Each of the Borrowers and each of their Subsidiaries shall comply with all
applicable pension, retirement funding or employee benefit legislation in any
jurisdiction.
9.12. USE OF PROCEEDS. The proceeds of the Loans shall be used to
refinance certain Indebtedness of the Borrowers under the Prior Credit
Agreement, to finance Approved Acquisitions, and for working capital and general
corporate purposes of the Borrowers. TransTechnology will obtain Letters of
Credit solely for working capital and general corporate purposes.
9.13. ADDITIONAL MORTGAGED PROPERTY. If, after the Closing Date, any of
the Borrowers or their Subsidiaries acquires or leases for a term in excess of
five (5) years real estate used as a manufacturing or warehouse facility, such
Borrower shall, or shall, upon the request of the Administrative Agent or the
Majority Lenders, cause such Subsidiary to, forthwith deliver to the
Administrative Agent a
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fully executed mortgage or deed of trust over such real estate, in form and
substance satisfactory to the Administrative Agent, together with title
insurance policies, surveys, evidences of insurance with the Administrative
Agent named as loss payee and additional insured, legal opinions and other
documents and certificates with respect to such real estate as was required for
Real Estate of such Borrower or Subsidiary as of the Closing Date. Each of the
Borrowers further agrees that, following the taking of such actions with respect
to such real estate, the Administrative Agent shall have for the benefit of the
Lenders and the Administrative Agent a valid and enforceable first priority
mortgage or deed of trust over such real estate, free and clear of all defects
and encumbrances except for Permitted Liens.
9.14. BANK ACCOUNTS. Each of the Borrowers will, and will cause its
Subsidiaries to, together with the employees, agents and other Persons acting on
behalf of such Borrower or Subsidiary, receive and hold in trust for the
Administrative Agent and the Lenders all payments constituting proceeds of
accounts receivable or other Collateral which come into their possession or
under their control and, immediately upon receipt thereof, deposit such payments
in the form received, with any appropriate endorsements, in one of the accounts
designated as a lockbox or central depository account on SCHEDULE 8.20.
9.15. INTEREST RATE PROTECTION. With effect from a date no later than
December 31, 1999, TransTechnology will maintain interest rate protection
arrangements on terms and conditions satisfactory to the Administrative Agent
with respect to a principal amount of at least $125,000,000 for a period of
three (3) years from the date of implementation of such arrangements; PROVIDED
that if prior to December 31, 1999, TransTechnology shall have issued at least
$125,000,000 of fixed rate long-term debt, the requirement for interest rate
protection arrangements detailed in this Section 9.15 will be considered met.
9.16. FURTHER ASSURANCES. Each of the Borrowers will, and will cause
each of its Subsidiaries to, cooperate with the Lenders and the Administrative
Agent and execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Credit Agreement and the other Loan
Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Issuing Bank has any
obligations to issue, extend or renew any Letters of Credit:
10.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers will not, and will
not permit any of their Subsidiaries to, create, incur, assume, guarantee, or be
or remain liable, contingently or otherwise, with respect to, any Indebtedness
other than:
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(a) Indebtedness to the Lenders and the Administrative Agent
arising under any of the Loan Documents;
(b) current liabilities of any of the Borrowers or their
Subsidiaries incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 9.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
any of the Borrowers or Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Subordinated Debt not exceeding $150,000,000 in aggregate
principal amount at any I time outstanding;
(g) obligations under Capitalized Leases not exceeding
$8,000,000 in aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with (i) the
acquisition after the Closing Date of any real or personal property by
any of the Borrowers or their Subsidiaries, and (ii) the issuance by
any of the Borrowers or their Subsidiaries of any industrial revenue
bonds, industrial development bonds or similar instruments, PROVIDED
that the aggregate principal amount of Indebtedness of TransTechnology
and its Subsidiaries incurred pursuant to this clause (h) shall not
exceed the aggregate amount of $10,000,000 at any one time;
(i) Indebtedness existing on the date hereof and listed and
described on SCHEDULE 10.1 hereto; and
(j) Indebtedness of any Subsidiary of TransTechnology to
TransTechnology; PROVIDED that such Indebtedness shall be evidenced by
promissory notes duly executed by the obligor, and all such
intercompany notes shall be pledged and delivered to the Administrative
Agent and be in form and substance satisfactory to the Administrative
Agent.
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10.2. RESTRICTIONS ON LIENS. The Borrowers will not, and will not
permit any of their Subsidiaries to, (i) create or incur or suffer to be created
or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (v) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; PROVIDED that the Borrowers and their
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:
(a) liens in favor of a Borrower on all or part of the assets
of Subsidiaries of such Borrower securing Indebtedness owing by such
Subsidiaries to such Borrower;
(b) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
other than Mortgaged Properties to secure claims for labor, material or
supplies in respect of obligations not overdue or delinquent;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties other than Mortgaged Properties in
respect of judgments or awards, the Indebtedness with respect to which
is permitted by Section 10.1(d);
(e) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties other than Mortgaged
Properties, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue or delinquent;
(f) encumbrances on Real Estate other than the Mortgaged
Property consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities
in the title thereto, landlord's or lessor's liens under leases to
which a Borrower or a Subsidiary of a Borrower is a party, and other
minor liens or encumbrances none of which in the opinion of the
Borrowers interferes materially with the use of the property affected
in the ordinary conduct of the business of the Borrowers and their
Subsidiaries, which defects do not individually or in the aggregate
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have a materially adverse effect on the business of any Borrower
individually or of TransTechnology and its Subsidiaries on a
consolidated basis;
(g) liens existing on the date hereof and listed on SCHEDULE
10.2 hereto;
(h) security interests in, or purchase money mortgages on,
real or personal property other than Mortgaged Properties acquired
after the date hereof to secure Indebtedness of the type permitted by
Section 10.1(h)(i), in amounts not to exceed those permitted by Section
10.1(h), and incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired (or comparable security interests, such
as collateral assignments or retention of title agreements entered into
in the ordinary course of business);
(i) liens and encumbrances on each Mortgaged Property as and
to the extent permitted by the Mortgage applicable thereto; and
(j) liens in favor of the Administrative Agent for the benefit
of the Lenders and the Administrative Agent under the Loan Documents.
10.3. RESTRICTIONS ON INVESTMENTS. The Borrowers will not, and will not
permit any of their Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America, the Federal Republic of Germany or the United
Kingdom that mature within one (1) year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States or Canadian banks having
total assets in excess of $1,000,000,000 or, with respect to
Subsidiaries of TransTechnology located outside the United States,
deposit accounts with local banks having total assets in excess of
$1,000,000,000 or the local currency equivalent thereof;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if
rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
SCHEDULE 10.3 hereto;
(e) Investments with respect to Indebtedness permitted by
Section 10.1(j) so long as such entities remain Subsidiaries of
TransTechnology;
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(f) Investments consisting of the Guaranties or Investments by
TransTechnology in Subsidiaries of TransTechnology existing on the
Closing Date;
(g) Investments consisting of promissory notes received as
proceeds of asset dispositions permitted by Section 10.5.2;
(h) Investments consisting of loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $250,000 in the aggregate at
any time outstanding; and (i) other Investments in an aggregate amount
not in excess of $100,000;
PROVIDED, HOWEVER, that, with the exception of demand deposits referred to in
Section 10.3(b) and loans and advances referred to in Section 10.3(h), such
Investments will be considered Investments permitted by this Section 10.3 only
if all actions have been taken to the satisfaction of the Administrative Agent
to provide to the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, a first priority perfected security interest in all of
such Investments free of all encumbrances other than Permitted Liens; and
PROVIDED, FURTHER, that, subject to Section 7.4, no Investments in any
Subsidiaries shall be permitted unless such Subsidiary either is at the time of
such Investment a Guarantor or at such time enters into a guaranty or joinder or
other agreement, in each case in form and substance acceptable to the
Administrative Agent, pursuant to which such Subsidiary becomes a guarantor of
the payment and performance of the Obligations.
10.4. DISTRIBUTIONS. TransTechnology will not make, or permit any of
its Subsidiaries to make, any Distributions, EXCEPT that, so long as no Default
or Event of Default has occurred and is continuing or would result therefrom,
TransTechnology may declare and pay dividends on or in respect of any shares of
its capital stock in an aggregate amount not to exceed $2,000,000 paid in any
period of twelve (12) consecutive months.
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1. MERGERS AND ACQUISITIONS. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to any
merger or consolidation, to convert any of the Borrowers or their
Subsidiaries from one form of corporate organization or partnership to
another, or agree to or effect any asset acquisition or stock
acquisition, other than:
(a) the acquisition of assets (other than assets
which constitutes all or a substantial part of a business or
division) in the ordinary course of business consistent with
the past practices of the TransTechnology Group;
(b) Approved Acquisitions, subject to fulfillment of
the conditions set forth in the definition thereof;
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(c) the merger or consolidation of one or more of the
Subsidiaries of TransTechnology with and into TransTechnology;
or
(d) the merger, conversion or consolidation of two or
more Subsidiaries of TransTechnology, PROVIDED that no assets
of any such Subsidiary which prior to such merger or
consolidation were pledged to the Administrative Agent or the
Lenders or in or over which the Administrative Agent or the
Lenders had any security interest, charge, lien or other
encumbrance shall, as a result of such merger, conversion or
consolidation, cease to be so pledged or otherwise encumbered.
10.5.2. DISPOSITION OF ASSETS. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to or
agree to or effect any disposition of assets, other than:
(a) the disposition of assets (other than assets
which constitutes all or a substantial part of a business or
division) in the ordinary course of business, consistent with
the past practices of the TransTechnology Group;
(b) the disposition of the assets listed in SCHEDULE
10.5.2, PROVIDED that (i) such disposition is for
consideration equal to or greater than the fair market value
of such assets, as determined by the management of the selling
member of the TransTechnology Group in its reasonable
discretion and (ii) the proceeds of any such disposition shall
be paid to the Administrative Agent for the account of the
Lenders, to be applied against the Loans in accordance with
Section 4.9; and
(c) the disposition of the assets identified on the
most recent balance sheet of TransTechnology and its
Subsidiaries as belonging to or employed in operations
identified in such balance sheet as discontinued operations of
the TransTechnology Group, PROVIDED that the proceeds of any
such disposition shall be paid to the Administrative Agent for
the account of the Lenders, to be applied against the Loans in
accordance with Section 4.9;
PROVIDED, however, that in the event of any disposition of assets specifically
permitted pursuant to this Section 10.5.2, the Administrative Agent shall be
required, upon the request of any of the Borrowers, to release any security
interest in the Administrative Agent's favor on any such assets, and the
Administrative Agent is hereby authorized to release any such security interest
by each of the Lenders.
10.6. SALE AND LEASEBACK. The Borrowers will not, and will not permit
any of their Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby any Borrower or Subsidiary of a Borrower shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other
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property that any member of the TransTechnology Group intends to use for
substantially the same purpose as the property being sold or transferred.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrowers will not, and
will not permit any of their Subsidiaries to, (i) construct or install on any of
the Real Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (ii) conduct any activity at any Real Estate or use any
Real Estate in any manner so as to cause any material release (i.e., releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping) of Hazardous Substances on, upon or
into the Real Estate, or (iii) otherwise conduct any activity at any Real Estate
or use any Real Estate in any manner that would be in material violation of any
Environmental Law or bring such Real Estate in material violation of any
Environmental Law.
10.8. SUBORDINATED DEBT. Without the prior written consent of the
Majority Lenders and the Administrative Agent, TransTechnology will not, and
will not permit any of its Subsidiaries to:
(a) amend or modify the provisions of any Subordinated Debt so
as to affect the subordination of such Subordinated Debt to the
Obligations, or accelerate the required payment dates or the maturity
of such Subordinated Debt, or impose upon TransTechnology and its
Subsidiaries materially more onerous or restrictive covenants, events
of default or remedies, or otherwise and in similar fashion adversely
affect the interests of the Lenders hereunder in any material respect;
or
(b) make any optional payment, prepayment, redemption or
repurchase of any Subordinated Debt, including without limitation any
payments on account of or for any sinking fund or other similar fund
for the repurchase, retirement or redemption of Subordinated Debt,
other than as required by the terms thereof and in accordance with the
subordination provisions applicable thereto.
10.9. EMPLOYEE BENEFIT PLANS. Neither TransTechnology nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which could result
in a material liability for TransTechnology or any of its Subsidiaries;
or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of TransTechnology or any of its Subsidiaries pursuant to
Section 302(f) or Section 4068 of ERISA; or
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(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.
10.10. BANK ACCOUNTS. TransTechnology will not, and will not permit any
of its Subsidiaries to, (i) establish any bank accounts other than those listed
on SCHEDULE 8.20 without the Administrative Agent's prior written consent, (ii)
violate directly or indirectly any bank agency or lock box agreement in favor of
the Administrative Agent for the benefit of the Lenders and the Administrative
Agent with respect to such account, or (iii) deposit into any of the payroll
accounts listed on SCHEDULE 8.20 any amounts in excess of amounts necessary to
pay current payroll obligations from such accounts.
10.11. OPERATING LEASES. The Borrowers will not, and will not permit
any of their Subsidiaries to, create, incur, assume, guarantee or remain liable
for, contingently or otherwise, any Rental Obligations with respect to Operating
Leases in excess of an aggregate amount of $5,500,000 scheduled to become due
and payable in any fiscal year.
10.12. SO OHG PARTNERSHIP AGREEMENT. TransTechnology will not, and will
not permit any of its Subsidiaries to, amend, supplement, restate or otherwise
modify the Partnership Agreement of SO OHG as in effect as of October 27, 1995,
in any way which adversely affects any of the security interests created by the
German Security Documents or otherwise adversely affects the interest of the
Administrative Agent or any of the Lenders, without the prior written consent of
the Administrative Agent, the DM Fronting Bank and the Majority Lenders.
10.13. MAINTENANCE OF BUSINESS. The Borrowers will not, and will not
permit any of their Subsidiaries to, materially change the business of such
Borrower or Subsidiary from the Business.
11. FINANCIAL COVENANTS OF THE BORROWERS.
The Borrowers jointly and severally covenant and agree that, so long as
any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is
outstanding or any Lender has any obligation to make any Loans or the Issuing
Bank has any obligation to issue, extend or renew any Letters of Credit:
11.1. CONSOLIDATED EBITDA TO CONSOLIDATED TOTAL INTEREST EXPENSE.
TransTechnology will not permit the ratio of Consolidated EBITDA for any
Reference Period ending during any period described in the table set forth below
to Consolidated Total Interest Expense for such Reference Period to be less than
the ratio set forth opposite such period in such table:
@@
Period Ratio
------ -----
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From the Closing Date through 2.25 : 1
December 31, 2000
From January 1, 2001 through 2.50 : 1
June 30, 2002
From July 1, 2002 and thereafter 2.75 : 1
@@
11.2. FIXED CHARGE COVERAGE RATIO. TransTechnology will not permit the
ratio of (a) the aggregate amount of (i) Consolidated EBITDA for any Reference
Period ending during any period described in the table set forth below, LESS
(ii) the amount of Capital Expenditures of TransTechnology and its Subsidiaries
for such Reference Period, to (b) the aggregate amount of Consolidated Total
Interest Expense for such Reference Period, PLUS the aggregate amount of
payments of principal of any Funded Indebtedness of TransTechnology and its
Subsidiaries actually made or required to be made during such Reference Period
(including, for the avoidance of doubt, any such payments made or required to be
made in respect of the Term Loan or with respect to any Subordinated Debt), but
excluding any such amounts required to be repaid pursuant to Section 4 hereof,
to be less than the ratio set forth opposite such period in such table:
@@
Period Ratio
------ -----
From the Closing Date through 1.50 : 1
December 31, 2000
From January 1, 2001 through 1.75 : 1
June 30, 2002
From July 1, 2002 and thereafter 2.00 : 1
@@
11.3. LEVERAGE RATIO. TransTechnology will not permit the Leverage
Ratio at any time during any Reference Period ending during any period described
in the table set forth below to exceed the ratio set forth opposite such period
in such table:
@@
Period Ratio
------ -----
From the Closing Date through 5.00 : 1
March 31, 2000
From April 1, 2000 through 4.75 : 1
March 31, 2001
<PAGE> 86
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From April 1, 2001 and thereafter 4.50 : 1
@@
11.4. SENIOR LEVERAGE RATIO. TransTechnology will not permit the Senior
Leverage Ratio at any time during any Reference Period ending during any period
described in the table set forth below, to exceed the ratio set forth opposite
such period in such table:
@@
Period Ratio
------ -----
From the Closing Date through 3.75 : 1
March 31, 2000
From April 1, 2000 through 3.50 : 1
March 31, 2001
From April 1, 2001 and thereafter 3.25 : 1
@@
PROVIDED, that from and after the Placing Date, the applicable table shall be as
follows:
@@
Period Ratio
------ -----
From the Closing Date through 3.25 : 1
March 31, 2000
From April 1, 2000 through 3.00 : 1
March 31, 2001
From April 1, 2001 and thereafter 2.75 : 1
@@
11.5. MINIMUM NET WORTH. TransTechnology will not permit Consolidated
Net Worth at any time to be less than $112,500,000, as such amount shall be
increased at the end of each fiscal quarter (commencing with the fiscal quarter
ending on or around September 30, 1999), for the fiscal quarter thereafter, by
the addition of seventy-five percent (75%) of Consolidated Net Income earned
after June 30, 1999.
11.6. CAPITAL EXPENDITURES. Subject to the last sentence of this
Section 11.6, TransTechnology will not make, or permit any Subsidiary of
TransTechnology to make, Capital Expenditures in any fiscal year that exceed in
the aggregate for
<PAGE> 87
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TransTechnology and its Subsidiaries for such fiscal year the amount set forth
for such fiscal year in the chart below:
@@
Fiscal Year Amount
----------- ------
Ending on March 31, 2000 $12,000,000
Ending on March 31, 2001 $12,000,000
Ending on March 31, 2002 $13,000,000
Ending on March 31, 2003 $15,000,000
Ending on March 31, 2004 and thereafter $15,000,000
@@
If during any fiscal year set forth in the table above the amount of Capital
Expenditures permitted for that fiscal year is not utilized, the unutilized
amount may be utilized in any subsequent fiscal year, PROVIDED, HOWEVER, that
the aggregate amount of (i) the unutilized portion from any one fiscal year,
PLUS (ii) any unutilized portion previously carried forward and which remains
unutilized, which may be carried forward from one fiscal year to the subsequent
fiscal year shall not exceed $2,000,000.
12. CLOSING CONDITIONS.
The obligations of the Lenders to make the initial Revolving Credit
Loans, of the Fronting Banks to make the initial International Facility Loans,
and of the Issuing Bank to issue any initial Letters of Credit shall be subject
to the satisfaction of the following conditions precedent on or prior to the
Closing Date:
12.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the
Lenders. The Administrative Agent shall have received a fully executed copy of
each such document.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Lenders shall
have received from TransTechnology and each of its Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (i) its charter or other incorporation documents as
in effect on such date of certification, and (ii) its by-laws as in effect on
such date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by TransTechnology and each of its
Subsidiaries of this Credit Agreement and the other Loan Documents to which it
is
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or is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Lenders shall have been provided to each of the
Lenders.
12.4. INCUMBENCY CERTIFICATE. Each of the Lenders shall have received
from TransTechnology and each of its Subsidiaries an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of
TransTechnology or such Subsidiary, and giving the name and bearing a specimen
signature of each individual who shall be authorized: (i) to sign, in the name
and on behalf of each of TransTechnology and such Subsidiary, each of the Loan
Documents and Acquisition Documents to which TransTechnology or such Subsidiary
is or is to become a party; and (ii) in the case and the Borrowers, to make Loan
Requests and Conversion Requests, to apply for Letters of Credit, and to give
notices and to take other action on behalf of the Borrowers under the Loan
Documents.
12.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Administrative Agent a legal, valid and enforceable first
(except for Permitted Liens entitled to priority under applicable law) security
interest in and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Administrative Agent to protect and preserve such security interests shall have
been duly effected. The Administrative Agent shall have received evidence
thereof in form and substance satisfactory to the Administrative Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The
Administrative Agent shall have received from each of TransTechnology and its
Subsidiaries a completed and fully executed Perfection Certificate and the
results of UCC searches or searches of any other relevant register of charges or
commercial register with respect to the Collateral, indicating no liens other
than Permitted Liens and otherwise in form and substance satisfactory to the
Administrative Agent.
12.7. SURVEYS. The Administrative Agent shall have received a Survey of
each Mortgaged Property as to which a survey has been conducted on or prior to
the date hereof.
12.8. TITLE INSURANCE, ETC..
(a) The Administrative Agent shall have received a Title Policy
covering each Mortgaged Property located in the United States (or commitments to
issue such policies, with all conditions to issuance of the Title Policy deleted
by an authorized agent of the Title Insurance Company) together with proof of
payment of all fees and premiums for such policies, from the Title Insurance
Company and in amounts satisfactory to the Administrative Agent, insuring the
interest of the Administrative Agent and each of the Lenders as mortgagee under
the Mortgages.
(b) The Administrative Agent shall have received an opinion of Canadian
counsel addressed to the Administrative Agent for the benefit of the Lenders, in
form and substance satisfactory to the Administrative Agent, as to title to the
Mortgaged Property located in Canada.
<PAGE> 89
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12.9. CERTIFICATES OF INSURANCE. The Administrative Agent shall have
received (i) a certificate of insurance from an independent insurance broker
dated as of the Closing Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing the insurance
obtained in accordance with the provisions of the Security Agreements and (ii)
certified copies of all policies evidencing such insurance (or certificates
therefore signed by the insurer or an agent authorized to bind the insurer).
12.10. BANK AGENCY AGREEMENTS. The Administrative Agent shall have
received an agreement, in form and substance satisfactory to the Administrative
Agent, from each bank at which TransTechnology or any of its Subsidiaries
maintains depository accounts (including bank agency or lock box agreements)
concerning the Administrative Agent's interest for the benefit of the Lenders
and the Administrative Agent in such accounts.
12.11. HAZARDOUS WASTE ASSESSMENTS. The Administrative Agent shall have
received hazardous waste site assessments from environmental engineers or other
documentation in form and substance satisfactory to the Administrative Agent,
covering all Mortgaged Property and all other real property in respect of which
TransTechnology or any of its Subsidiaries may have material liability, whether
contingent or otherwise, for dumping or disposal of Hazardous Substances.
12.12. SOLVENCY CERTIFICATE. Each of the Lenders shall have received an
officer's certificate of TransTechnology dated as of the Closing Date as to the
solvency of TransTechnology and its Subsidiaries following the consummation of
the transactions contemplated herein and in form and substance satisfactory to
the Lenders.
12.13. OPINIONS OF COUNSEL. Each of the Lenders and the Administrative
Agent shall have received a favorable legal opinion addressed to the Lenders and
the Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Lenders and the Administrative Agent, from:
(a) Hahn Loeser & Parks LLP, counsel to TransTechnology and
its Subsidiaries in the United States;
(b) Jones, Day, Reavis & Pogue, counsel to TransTechnology and
its Subsidiaries in the Federal Republic of Germany;
(c) Simmons & Simmons, solicitors to Limited; and
(d) if requested by the Administrative Agent such other local
counsel to TransTechnology in any jurisdiction where any Collateral
(including but not limited to the Mortgaged Property) is located.
12.14. PAYMENT OF FEES. TransTechnology shall have paid to the
Administrative Agent the fees payable pursuant to Section 6.1, and shall have
paid the reasonable fees and expenses of the Administrative Agent's Special
Counsel incurred
<PAGE> 90
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in connection with the preparation and negotiation of this Credit Agreement and
the other Loan Documents.
12.15. SENIOR SUBORDINATED LOANS. The Senior Subordinated Loan
Agreement shall be in full force and effect, and all of the conditions precedent
to the borrowing by TransTechnology of Senior Subordinated Loans in the
principal amount of $75,000,000 (other than the effectiveness of this Agreement)
shall have been fulfilled.
12.16. TINNERMAN ACQUISITION. All of the conditions precedent to the
completion of the Tinnerman Acquisition in accordance with the Tinnerman
Acquisition Agreement shall have been fulfilled.
12.17. DISBURSEMENT INSTRUCTIONS. The Administrative Agent shall have
received disbursement instructions from TransTechnology indicating that (a) the
proceeds of the Senior Subordinated Loans, the Term Loan and a portion of the
proceeds of the initial Revolving Credit Loans are to be paid to Eaton
Corporation in payment of the purchase price under the Tinnerman Acquisition
Agreement, and (b) that a portion of the proceeds of the initial Revolving
Credit Loans, in an aggregate amount equal to the total amount of all
Indebtedness under the Prior Credit Agreement, are to be paid to the lenders
thereunder.
12.18. MINIMUM EBITDA. Consolidated Adjusted EBITDA for
Trans-Technology and its Subsidiaries (assuming for the purposes of this Section
12.18, completion of the Tinnerman Acquisition) for the Reference Period most
recently ended prior to the Closing Date for which such information is available
shall be at least $63,000,000.
12.19. MAXIMUM LEVERAGE RATIO. After giving effect to the transactions
described herein, in the Senior Subordinated Loan Documents and in the Tinnerman
Acquisition Documents, the Leverage Ratio as of the Closing Date shall not
exceed 4.75:1.
12.20. COMPLIANCE CERTIFICATE. The Administrative Agent shall have
received a statement certified on behalf of TransTechnology by the principal
financial or accounting officer of TransTechnology in substantially the form of
Exhibit D hereto and setting forth in reasonable detail computations evidencing
compliance with the closing conditions set forth in Sections 12.18 and 12.19,
and compliance of TransTechnology and its Subsidiaries as of the Closing Date,
on a pro forma basis assuming completion of the transactions contemplated
hereby, by the Senior Subordinated Loan Documents and by the Tinnerman
Acquisition Documents, with the financial covenants set forth in Section 11.
13. CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Revolving Credit Loans, of
the Fronting Banks to make any International Facility Loans, and of the Issuing
Bank to issue, extend or renew any Letter of Credit, in each case whether on or
after the
<PAGE> 91
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Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of TransTechnology and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan or the issuance, extension or
renewal of such Letter of Credit, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such individual
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. Upon the
request of the Administrative Agent, TransTechnology shall have delivered to the
Administrative Agent a certificate of TransTechnology signed by an authorized
officer of TransTechnology to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make such Loan pursuant
to the provisions of this Credit Agreement, or to participate in the issuance,
extension or renewal of such Letter of Credit or in the reasonable opinion of
the Issuing Bank would make it illegal for the Issuing Bank to issue, extend or
renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System or any other applicable regulatory or supervisory body.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents,
the Acquisition Documents and all other documents incident thereto shall be
satisfactory in substance and in form to the Lenders and to the Administrative
Agent and the Administrative Agent's Special Counsel, and the Lenders, the
Administrative Agent and such counsel shall have received all information and
such counterpart originals or certified or other copies of such documents as the
Administrative Agent may reasonably request.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("EVENTS OF DEFAULT" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "DEFAULTS") shall
occur:
<PAGE> 92
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(a) any of the Borrowers shall fail to pay any principal of
the Loans or any Reimbursement Obligation when the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) any of the Borrowers or their Subsidiaries shall fail to
pay any interest on the Loans, the commitment fee, any Letter of Credit
Fee, the Administrative Agent's fee, the fronting fee, or other sums
due hereunder or under any of the other Loan Documents, when the same
shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for
payment;
(c) any of the Borrowers or their Subsidiaries shall fail to
comply with any of its covenants contained in Section 9, 10 or 11 or
any of the covenants contained in any of the Mortgages or in the
Debenture;
(d) any of the Borrowers or their Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
Section 14.1 or those which by their terms expressly exclude any grace
period for any non-compliance therewith) for fifteen (15) days after
written notice of such failure has been given to TransTechnology by the
Administrative Agent;
(e) any representation or warranty of or any of the Borrowers
or their Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) any of the Borrowers or their Subsidiaries shall fail to
pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received, or in respect of any
Capitalized Leases as to which the aggregate principal amount of lease
obligations then outstanding exceed $1,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
or credit received or in respect of any such Capitalized Leases for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof;
(g) any of the Borrowers or their Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of such Borrower or
Subsidiary or of any substantial part of the assets of such Borrower or
Subsidiary or shall commence any case or other proceeding relating to
any of the Borrowers or their Subsidiaries
<PAGE> 93
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under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against or any of the Borrowers or their
Subsidiaries and any of the Borrowers or their Subsidiaries shall
indicate its approval thereof, consent thereto or acquiescence therein
or such petition or application shall not have been dismissed within
forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Borrowers
or their Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of any of the Borrowers or their Subsidiaries in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against any of the Borrowers or their Subsidiaries
that, with other outstanding final judgments, undischarged, against the
Borrowers and their Subsidiaries exceeds in the aggregate $2,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Administrative Agent's security
interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Lenders (and,
notwithstanding anything herein to the contrary, if any guaranty shall
be cancelled, terminated, revoked or rescinded without the consent of
the Lenders), or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall
be commenced by or on behalf of any of the Borrowers or their
Subsidiaries party thereto or any of their respective stockholders, or
any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall
have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of TransTechnology
or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan
in an aggregate amount exceeding $250,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United
<PAGE> 94
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States District Court of a trustee to administer such Guaranteed
Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Plan; or the PBGC shall have
instituted proceedings to terminate such Guaranteed Pension Plan;
(l) any of the Borrowers or their Subsidiaries shall be
enjoined, restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting any material
part of its business and such order has a material adverse effect on
the business or financial condition of such Borrower or Subsidiary;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of any of
the Borrowers or their Subsidiaries if such event or circumstance is
not covered by business interruption insurance and would have a
material adverse effect on the business or financial condition of such
Borrower or Subsidiary;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by any of the Borrowers or their Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of such Borrower
or Subsidiary;
(o) any of the Borrowers or their Subsidiaries shall be
indicted for a state or federal crime, or any civil or criminal action
shall otherwise have been brought against any of the Borrowers or their
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of such Borrower or Subsidiary having a fair
market value in excess of $2,000,000;
(p) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 35% or more of the outstanding shares of common stock of
TransTechnology; or, during any period of twelve consecutive calendar
months, individuals who were directors of TransTechnology on the first
day of such period shall cease to constitute a majority of the board of
directors of TransTechnology;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Lenders shall, by
notice in writing to the Borrowers declare all amounts owing with respect to
this Credit Agreement, the Loans, the Notes and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
<PAGE> 95
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immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by each of the Borrowers;
PROVIDED that in the event of any Event of Default specified in Section 14.1(g)
or 14.1(h), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent or any Lender.
14.2. TERMINATION OF COMMITMENT. If any one or more of the Events of
Default specified in Section 14.1(g), Section 14.1(h) or Section 14.1(j) shall
occur, any unused portion of the credit hereunder shall forthwith terminate and
each of the Lenders (including the Fronting Banks) shall be relieved of all
further obligations to make Loans to any of the Borrowers and the Issuing Bank
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. If any other Event of Default shall have occurred and be continuing,
or if on any Drawdown Date or other date for issuing, extending or renewing any
Letter of Credit the conditions precedent to the making of the Loans to be made
on such Drawdown Date or (as the case may be) to issuing, extending or renewing
such Letter of Credit on such other date are not satisfied the Administrative
Agent may and, upon the request of the Majority Lenders, shall, by notice to the
Borrowers, terminate the Commitments hereunder, and upon such notice being given
such Commitments shall terminate immediately and each of the Lenders (including
the Fronting Banks) shall be relieved of all further obligations to make Loans
and the Issuing Bank shall be relieved of all further obligations to issue,
extend or renew Letters of Credit. No termination of the Commitments shall
relieve any of the Borrowers or their Subsidiaries of any of the Obligations.
14.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Administrative Agent or
the Majority Lenders shall have accelerated the maturity of the Loans pursuant
to Section 14.1, each Lender, if owed any amount with respect to the Loans or
the Reimbursement Obligations, may, with the consent of the Majority Lenders but
not otherwise, proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement and
the other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the EX PARTE appointment of a receiver, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of such Lender. No remedy herein
conferred upon any Lender or the Administrative Agent or the holder of any Note
or purchaser of any Letter of Credit Participation is intended to be exclusive
of any other remedy herein or in any of the other Loan Documents and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or under any of the other Loan Documents or now or hereafter
existing at law or in equity or by statute or any other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Administrative Agent or any Lender, as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise with
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respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent, for the
exercise, protection or enforcement by the Administrative Agent of all
or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Credit Agreement or any of the other
Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Administrative Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Administrative Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Lenders may determine; PROVIDED, HOWEVER,
that distributions in respect of such obligations shall be made (i)
PARI PASSU among Obligations with respect to the Administrative Agent's
fee payable pursuant to Section 6.2 and all other Obligations and (ii)
Obligations owing to the Lenders with respect to each type of
Obligation such as interest, principal, fees and expenses, shall be
made among the Lenders PRO RATA; and PROVIDED, FURTHER, that the
Administrative Agent may in its discretion make proper allowance to
take into account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to Section 9-504(1)(c) of the
Uniform Commercial Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Lenders to any of the Borrowers and any securities or other property of the
Borrowers in the possession of such Lender may be applied to or set off by such
Lender against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrowers to such Lender. Each of the Lenders
agrees with each other Lender that (i) if an amount to be set off is to be
applied to Indebtedness of a Borrower to such Lender, other than Indebtedness
evidenced by the Notes held by such Lender or constituting Reimbursement
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Obligations owed to such Lender, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes held by
such Lender or constituting Reimbursement Obligations owed to such Lender, and
(ii) if such Lender shall receive from any of the Borrowers, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or constituting
Reimbursement Obligations owed to, such Lender by proceedings against any of the
Borrowers at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes held by, or Reimbursement
Obligations owed to, such Lender any amount in excess of its ratable portion of
the payments received by all of the Lenders with respect to the Notes held by,
and Reimbursement Obligations owed to, all of the Lenders, such Lender will make
such disposition and arrangements with the other Lenders with respect to such
excess, either by way of distribution, PRO TANTO assignment of claims,
subrogation or otherwise as shall result in each Lender receiving in respect of
the Notes held by it or Reimbursement Obligations owed it, its proportionate
payment as contemplated by this Credit Agreement; PROVIDED that if all or any
part of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
16. THE AGENTS.
16.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action
on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Administrative Agent, together with such
powers as are reasonably incident thereto, PROVIDED that no duties or
responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Administrative Agent.
(b) The relationship between the Administrative Agent and each
of the Lenders is that of an independent contractor. The use of the
term "Administrative Agent" is for convenience only and is used to
describe, as a form of convention, the independent contractual
relationship between the Administrative Agent and each of the Lenders.
Nothing contained in this Credit Agreement nor the other Loan Documents
shall be construed to create an agency, trust or other fiduciary
relationship between the Administrative Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Administrative Agent
is nevertheless a "representative" of the Lenders, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes of
actions for the benefit of the Lenders and the Administrative Agent
with respect to all collateral security and guaranties contemplated by
the Loan Documents. Such actions include the designation of the
Administrative Agent as "secured
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party", "mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to
the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended
to secure the payment or performance of any of the Obligations, all for
the benefit of the Lenders and the Administrative Agent.
16.2. EMPLOYEES AND AGENTS. The Administrative Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Credit Agreement and the other
Loan Documents. The Administrative Agent may utilize the services of such
Persons as the Administrative Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrowers. Without limiting the foregoing, the Administrative Agent
may appoint the Sterling Fronting Bank or any other financial institution with
an office located within the United Kingdom as its agent to exercise within the
United Kingdom, under the Administrative Agent's direction, any or all of the
Administrative Agent's rights and duties under this Credit Agreement and the
other Loan Documents, and the Administrative Agent may appoint the DM Fronting
Bank or any other financial institution with an office located within Germany as
its agent to exercise within Germany, under the Administrative Agent's
direction, any or all of the Administrative Agent's rights and duties under this
Credit Agreement and the other Loan Documents. Any Fronting Bank or other
financial institution so appointed shall be entitled to the benefits of the
provisions of Sections 16 - 18 to the same extent, and subject to the same
limitations, as the Administrative Agent, for so long as such Fronting Bank or
other financial institution acts in such capacity.
16.3. NO LIABILITY. Neither the Agents nor any of their shareholders,
directors, officers or employees nor any other Person assisting them in their
duties, nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that an Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this Credit
Agreement, the Notes, the Letters of Credit, any of the other Loan Documents or
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or for
the validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrowers or any of their Subsidiaries, or be bound to ascertain or inquire as
to the performance or observance of any of the terms,
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conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or to
inspect any of the properties, books or records of the Borrowers or any of their
Subsidiaries. The Administrative Agent shall not be bound to ascertain whether
any notice, consent, waiver or request delivered to it by any of the Borrowers
or any holder of any of the Notes shall have been duly authorized or is true,
accurate and complete. The Administrative Agent has not made nor does it now
make any representations or warranties, express or implied, nor does it assume
any liability to the Lenders, with respect to the credit worthiness or financial
conditions of the Borrowers or any of their Subsidiaries. Each Lender
acknowledges that it has, independently and without reliance upon any Agent or
Lender, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by any of
the Borrowers to the Administrative Agent hereunder or any of the other
Loan Documents for the account of any Lender shall constitute a payment
to such Lender. The Administrative Agent agrees promptly to distribute
to each Lender such Lender's pro rata share of payments received by the
Administrative Agent for the account of the Lenders except as otherwise
expressly provided herein or in any of the other Loan Documents.
16.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in the
opinion of the Administrative Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any
of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution
shall have been adjudicated by a court of competent jurisdiction. If a
court of competent jurisdiction shall adjudge that any amount received
and distributed by the Administrative Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.
16.5.3. DELINQUENT LENDERS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Lender that fails (i) to make available to the
Administrative Agent its pro rata share of any Loan or to purchase any
Letter of Credit Participation, (ii) to make payment on the due date
therefor of any amount due to any of the Fronting Banks under Section
6.12.2, or (iii) to comply with the provisions of Section 15 with
respect to making dispositions and arrangements with the other Lenders,
where such Lender's share of any payment received, whether by setoff or
otherwise, is in excess of its pro rata share of such payments due and
payable to all of the Lenders, in each case as, when and to the full
extent required by the provisions of this Credit Agreement, shall be
deemed delinquent (a "DELINQUENT LENDER") and shall be deemed a
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Delinquent Lender until such time as such delinquency is satisfied. A
Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Borrowers, whether on account of outstanding Loans,
Unpaid Reimbursement Obligations, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of,
their respective pro rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. The Delinquent Lender hereby authorizes the
Administrative Agent to distribute such payments to the nondelinquent
Lenders in proportion to their respective pro rata shares of all
outstanding Loans and Unpaid Reimbursement Obligations. A Delinquent
Lender shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all
outstanding Loans and Unpaid Reimbursement Obligations of the
nondelinquent Lenders, the Lenders' respective pro rata shares of all
outstanding Loans and Unpaid Reimbursement Obligations have returned to
those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
16.6. HOLDERS OF NOTES. The Administrative Agent may deem and treat the
payee of any Note or the purchaser of any Letter of Credit Participation as the
absolute owner or purchaser thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
16.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold
harmless the Administrative Agent from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Administrative Agent has not been
reimbursed by the Borrowers as required by Section 17), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or the Administrative Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Administrative Agent's willful misconduct or gross
negligence.
16.8. AGENTS AS LENDERS. In its individual capacity, each of the
Lenders which is also an Agent hereunder shall have the same obligations and the
same rights, powers and privileges in respect of its Revolving Credit Commitment
and the Loans made by it, and as the holder of any of the Notes and as the
purchaser of any Letter of Credit Participations, as it would have were it not
also an Agent.
16.9. RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving sixty (60) days prior written notice thereof to the
Lenders and TransTechnology. Upon any such resignation, the Majority Lenders
shall have the right to appoint a successor Administrative Agent. Unless a
Default or Event of Default shall have occurred and be continuing, such
successor Administrative Agent shall be reasonably acceptable to
TransTechnology. If no successor Administrative Agent shall have been so
appointed by the Majority
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Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Administrative Agent.
16.10. DUTIES OF CERTAIN AGENTS. Neither the Syndication Agent nor the
Documentation Agent shall have any duties or responsibilities under this Credit
Agreement in its capacity as such.
17. EXPENSES.
The Borrowers jointly and severally (but, in the case of GmbH, subject
to Section 30 of the GmbH Act of Germany) agree to pay (i) the reasonable costs
of producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (ii) any taxes (including
any interest and penalties in respect thereto) payable by the Administrative
Agent or any of the Lenders (other than taxes based upon the Administrative
Agent's or any Lender's net income) on or with respect to the transactions
contemplated by this Credit Agreement (the Borrowers hereby agreeing to
indemnify the Administrative Agent and each Lender with respect thereto), (iii)
the reasonable fees, expenses and disbursements of the Administrative Agent's
Special Counsel or any local counsel to the Administrative Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(iv) the fees, expenses and disbursements of the Administrative Agent incurred
by the Administrative Agent in connection with the preparation, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums, asset and/or collateral examiners' and
commercial finance examiners' fees and surveyor, engineering and appraisal
charges, (v) any fees, costs, expenses and bank charges, including bank charges
for returned checks, incurred by the Administrative Agent in establishing,
maintaining or handling agency accounts, lock box accounts and other accounts
for the collection of any of the Collateral; (vi) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys' fees and costs,
which attorneys may be employees of any Lender or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Lender or the Administrative
Agent in connection with (A) the enforcement of or preservation of rights under
any of the Loan Documents against any of the Borrowers or their
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Subsidiaries or the administration thereof after the occurrence of a Default or
Event of Default and (B) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to any Lender's or the Administrative
Agent's relationship with any of the Borrowers or their Subsidiaries and (vii)
all reasonable fees, expenses and disbursements of any Lender or the
Administrative Agent incurred in connection with UCC searches, searches of
registers of charges and commercial or companies registers, UCC filings,
mortgage recordings or other filings on recordings of security documents
evidencing the Administrative Agent's lien on the Collateral. The covenants of
this Section 17 shall survive payment or satisfaction of all other Obligations.
18. INDEMNIFICATION.
The Borrowers jointly and severally (but, in the case of GmbH, subject
to Section 30 of the GmbH Act of Germany) agree to indemnify and hold harmless
the Agents, the Arranger and the Lenders, and their respective shareholders,
directors, agents, officers, Subsidiaries and Affiliates (each, an "INDEMNIFIED
PARTY") from and against any and all claims, actions, suits or causes of action
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages, settlement payments, obligations, and reasonable costs and
expenses of every nature and character arising out of this Credit Agreement or
any of the other Loan Documents or the transactions contemplated hereby
including, without limitation, (i) any actual or proposed use by any of the
Borrowers or their Subsidiaries of the proceeds of any of the Loans or Letters
of Credit, (ii) the reversal or withdrawal of any provisional credits granted by
the Administrative Agent or any Lender upon the transfer of funds from bank
agency or lock box accounts or in connection with the provisional honoring of
checks or other items, (iii) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of any of the Borrowers or
their Subsidiaries comprised in the Collateral, (iv) any of the Borrowers or
their Subsidiaries entering into or performing this Credit Agreement or any of
the other Loan Documents, or (v) with respect to the Borrowers and their
Subsidiaries and their respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding, but excluding any such
liabilities, losses, damages, settlement payments, obligations, costs and
expenses resulting from the gross negligence or willful misconduct of the
applicable Indemnified Party. In litigation, or the preparation therefor, each
of the Lenders, the Agents and the Arranger shall be entitled to select their
own counsel and, in addition to the foregoing indemnity, the Borrowers jointly
and severally (but, in the case of GmbH, subject to Section 30 of the GmbH Act
of Germany) agree to pay promptly the reasonable fees and expenses of such
counsel. If, and to the extent that the obligations of the Borrowers under this
Section 18 are unenforceable for any reason, the Borrowers hereby jointly and
severally (but, in the case of GmbH,
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subject to Section 30 of the GmbH Act of Germany) agree to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this Section 18
shall survive payment or satisfaction in full of all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of any of the Borrowers or their Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by any of the Lenders of any
of the Loans and the issuance, extension or renewal of any Letters of Credit, as
herein contemplated, and shall continue in full force and effect so long as any
Letter of Credit or any amount due under this Credit Agreement or the Notes or
any of the other Loan Documents remains outstanding or any Lender has any
obligation to make any Loans or the Issuing Bank has any obligation to issue,
extend or renew any Letter of Credit, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All statements contained
in any certificate or other paper delivered to any Lender or the Administrative
Agent at any time by or on behalf of TransTechnology or any of its Subsidiaries
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by TransTechnology or such Subsidiary
hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT. Except as provided herein, each Lender
may assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations as a Lender under this Credit Agreement (including all or
a portion of its Commitment Percentage and Revolving Credit Commitment and the
same portion of the applicable Loans at the time owing to it, the Notes held by
it and, in the case of its Revolving Credit Commitment, the same portion of its
participating interest in the risk relating to any Letters of Credit or Fronted
Loans); PROVIDED that (i) each of the Administrative Agent and, so long as no
Default or Event of Default shall have occurred and be continuing,
TransTechnology, shall have given its prior written consent to such assignment
(such consent not to be unreasonably withheld), PROVIDED, FURTHER, however, that
no such consent and no fee for the Administrative Agent shall be required for
any assignment to a Lender or an Affiliate or Related Fund of a Lender, (ii)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Lender's rights and obligations as a Lender under this Credit
Agreement, (iii) each assignment, other than an assignment to a Lender or an
Affiliate or Related Fund of a Lender (as to which no such minimum amount shall
apply), shall be in an amount that is at least $2,500,000 or a greater multiple
of $500,000, PROVIDED, HOWEVER, that assignments that are made on the same day
to two or more Related Funds may be treated as a single assignment for purposes
of the minimum amount, and (iv) the parties to such assignment shall execute and
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deliver to the Administrative Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form of
EXHIBIT E hereto (an "ASSIGNMENT AND ACCEPTANCE"), together with any Notes
subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in any such Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder, and (ii) the assigning Lender shall, to
the extent provided in such assignment and upon payment to the Administrative
Agent of the registration fee referred to in Section 20.3, be released from its
obligations under this Credit Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Lender makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of TransTechnology and its Subsidiaries or any other Person primarily
or secondarily liable in respect of any of the Obligations, or the
performance or observance by any of the Borrowers and their
Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under
this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Lender, the Agents or any other Lender and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
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(e) such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such
powers under this Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Lender;
(h) such assignee and such assignor each represents and
warrants that it is legally authorized to enter into such Assignment
and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Lender satisfactory to such assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
20.3. REGISTER. The Administrative 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 Lenders,
and (b) the Commitment Percentages and the principal amounts of the Revolving
Credit Loans and portions of the Term Loan owing to, and the Letter of Credit
Participations and participations in the risk related to the Fronted Loans
purchased by, the Lenders from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender 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 a Lender to an Affiliate or a Related Fund of such Lender, the assigning
Lender agrees to pay to the Administrative Agent a registration fee in the sum
of $3,500.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Administrative Agent shall (i) record the information
contained therein in the Register, and (ii) give prompt notice thereof to
TransTechnology and the Lenders (other than the assigning Lender). Within five
(5) Business Days after receipt of such notice, TransTechnology, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
each surrendered Note, a new Note to the order of such Eligible Assignee in an
amount equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained some portion
of its obligations hereunder, a new Note or Notes to the order of the assigning
Lender in an amount equal to the
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amount retained by it hereunder as a Lender. Such new Notes shall provide that
they are replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such in Assignment and Acceptance
and shall otherwise be substantially the form of the assigned Notes. Upon the
request of the recipient of new Notes or the Administrative Agent, within five
(5) days of issuance of such new Notes pursuant to this Section 20.4,
TransTechnology shall deliver an opinion of counsel, which may be the general
counsel of TransTechnology, addressed to the recipients of the new Notes and the
Administrative Agent, relating to the due authorization, execution and delivery
of such new Notes and the legality, validity and binding effect thereof, in form
and substance satisfactory to the recipients of the new Notes, the
Administrative Agent and the Administrative Agent's Special Counsel. The
surrendered Notes shall be cancelled and returned to TransTechnology.
20.5. PARTICIPATIONS. Each Lender may sell participations to one or
more banks or other entities in all or a portion of such Lender's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (i) each such participation shall be in an amount of not less than
$1,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers, and (iii) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Loan Documents shall
be the rights to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on any Loans, extend the term or increase
the amount of any of the Commitments of such Lender as it relates to such
participant, reduce the amount of any commitment fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
20.6. DISCLOSURE. The Borrowers agree that in addition to disclosures
made in accordance with standard and customary banking practices any Lender may
disclose information obtained by such Lender pursuant to this Credit Agreement
to assignees or participants and potential assignees or participants hereunder;
PROVIDED that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH TRANSTECHNOLOGY. If any
assignee Lender is an Affiliate of TransTechnology, then any such assignee
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to Section 14.1 or Section 14.2, and the determination of the Majority
Lenders shall for all purposes of this Credit Agreement and the other Loan
Documents be made without regard to such assignee Lender's interest in any of
the Loans. If any Lender sells a participating
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interest in any of the Loans or Reimbursement Obligations to a participant, and
such participant is TransTechnology or an Affiliate of TransTechnology, then
such transferor Lender shall promptly notify the Administrative Agent of the
sale of such participation. A transferor Lender shall have no right to vote as a
Lender hereunder or under any of the other Loan Documents for purposes of
granting consents or waivers or for purposes of agreeing to amendments or
modifications to any of the Loan Documents or for purposes of making requests to
the Administrative Agent pursuant to Section 14.1 or Section 14.2 to the extent
that such participation is beneficially owned by TransTechnology or any
Affiliate of TransTechnology, and the determination of the Majority Lenders
shall for all purposes of this Credit Agreement and the other Loan Documents be
made without regard to the interest of such transferor Lender in the Loans to
the extent of such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender shall
retain its rights to be indemnified pursuant to Section 17 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Lender is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to TransTechnology and the Administrative Agent certification as to its
exemption from deduction or withholding of any United States federal income
taxes. If the Reference Bank transfers all of its interest, rights and
obligations under this Credit Agreement, the Administrative Agent shall, in
consultation with TransTechnology and with the consent of TransTechnology and
the Majority Lenders, appoint another Lender to act as the Reference Bank
hereunder, and in the absence of such consent the Administrative Agent shall act
as Reference Bank. Anything contained in this Section 20 to the contrary
notwithstanding, any Lender may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Notes) to any of the twelve Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents.
20.9. ASSIGNMENT BY THE BORROWERS. None of the Borrowers shall assign
or transfer any of its rights or obligations under any of the Loan Documents,
without the prior written consent of each of the Lenders.
20.10. SYNDICATION. The Borrowers shall provide all information
reasonably requested by the Arranger in form and substance reasonably
satisfactory to the Arranger to complete the syndication of BankBoston's initial
Commitment, including, without limitation, all information that is reasonably
available and all projections prepared by or on behalf of the Borrowers relating
to the transactions contemplated hereby. The Borrowers and their respective
directors, officers, employees and agents shall, at the reasonable request of
the Arranger meet with potential Lenders and provide such additional information
as such Persons might reasonably request. The Borrowers agree that the option to
borrow Eurocurrency Rate Loans under the loan facilities set forth herein prior
to completion of the
<PAGE> 108
-100-
syndication of BankBoston's initial Commitment is subject to the provisions of
the second sentence of Section 6.13.
21. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail or, if either the Person giving the notice or the
Person being notified is outside the United States, by registered or
recorded-delivery air mail, in each case postage prepaid, sent by overnight
courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to any of the Borrowers, at TransTechnology
Corporation, 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 Administrative Agent, at 100 Federal Street,
Boston, Massachusetts 02110, USA, Attention: Maura C. Wadlinger, Vice
President, or such other address for notice as the Administrative Agent
shall last have furnished in writing to the Person giving the notice;
(c) if to any Lender or Fronting Bank, at such Lender's or
Fronting Bank's address set forth on SCHEDULE 1 hereto, or such other
address for notice as such Lender or Fronting Bank shall have last
furnished in writing to the Person giving the notice; and
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile,
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof, and (iii) if sent by
registered or recorded-delivery air mail, on the fifth Business Day following
the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS
AGREE THAT ANY SUIT FOR THE
<PAGE> 109
-101-
ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND EACH OF THE BORROWERS CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE
UPON IT BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21. IN ADDITION, ANY SUIT OR
OTHER REMEDY UNDER ANY OF THE SECURITY DOCUMENTS MAY BE BROUGHT IN THE
JURISDICTION IN WHICH THE RESPECTIVE COLLATERAL OR MORTGAGED PROPERTY THEREUNDER
IS LOCATED. EACH OF GMBH AND LIMITED HEREBY EXPRESSLY APPOINTS TRANSTECHNOLOGY
AT THE ADDRESS SPECIFIED IN SECTION 21 AS ITS AGENT FOR SERVICE OF PROCESS. EACH
OF THE BORROWERS HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
26. WAIVER OF JURY TRIAL.
Each of the Borrowers and the Lenders hereby waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, each of the
Borrowers hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Borrowers (i) certifies
<PAGE> 110
-102-
that no representative, agent or attorney of any Lender or the Administrative
Agent has represented, expressly or otherwise, that such Lender or the
Administrative Agent would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that each of the Administrative Agent
and the Lenders has been induced to enter into this Credit Agreement, the other
Loan Documents to which it is a party by, among other things, the waivers and
certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
27.1. VOTING PROCEDURES.
(a) Except as set forth in clauses (b) - (f) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents may be
amended or waived and any departure therefrom may be consented to by the
Majority Lenders if, but only if, such amendment, waiver or consent is in
writing signed by the Majority Lenders and, in the case of an amendment (other
than an amendment described in Section 27.2), by the Borrowers and, in any such
event, the failure to observe, perform oR discharge any such term, covenant,
agreement or condition (whether such amendment is executed or such waiver or
consent is given before or after such failure) shall not be construed as a
breach of such term, covenant, agreement or condition or as a Default or an
Event of Default. Unless otherwise specified in such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific instance and
for the specific purpose for which given. Anything herein to the contrary
notwithstanding, the Majority Lenders shall have the right to waive any Default
or Event of Default and the consequences hereunder of such Default or Event of
Default and shall have the right to enter into an agreement with the Borrowers
providing for the forbearance from the exercise of any remedies provided
hereunder or under the other Loan Documents without waiving any Default or Event
of Default. The making of Loans hereunder by the Lenders during the existence of
a Default or Event of Default shall not be deemed to constitute a waiver of such
Default or Event of Default.
(b) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders, no amendment, consent or waiver shall
affect the amount or extend the time of the obligation of the Lenders to make
Loans or extend the originally scheduled time or times of payment of the
principal of any Loan or alter the time or times of payment of interest on any
Loan or the amount of the principal thereof or the rate of interest thereon or
the amount of any revolving credit commitment fee payable hereunder or permit
any subordination of the principal or interest on any Loan.
(c) Except as otherwise set forth in this Agreement, without the prior
unanimous written consent of the Lenders and the Fronting Banks, no amendment,
consent or waiver shall affect the amount or extend the time of the obligation
of the Fronting Banks to make International Facility Loans or extend the
originally scheduled time or times of payment of the principal of any such Loan
or alter the time or times of payment of interest on any such Loan or the amount
of the principal thereof or the rate of interest thereon or the amount of the
fronting fee referred to in
<PAGE> 111
-103-
Section 6.12.1 or permit any subordination of the principal or interest on any
such Loan or alter the apportionment of any repayments or prepayment of any such
Loans to which a Fronting Bank is entitled.
(d) Except as otherwise set forth in this Agreement, (i) without the
prior written consent of the Issuing Bank, no amendment, consent or waiver shall
affect the rights or duties of the Issuing Bank, including without limitation
the amount of any Letter of Credit Fees payable hereunder, (ii) without the
prior written consent of a Fronting Bank, no amendment, consent or waiver shall
affect the rights or duties of such Fronting Bank, including without limitation
the amount of any fronting fees payable hereunder and (iii) without the prior
written consent of the applicable Agent, no amendment, consent or waiver shall
affect the right or duties of an Agent, including without limitation the amount
of any Administrative Agent's fees payable hereunder, or the provisions of
Section 16.
(e) Neither TransTechnology nor any of its Subsidiaries which is a
"significant subsidiary" (as defined in Regulation S-X under the Securities
Exchange Act of 1934) shall be released from any of the Guaranties, other than
as specifically permitted by such Guaranty, without the prior unanimous written
consent of the Lenders pursuant to this Section 27.1(e), and no portion of the
Collateral with a book value at the time of such release which, when aggregated
with the book value of all other portions of the Collateral released by the
Administrative Agent in any fiscal year without the prior unanimous consent of
the Lenders pursuant to this Section 27.1(e), exceeds $1,000,000, shall be
released by the Administrative Agent, other than as specifically permitted by
this Agreement or in the other Loan Documents, without the prior unanimous
written consent of the Lenders for such release, PROVIDED, however, that any
other release of Collateral may be agreed to by the Administrative Agent alone,
unless specifically prohibited by this Agreement or any of the other Loan
Documents.
(f) Neither the definition of "Majority Lenders", nor the provisions of
this Section 27.1, may be amended without the prior unanimous written consent of
the Lenders.
27.2. BORROWERS' CONSENT NOT REQUIRED FOR CERTAIN AMENDMENTS.
Notwithstanding any provision of this Agreement or the other Loan Documents to
the contrary, no consent, written or otherwise, of the Borrowers shall be
necessary or required in connection with any amendment to Section 6.12.2 or
Section 16, and Any amendment to such provisions shall be effected solely by and
among the Administrative Agent, the Fronting Banks and the Lenders (with respect
to any amendment to Section 6.12.2) or the Administrative Agent and the Lenders
(with respect to any amendment of Section 16), PROVIDED that no such amendment
shall impose any obligation on the Borrowers.
27.3. COURSE OF DEALING. No course of dealing or delay or omission on
the part of the Administrative Agent or any Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon any of the Borrowers shall entitle any of the Borrowers to other or
further notice or demand in similar or other circumstances.
<PAGE> 112
-104-
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
29.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY.
Trans-Technology acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to
TransTechnology or one or more of its Subsidiaries, in connection with this
Credit Agreement or otherwise, by a Section 20 Subsidiary. TransTechnology, for
itself and each of its Subsidiaries, hereby authorizes (a) such Section 20
Subsidiary to share with the Administrative Agent and each Lender any
information delivered to such Section 20 Subsidiary by TransTechnology or any of
its Subsidiaries, and (b) the Administrative Agent and each Lender to share with
such Section 20 Subsidiary any information delivered to the Administrative Agent
or such Lender by TransTechnology or any of its Subsidiaries pursuant to this
Credit Agreement, or in connection with the decision of such Lender to enter
into this Credit Agreement; it being understood, in each case, that any such
Section 20 Subsidiary receiving such information shall be bound by the
confidentiality provisions of this Credit Agreement. Such authorization shall
survive the payment and satisfaction in full of all of Obligations.
29.2. CONFIDENTIALITY. Each of the Lenders and the Administrative Agent
agrees, on behalf of itself and each of its affiliates, directors, officers,
employees and representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound banking practices, any non-public information supplied to it by
TransTechnology or any of its Subsidiaries pursuant to this Credit Agreement
that is identified by such Person as being confidential at the time the same is
delivered to any of the Lenders or the Administrative Agent, PROVIDED that
nothing herein shall limit the disclosure of any such information (a) after such
information shall have become public other than through a violation of this
Section 29, (b) tO the extent required by statute, rule, regulation or judicial
process, (c) to counsel, auditors or accounts for any of the Lenders or the
Administrative Agent, (d) to bank examiners or any other regulatory authority
having jurisdiction over any of the Lenders or the Administrative Agent, (e) to
the Administrative Agent, any Lender or any Section 20 Subsidiary, (f) in
connection with any litigation to which any one or more of the Lenders, the
Administrative Agent or any Section 20 Subsidiary is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Loan
Document, (g) to a Subsidiary or affiliate of such Lender as provided in Section
29.1 or (h) to any assignee oR participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by the
provisions of Section 20.6.
<PAGE> 113
-105-
29.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Lenders and the Administrative Agent shall,
prior to disclosure thereof, notify TransTechnology of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender or the Administrative
Agent by such governmental agency) or pursuant to legal process, and shall
consult with TransTechnology on the advisability of taking legally available
steps to resist or narrow any such request. In the event that such steps are not
available or effective, or are deemed inadvisable by counsel to such Lender or
the Administrative Agent, as the case may be, or in the event that
TransTechnology waives compliance with the provisions of this Section 29.3, such
Lender or the Administrative Agent, and/or its respective representatives, as
the case may be, may disclose to any tribunal only that portion of such
non-public information which it is advised by counsel is legally required to be
disclosed, and shall exercise reasonable efforts to obtain assurances that
confidential treatment will be accorded such non-public information.
29.4. OTHER. In no event shall any Lender or the Administrative Agent
be obligated or required to return any materials furnished to it or any Section
20 Subsidiary by TransTechnology or any of its Subsidiaries which such Lender,
Section 20 Subsidiary or Administrative Agent is required to retain pursuant to
any requirement of law or rule or regulation of any governmental agency. The
obligations of each Lender under this Section 29 shall supersede and replace the
obligations of such Lender under any confidentiality letter in respect of this
financing signed and delivered by such Lender to TransTechnology prior to the
date hereof and shall be binding upon any assignee of, or purchaser of any
participation in, any interest in any of the Loans or Reimbursement Obligations
from any Lender.
30. TRANSITIONAL ARRANGEMENTS.
30.1. PRIOR CREDIT AGREEMENT SUPERSEDED. This Credit Agreement shall on
the Closing Date amend and restate the Prior Credit Agreement in its entirety,
except as provided in this Section 30. On the Closing Date, the rights and
obligations of the parties evidenced by the Prior Credit Agreement shall be
evidenced by the Credit Agreement and the other Loan Documents, as defined
herein, and the Loans as defined in the Prior Credit Agreement, collectively,
shall be converted to the Loans as defined herein.
30.2. INTEREST AND FEES UNDER PRIOR CREDIT AGREEMENT. All interest and
fees and expenses, if any, owing or accruing under or in respect of the Prior
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (prorated in the case of any fractional periods), and shall be paid in
accordance with the method, for the periods, and on the dates, specified in the
Prior Credit Agreement, as if the Prior Credit Agreement were still in effect.
Commencing on the Closing Date, the commitment fee shall be payable by the
Borrowers to the Administrative Agent for the account of the Lenders in
accordance with Section 2.2.
<PAGE> 114
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Joseph F. Spanier
--------------------------------
Name: Joseph F. Spanier
Title: Vice President and CFO
TRANSTECHNOLOGY SEEGER-ORBIS GMBH
By: /s/ Ulf Jemsby
--------------------------------
Name: Ulf Jemsby
Title: Geschaftsfuhrer
TRANSTECHNOLOGY (GB) LIMITED
By: /s/ Ulf Jemsby
--------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Gerald C. Harvey
--------------------------------
Name: Gerald C. Harvey
Title: Director
BANKBOSTON, N.A., individually and as
Administrative Agent, Issuing Bank and
Sterling Fronting Bank
By: /s/ Robert W. MacElhiney
--------------------------------
Name: Robert W. MacElhiney
Title: Vice President
<PAGE> 115
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank
By: /s/ Michael Leitzbach
--------------------------------
Name: Michael Leitzbach
Title: Assistant Treasurer
By: /s/ Matthias Landskron
--------------------------------
Name: Matthias Landskron
Title: Vice President
ABN AMRO BANK N.V.,
individually and as Syndication Agent
By: /s/ Lisa Megeaski
--------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Edward D. Puckhaber
--------------------------------
Name: Edward D. Puckhaber
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
CHICAGO, individually and as
Documentation Agent
By: /s/ Jeffrey Lubatkin
--------------------------------
Name: Jeffrey Lubatkin
Title: Vice President
<PAGE> 116
THE BANK OF NEW YORK
By: /s/ Steven P. Castellucci
--------------------------------
Name: Steven P. Castellucci
Title: Vice President
KEY CORPORATE CAPITAL INC.
By: /s/ Alex Strazzella
--------------------------------
Name: Alex Strazzella
Title: Vice President
BANK OF NOVA SCOTIA
By: /s/ Brian Allen
--------------------------------
Name: Brian Allen
Title: Senior Relationship Manager
COMERICA BANK
By: /s/ Kimberly S. Kersten
--------------------------------
Name: Kimberly S. Kersten
Title: Vice President
DRESDNER BANK, AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By: /s/ Christopher E. Sarisky
--------------------------------
Name: Christopher E. Sarisky
Title: Assistant Vice President
By: /s/ John R. Morrison
--------------------------------
Name: John R. Morrison
Title: Vice President
<PAGE> 117
SUMMIT BANK
By: /s/ Richard J. Banning
--------------------------------
Name: Richard J. Banning
Title: Vice President
<PAGE> 118
EXHIBIT A
---------
FORM OF [AMENDED AND RESTATED]
REVOLVING CREDIT NOTE
$[_______] ________ __, ______
FOR VALUE RECEIVED, the undersigned TRANSTECHNOLOGY CORPORATION, a
Delaware corporation ("TransTechnology"), hereby promises to pay (without setoff
or counterclaim) to the order of [INSERT LENDER], a [insert entity] (the
"Lender"), at the Administrative Agent's Head Office (as defined in the Credit
Agreement referred to below):
(a) prior to or on August __, 2004 the principal amount of
[INSERT AMOUNT] DOLLARS ($_____) or, if less, the aggregate unpaid
principal amount of Revolving Credit Loans advanced by the Lender to
TransTechnology pursuant to the Second Amended and Restated Credit
Agreement dated as of June 30, 1995 and amended and restated as of July
24, 1998 and as further amended and restated as of August __, 1999 (as
amended, restated, modified, varied and in effect from time to time,
the "Credit Agreement"), by and among TransTechnology, TransTechnology
Seeger-Orbis GmbH, TransTechnology (GB) Limited (collectively, the
"Borrowers"), the lending institutions party thereto (the "Lenders"),
BankBoston, N.A. acting through its London Branch as Sterling Fronting
Bank, BHF-BANK Aktiengesellschaft acting as DM Fronting Bank,
BankBoston, N.A., as Issuing Bank, ABN AMRO Bank N.V., as Syndication
Agent, The First National Bank of Chicago, as Documentation Agent, and
BankBoston, N.A., as administrative agent for itself, the Lenders, the
Sterling Fronting Bank, the DM Fronting Bank and the Issuing Bank (the
"Administrative Agent");
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by
TransTechnology in accordance with the terms of the Credit Agreement. The Lender
and any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of TransTechnology contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All
<PAGE> 119
-2-
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings herein as in the Credit Agreement.
[This Note constitutes the amendment and restatement in its entirety of
the [amended and restated] revolving credit note of TransTechnology to the
Lender dated as of July 24, 1998.]
TransTechnology irrevocably authorizes the Lender to make or cause to
be made, at or about the time of the Drawdown Date of any Revolving Credit Loan
or at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Revolving Credit Loans set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Lender with
respect to any Revolving Credit Loans shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Lender, but the failure to
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the obligation
of TransTechnology hereunder or under the Credit Agreement to make payments of
principal of and interest on this Note when due.
TransTechnology has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
TransTechnology and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
<PAGE> 120
-3-
THIS NOTE AND THE OBLIGATIONS OF TRANSTECHNOLOGY HEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). TRANSTECHNOLOGY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON
TRANSTECHNOLOGY BY MAIL AT THE ADDRESS SPECIFIED IN ss.21 OF THE CREDIT
AGREEMENT. TRANSTECHNOLOGY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
TRANSTECHNOLOGY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit
Note to be signed under seal in its corporate name by its duly authorized
officer as of the day and year first above written.
TRANSTECHNOLOGY
CORPORATION
By: _____________________________
Name:
Title:
<PAGE> 121
<TABLE>
<CAPTION>
- ------------------ -------------------- ----------------------- -------------------- ---------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
- ------------------ -------------------- ----------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
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- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
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- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
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- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
</TABLE>
<PAGE> 122
EXHIBIT B
---------
FORM OF LOAN REQUEST
[TRANSTECHNOLOGY CORPORATION]
[TRANSTECHNOLOGY SEEGER-ORBIS GmbH]
[TRANSTECHNOLOGY (GB) LIMITED]
_______ __, ____
[BankBoston, N.A., as Administrative Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: ]
or
[BankBoston, N.A., as Sterling Fronting Bank
BankBoston House
39 Victoria Street
London SW1H 0EE
Attention: ]
or
[BHF-BANK Aktiengesellschaft, as DM Fronting Bank
insert branch address
Attention:]
Ladies and Gentlemen:
Reference is hereby made to that certain Second Amended and Restated Credit
Agreement, dated as of June 30, 1995 and amended and restated as of July 24,
1998 and as further amended and restated as of August __, 1999 (as the same may
be amended, restated, modified, varied and in effect from time to time, the
"Credit Agreement"), among TransTechnology Corporation ("TransTechnology"),
TransTechnology Seeger-Orbis GmbH ("GmbH"), TransTechnology (GB) Limited
("Limited"), BankBoston, N.A. ("BankBoston") and the other lending institutions
party thereto (the "Lenders"), BankBoston, acting through its London Branch as
Sterling Fronting Bank, BHF-BANK Aktiengesellschaft, acting as DM Fronting Bank,
BankBoston, as issuing bank (in such capacity, the "Issuing Bank"), ABN AMRO
Bank N.V., as Syndication Agent, The First National Bank of Chicago, as
Documentation Agent, and BankBoston, as administrative agent for itself, the
Lenders, the Sterling Fronting Bank, the DM Fronting Bank and the Issuing Bank
(in such capacity, the "Administrative Agent"). Capitalized terms which are used
herein without definition
<PAGE> 123
BankBoston, N.A., as Administrative Agent
Page 2
and which are defined in the Credit Agreement shall have the same meanings
herein as in the Credit Agreement.
Pursuant to Section ___ of the Credit Agreement, we hereby request that
a _______________ Loan [**IN THE CASE OF A REVOLVING CREDIT LOAN ** consisting
of a Base Rate Loan in the principal amount of $__________, or a Eurocurrency
Rate Loan in the principal amount of $__________] with an Interest Period of
_________] [**IN THE CASE OF AN INTERNATIONAL FACILITY LOAN** in the principal
amount of ____________ with an Interest Period of __________] be made on
__________ __, ____. We understand that this request is irrevocable and binding
on us and obligates us to accept the requested _____________ Loan on such date.
We hereby certify (a) that the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $_________, (b) that the
aggregate outstanding principal amount of the International Facility Loans on
today's date is the DM Equivalent of $_________ and the Sterling Equivalent of
$________, (c) that we will use the proceeds of the requested ________________
Loan in accordance with the provisions of the Credit Agreement, (d) that each of
the representations and warranties contained in the Credit Agreement or in any
document or instrument delivered pursuant to or in connection with the Credit
Agreement was true as of the date as of which it was made and is true at and as
of the date hereof (except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties related
expressly to an earlier date) and (e) that no Default or Event of Default has
occurred and is continuing.
Very truly yours,
[TRANSTECHNOLOGY CORPORATION]
By:
---------------------------
Name:
Title:
or
<PAGE> 124
BankBoston, N.A., as Administrative Agent
Page 3
[TRANSTECHNOLOGY SEEGER-ORBIS GmbH]
By:
--------------------------------
Name:
Title:
or
[TRANSTECHNOLOGY (GB) LIMITED]
By:
--------------------------------
Name:
Title:
<PAGE> 125
EXHIBIT C
---------
FORM OF TERM NOTE
$[___________] _____________ __, ____
FOR VALUE RECEIVED, the undersigned TRANSTECHNOLOGY CORPORATION, a
Delaware corporation ("TransTechnology"), hereby promises to pay (without setoff
or counterclaim) to the order of [INSERT LENDER], a [insert entity] (the
"Lender"), at the Administrative Agent's Head Office (as defined in the Credit
Agreement referred to below):
(a) prior to or on August __, 2004" \@ "MMMM d, yyyy" \*
charformat August __, 2004 the principal amount of [INSERT AMOUNT]
DOLLARS ($____), evidencing the portion of the Term Loan made by the
Lender to TransTechnology pursuant to the Second Amended and Restated
Credit Agreement dated as of June 30, 1995 and amended and restated as
of July 24, 1998 and as further amended and restated as of August __,
1999 (as amended, restated, modified, varied and in effect from time to
time, the "Credit Agreement"), by and among TransTechnology,
TransTechnology Seeger-Orbis GmbH, TransTechnology (GB) Limited
(collectively, the "Borrowers"), the lending institutions party thereto
(the "Lenders"), BankBoston, N.A. acting through its London Branch as
Sterling Fronting Bank, BHF-BANK Aktiengesellschaft acting as DM
Fronting Bank, BankBoston, N.A., as Issuing Bank, ABN AMRO Bank N.V.,
as Syndication Agent, The First National Bank of Chicago, as
Documentation Agent, and BankBoston, N.A., as administrative agent for
itself, the Lenders, the Sterling Fronting Bank, the DM Fronting Bank
and the Issuing Bank (the "Administrative Agent");
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest from the date hereof on the principal amount from
time to time outstanding to and including the maturity hereof at the
rates and terms and in all cases in accordance with the terms of the
Credit Agreement.
This Note evidences borrowings under and has been issued by
TransTechnology in accordance with the terms of the Credit Agreement. The Lender
and any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of TransTechnology contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
TransTechnology irrevocably authorizes the Lender to make or cause to
be made, at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the receipt of such payment. The outstanding
<PAGE> 126
-2-
amount of the Lender's portion of the Term Loan set forth on the grid attached
to this Note, or the continuation of such grid, or any other similar record,
including computer records, maintained by the Lender with respect to its portion
of the Term Loan shall be prima facie evidence of the principal amount of the
Lender's portion of the Term Loan owing and unpaid to the Lender, but the
failure to record, or any error in so recording, any such amount on any such
grid, continuation or other record shall not limit or otherwise affect the
obligation of TransTechnology hereunder or under the Credit Agreement to make
payments of principal of and interest on this Note when due.
TransTechnology has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
TransTechnology and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF TRANSTECHNOLOGY HEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). TRANSTECHNOLOGY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON
TRANSTECHNOLOGY BY MAIL AT THE ADDRESS SPECIFIED IN ss.21 OF THE CREDIT
AGREEMENT. TRANSTECHNOLOGY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
TRANSTECHNOLOGY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY
RIGHTS OR OBLIGATIONS
<PAGE> 127
-3-
HEREUNDER, OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
<PAGE> 128
-4-
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
under seal in its corporate name by its duly authorized officer as of the day
and year first above written.
TRANSTECHNOLOGY CORPORATION
By: ___________________________
Name:
Title:
<PAGE> 129
-5-
<TABLE>
<CAPTION>
- ------------------ -------------------- ----------------------- -------------------- ---------------------
Amount Amount of Balance of
of Term Loan Principal Paid Principal Notation
Date or Prepaid Unpaid Made By:
- ------------------ -------------------- ----------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
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- ------------------ -------------------- ----------------------- -------------------- ---------------------
- ------------------ -------------------- ----------------------- -------------------- ---------------------
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- ------------------ -------------------- ----------------------- -------------------- ---------------------
</TABLE>
<PAGE> 130
EXHIBIT D
---------
FORM OF
-------
COMPLIANCE CERTIFICATE
----------------------
___________ __, ___
To each of the Lenders party to the
Credit Agreement referred to below
c/o BankBoston, N.A., as Administrative Agent
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to the Second Amended and Restated Credit Agreement,
dated as of June 30, 1995 and amended and restated as of July 24, 1998 and as
further amended and restated as of August __, 1999 (as amended, restated,
modified, varied and in effect from time to time, the "Credit Agreement"), by
and among TransTechnology Corporation ("TransTechnology"), TransTechnology
Seeger-Orbis GmbH ("GmbH"), TransTechnology (GB) Limited ("Limited"),
BankBoston, N.A., acting through its London Branch as Sterling Fronting Bank,
BHF-BANK Aktiengesellschaft, acting as DM Fronting Bank, BankBoston, N.A., as
issuing bank (in such capacity, the "Issuing Bank") ABN AMRO Bank N.V., as
Syndication Agent, The First National Bank of Chicago, as Documentation Agent,
and BankBoston, N.A., as administrative agent for itself, the Lenders, the
Sterling Fronting Bank, the DM Fronting Bank and the Issuing Bank (in such
capacity the "Administrative Agent"). Capitalized terms which are used herein
without definition and which are defined in the Credit Agreement shall have the
respective meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 9.4(c) of the Credit Agreement, the principal
financial or accounting officer of TransTechnology hereby certifies to each of
you as follows: (a) the information furnished in the calculations attached
hereto was true and correct as of the last day of the fiscal [year] [quarter]
next preceding the date of this certificate; (b) as of the date of this
certificate, there exists no Default or Event of Default or condition which
would, with either or both the giving of notice or the lapse of time, result in
a Default or an Event of Default; and (c) the financial statements delivered
herewith were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (except, in the case
of quarterly statements, for year-end adjustments and provisions for footnotes
and, in all cases, except as disclosed therein).
IN WITNESS WHEREOF, the undersigned officer has executed this Compliance
Certificate as of the date first written above.
TRANSTECHNOLOGY CORPORATION
By:_______________________________
Title:
[Worksheet to be attached]
<PAGE> 131
EXHIBIT E
---------
FORM OF
-------
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated as of _____ __, ____
Reference is made to the Second Amended and Restated Credit Agreement
dated as of June 30, 1995 and amended and restated as of July 24, 1998 and as
further amended and restated as of August __, 1999 (as amended, restated,
modified, varied and in effect from time to time, the "Credit Agreement"), by
and among TransTechnology Corporation, a Delaware corporation
("TransTechnology"), TransTechnology Seeger-Orbis GmbH, a German limited
liability company ("GmbH"), TransTechnology (GB) Limited, an English limited
liability company ("Limited" and, together with TransTechnology and GmbH, the
"Borrowers" and each individually, a "Borrower"), BankBoston, N.A.
("BankBoston") and the other lending institutions listed on Schedule 1 thereto
(collectively, the "Lenders"), BankBoston, acting through its London Branch, as
Sterling Fronting Bank, BHF-BANK Aktiengesellschaft, as DM Fronting Bank,
BankBoston, as issuing bank (in such capacity, the "Issuing Bank"), ABN AMRO
Bank N.V., as Syndication Agent, The First National Bank of Chicago, as
Documentation Agent, and BankBoston, as administrative agent for itself, the
Lenders, the Sterling Fronting Bank, the DM Fronting Bank and the Issuing Bank
(the "Administrative Agent"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Credit Agreement.
_______________ (the "Assignor") and _______________ (the "Assignee")
hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, [(a)] a
$_______ interest in and to the rights, benefits, indemnities and obligations of
the Assignor under the Credit Agreement equal to _______% in respect of the
Total Revolving Credit Commitment [and (b) a $_____________ interest in and to
the rights, benefits, indemnities and obligations of the Assignor under the
Credit Agreement equal to ____________% in respect of the Term Loan] immediately
prior to the Effective Date (as hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the Effective Date (as hereinafter defined), immediately after giving
effect to this Assignment and Acceptance, its Revolving Credit Commitment is
$_______, its Commitment Percentage with respect to the
<PAGE> 132
-2-
Revolving Credit Loans is _______%, [the outstanding principal balance of its
Term Loan Commitment is $________________, its Commitment Percentage with
respect to the Term Loan is _____________%], the aggregate outstanding principal
balance of its Loans equals $_______________, and the aggregate amount of its
Letter of Credit Participations equals $_______, and (C) immediately after
giving effect to all assignments which have not yet become effective, the
Assignor's Commitment Percentage with respect to the Revolving Credit Loans [and
Commitment Percentage with respect to the Term Loan] will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or the attachment, perfection or priority of any security interest or
mortgage, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder free and clear of any claim or encumbrance; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of TransTechnology or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by TransTechnology or any of its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of its obligations under the Credit Agreement or
any of the other Loan Documents or any other instrument or document delivered or
executed pursuant thereto; and (iv) attaches hereto the Revolving Credit Note
[and Term Note] delivered to it under the Credit Agreement.
The Assignor requests that TransTechnology exchange the Assignor's
Revolving Credit Note [and/or Term Note] for new Revolving Credit Notes [and/or
Term Notes] payable to the Assignor and Assignee as follows:
<TABLE>
<CAPTION>
Notes payable to Amount of Revolving Credit Note: Amount of Term Note:
the order of:
<S> <C> <C>
Assignor $__________ $__________
Assignee $__________ $__________
</TABLE>
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants
that (A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all
acts, conditions and things required to be done and performed and to have
occurred
<PAGE> 133
-3-
prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to ss.ss.8.4 and 9.4 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Assignor, the Administrative
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) represents and
warrants that it is an Eligible Assignee; (v) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vii) acknowledges
that it has made arrangements with the Assignor satisfactory to the Assignee
with respect to its pro rata share of Letter of Credit Fees in respect of
outstanding Letters of Credit.
4. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____ __, ____ (the "Effective Date"). Following the
execution of this Assignment and Acceptance, each party hereto shall deliver its
duly executed counterpart hereof to the Administrative Agent for acceptance by
the Administrative Agent and recording in the Register by the Administrative
Agent. Schedule 1 to the Credit Agreement shall thereupon be replaced as of the
Effective Date by Schedule 1 annexed hereto.
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to ss.18 of the Credit Agreement with
respect to any claims or actions arising prior to the Effective Date.
6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance by
the Administrative Agent and such recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the rights and
interests assigned hereby (including payments of principal, interest, fees and
other amounts) to the Assignee. The Assignor and the Assignee shall make any
appropriate adjustments in payments for periods prior to the Effective Date
<PAGE> 134
-4-
by the Administrative Agent or with respect to the making of this assignment
directly between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
<PAGE> 135
-5-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer or officers thereunto duly authorized, as of the date
first above written.
ASSIGNOR:
---------
By: ________________________________________
Name:
Title:
ASSIGNEE:
---------
By: ________________________________________
Name:
Title:
CONSENTED TO:
- -------------
BANKBOSTON, N.A., AS
ADMINISTRATIVE AGENT
By:___________________________
Name:
Title:
[SO LONG AS NO DEFAULT
OR EVENT OF DEFAULT HAS
OCCURRED AND IS
CONTINUING:
TRANSTECHNOLOGY
CORPORATION
By:___________________________
Name:
Title:]
<PAGE> 136
-6-
SCHEDULE 1
<PAGE> 1
SENIOR SUBORDINATED
NOTE PURCHASE AGREEMENT
dated as of August 31, 1999
among
TRANSTECHNOLOGY CORPORATION
THE LENDERS AND HOLDERS REFERRED TO HEREIN
and
BANKBOSTON, N.A.
as Administrative Agent
Arranged by:
BANCBOSTON ROBERTSON STEPHENS INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.......................................................1
1.1. Definitions......................................................................1
1.2. Rules of Interpretation..........................................................17
2. SALE, PURCHASE AND CONVERSION OF BRIDGE NOTES.................................................18
2.1. Bridge Loan Commitment...........................................................18
2.2. The Bridge Notes.................................................................18
2.3. Scheduled Maturity of Bridge Notes...............................................19
2.4. Term Loan Commitment.............................................................19
2.5. The Term Notes...................................................................19
2.6. Scheduled Maturity of Term Notes.................................................20
2.7. Use of Proceeds..................................................................20
3. PURCHASE AND SALE OF WARRANTS.................................................................20
4. OTHER TERMS OF THE NOTES......................................................................20
4.1. Payment of Interest on Bridge and Term Notes.....................................20
4.2. Optional Redemption..............................................................22
4.3. Mandatory Prepayments from Asset Sales...........................................24
4.4. Mandatory Prepayment from Permanent Financing....................................24
4.5. Mandatory Prepayments from New Debt or Equity ...................................24
4.6. Mandatory Prepayment upon Change of Control......................................25
4.7. Terms of Redemption Offers.......................................................25
5. THE EXCHANGE NOTES............................................................................27
6. CERTAIN GENERAL PROVISIONS....................................................................29
6.1. Fees.............................................................................29
6.2. Payment Provisions...............................................................29
6.2.1. Currency of Account.....................................................29
6.2.2. Application of Interest Payments........................................29
6.2.3. Judgment Currency.......................................................29
6.2.4. Time of Payment.........................................................29
6.2.5. Payments by Administrative Agent........................................29
6.2.6. No Offset, etc..........................................................30
6.3. Computations.....................................................................30
6.4. Illegality; Inability to Determine LIBOR Rate....................................30
6.5. Additional Costs, etc............................................................31
6.6. Capital Adequacy.................................................................32
6.7. Certificate......................................................................33
6.8. Indemnity........................................................................33
6.9. Interest After Default...........................................................33
6.9.1. Overdue Amounts.........................................................33
6.9.2. Amounts Not Overdue.....................................................33
7. GUARANTY......................................................................................33
7.1. Subsidiary Guaranty..............................................................33
7.2. Subordination....................................................................33
8. REPRESENTATIONS AND WARRANTIES................................................................34
8.1. Corporate Authority..............................................................34
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C>
8.1.1. Incorporation; Good Standing............................................34
8.1.2. Authorization...........................................................34
8.1.3. Enforceability..........................................................34
8.2. Governmental Approvals...........................................................35
8.3. Title to Properties; Leases......................................................35
8.4. Financial Statements and Projections.............................................35
8.4.1. Financial Statements....................................................35
8.4.2. Projections.............................................................35
8.5. No Material Changes, etc.........................................................35
8.6. Franchises, Patents, Copyrights, etc.............................................36
8.7. Litigation.......................................................................36
8.8. No Materially Adverse Contracts, etc.............................................36
8.9. Compliance with Other Instruments, Laws, etc.....................................37
8.10. Tax Status.......................................................................37
8.11. No Event of Default..............................................................37
8.12. Holding Company and Investment Company Acts......................................37
8.13. Absence of Financing Statements, etc.............................................37
8.14. Disclosure.......................................................................37
8.15. Certain Transactions.............................................................38
8.16. Employee Benefit Plans...........................................................38
8.16.1. In General..............................................................38
8.16.2. Terminability of Welfare Plans..........................................38
8.16.3. Guaranteed Pension Plans................................................38
8.16.4. Multiemployer Plans.....................................................39
8.16.5. Compliance with Employment Benefit Laws.................................39
8.17. Use of Proceeds..................................................................39
8.18. Environmental Compliance.........................................................40
8.19. Subsidiaries, etc................................................................41
8.20. Bank Accounts....................................................................41
8.21. Year 2000 Compliance.............................................................41
9. AFFIRMATIVE COVENANTS OF THE COMPANY..........................................................41
9.1. Punctual Payment.................................................................41
9.2. Maintenance of Offices...........................................................41
9.3. Records and Accounts.............................................................41
9.4. Financial Statements, Certificates and Information...............................42
9.5. Notices..........................................................................43
9.5.1. Defaults................................................................43
9.5.2. Environmental Events....................................................43
9.5.3. Notice of Litigation and Judgments......................................43
9.6. Corporate Existence; Maintenance of Properties...................................44
9.7. Insurance........................................................................44
9.8. Taxes............................................................................44
9.9. Inspection of Properties and Books, etc..........................................45
9.9.1. General.................................................................45
9.9.2. Environmental Assessments...............................................45
9.9.3. Communications with Accountants.........................................46
9.10. Compliance with Laws, Contracts, Licenses, and Permits...........................46
9.11. Employee Benefit Plans...........................................................46
</TABLE>
<PAGE> 4
-iii-
<TABLE>
<S> <C> <C>
9.12. Use of Proceeds..................................................................47
9.13. Additional Guarantors............................................................47
9.14. Permanent Financing..............................................................47
9.15. Further Assurances...............................................................47
10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY.....................................................48
10.1. Restrictions on Indebtedness and Preferred Stock.................................48
10.2. Restrictions on Liens............................................................49
10.3. Restrictions on Investments......................................................50
10.4. Restricted Payments..............................................................50
10.5. Merger, Consolidation and Disposition of Assets..................................53
10.5.1. Mergers and Acquisitions................................................53
10.5.2. Disposition of Assets...................................................53
10.6. Sale and Leaseback...............................................................54
10.7. Compliance with Environmental Laws...............................................54
10.8. Employee Benefit Plans...........................................................54
10.9. Maintenance of Business..........................................................55
11. SUBORDINATION.................................................................................55
11.1 Agreement to Subordinate.........................................................55
11.2. Liquidation; Dissolution; Bankruptcy.............................................55
11.3. Default on Designated Senior Debt................................................56
11.4. Acceleration.....................................................................56
11.5. When Distribution Must Be Paid Over..............................................56
11.6. Notice by Company................................................................57
11.7. Subrogation......................................................................57
11.8. Relative Rights..................................................................57
11.9. No Impairment by Company.........................................................58
11.10. Distribution or Notice to Representative.........................................58
11.11. Rights of Administrative Agent...................................................59
11.12. Authorization to Effect Subordination............................................59
11.13. Amendments.......................................................................59
12. CLOSING CONDITIONS............................................................................59
12.1. Loan Documents...................................................................60
12.2. Certified Copies of Charter Documents............................................60
12.3. Corporate Action.................................................................60
12.4. Incumbency Certificate...........................................................60
12.5. Senior Loan Documents; Availability..............................................60
12.6. Tinnerman Acquisition............................................................60
12.7. Solvency Certificate.............................................................61
12.8. Opinions of Counsel..............................................................61
12.9. Payment of Fees..................................................................61
12.10. Disbursement Instructions........................................................61
13. CONDITIONS TO CLOSING AND CONVERSION..........................................................61
13.1. Representations True; No Event of Default........................................61
13.2. No Legal Impediment..............................................................62
13.3. Governmental Regulation..........................................................62
13.4. Proceedings and Documents........................................................62
14. EVENTS OF DEFAULT; ACCELERATION; ETC..........................................................62
14.1. Events of Default and Acceleration...............................................62
</TABLE>
<PAGE> 5
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<TABLE>
<S> <C> <C>
14.2. Remedies.........................................................................65
14.3. Distribution of Proceeds.........................................................65
15. SETOFF........................................................................................66
16. THE ADMINISTRATIVE AGENT......................................................................67
16.1. Authorization....................................................................67
16.2. Employees and Agents.............................................................68
16.3. No Liability.....................................................................68
16.4. No Representations...............................................................68
16.5. Payments.........................................................................68
16.5.1. Payments to Administrative Agent........................................68
16.5.2. Distribution by Administrative Agent....................................69
16.5.3. Delinquent Lenders......................................................69
16.6. Holders of Notes.................................................................69
16.7. Indemnity........................................................................70
16.8. Administrative Agent as Lender and Holder........................................70
16.9. Resignation of Administrative Agent..............................................70
17. EXPENSES......................................................................................70
18. INDEMNIFICATION...............................................................................71
19. SURVIVAL OF COVENANTS, ETC....................................................................72
20. ASSIGNMENT AND PARTICIPATION..................................................................72
20.1. Conditions to Assignment.........................................................72
20.2. Certain Representations and Warranties; Limitations;
Covenants......................................................................73
20.3. Register.........................................................................74
20.4. New Notes........................................................................74
20.5. Participations...................................................................75
20.6. Disclosure.......................................................................75
20.7. Assignee or Participant Affiliated with the Company..............................75
20.8. Miscellaneous Assignment Provisions..............................................76
20.9. Assignment by the Company........................................................76
21. NOTICES, ETC..................................................................................76
22. GOVERNING LAW.................................................................................77
23. HEADINGS......................................................................................77
24. COUNTERPARTS .................................................................................78
25. ENTIRE AGREEMENT, ETC.........................................................................78
26. WAIVER OF JURY TRIAL..........................................................................78
27. CONSENTS, AMENDMENTS, WAIVERS, ETC............................................................78
27.1. Voting Procedures................................................................78
27.2. Company's Consent Not Required for Certain Amendments............................79
27.3. Course of Dealing................................................................79
28. SEVERABILITY..................................................................................79
29. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.................................................80
29.1. Sharing of Information with Section 20 Subsidiary................................80
29.2. Confidentiality..................................................................80
29.3. Prior Notification...............................................................81
29.4. Other............................................................................81
</TABLE>
<PAGE> 6
List of Schedules and Exhibits
------------------------------
Exhibits
- --------
Exhibit A - Form of Bridge Note
Exhibit B - Form of Term Note
Exhibit C - Form of Exchange Note
Exhibit D - Indenture
Exhibit E - Registration Rights Agreement
Exhibit F - Compliance Certificate
Exhibit G - Subsidiary Guaranty
Exhibit H - Assignment and Acceptance
Schedules
- ---------
Schedule 1 The Lenders
Schedule 8.3 Title to Properties
Schedule 8.7 Litigation
Schedule 8.10 Tax Compliance
Schedule 8.16.5 Compliance with Employee Benefit Laws
Schedule 8.18 Environmental Compliance
Schedule 8.19 Subsidiaries
Schedule 8.20 Bank Accounts
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.3 Existing Investments
<PAGE> 7
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
-------------------------------------------
This SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT is made as of August
31, 1999, by and among TRANSTECHNOLOGY CORPORATION, a Delaware corporation
having its principal place of business at 150 Allen Road, Liberty Corner, New
Jersey 07938, USA (the "COMPANY" or "TRANSTECHNOLOGY"), BANKBOSTON, N.A., a
United States national banking association ("BANKBOSTON") and the other lending
institutions listed on SCHEDULE 1 (BankBoston and such other institutions,
collectively, the "Lenders"), and BANKBOSTON, N.A., as Administrative Agent for
the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of July 9,
1999, by and between the Company and Eaton Corporation (the "TINNERMAN
ACQUISITION AGREEMENT"), the Company has agreed to acquire the assets of Eaton
Corporation's Engineered Fasteners Division (referred to herein as "TINNERMAN");
and
WHEREAS, the Company has requested that the Lenders extend a credit
facility on the terms and conditions set forth herein in order to provide
financing for the completion of the transactions contemplated by the Tinnerman
Acquisition Agreement;
NOW, THEREFORE, in consideration for the foregoing premises and the
promises and covenants set forth herein, the parties hereto hereby agree as
follows.
1. DEFINITIONS AND RULES OF INTERPRETATION.
----------------------------------------
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this Section 1 or elsewhere in the provisions of this Agreement referred to
below:
ACQUIRED DEBT. With respect to any specified Person, (i) Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, including, without
limitation Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming Subsidiary of such specified
Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
ACQUISITION CLOSING DATE. The date of completion of the Tinnerman
Acquisition.
AFFILIATE. With respect to any Person, any other Person that would be
considered to be an affiliate of such Person under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if such Person were issuing securities.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head
office located at 100 Federal Street, Boston, Massachusetts 02110, or at such
other location as the Administrative Agent may designate from time to time.
<PAGE> 8
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ADMINISTRATIVE AGENT'S SPECIAL COUNSEL. Bingham Dana LLP, or such other
counsel as may be approved by the Administrative Agent.
AGREEMENT. This Senior Subordinated Note Purchase Agreement, including
the Schedules and Exhibits hereto.
APPLICABLE MARGIN. For each period set forth in the chart below, the
Applicable Margin shall be the applicable percentage set forth in the chart
below opposite such period:
------------------------------------ ----------------------------------
PERIOD APPLICABLE MARGIN
------------------------------------ ----------------------------------
Closing Date - 8.00%
November 30, 1999
------------------------------------ ----------------------------------
December 1, 1999 - 8.50%
February 29, 2000
------------------------------------ ----------------------------------
March 1, 2000 - 9.50%
May 31, 2000
------------------------------------ ----------------------------------
June 1, 2000 10.00%
August 31, 2000
------------------------------------ ----------------------------------
PROVIDED that, in the event that at any time during any of the periods set forth
in the table above, the Company shall have defaulted on any of its obligations
under Section 9.14 with respect to the Permanent Financing, such period shall be
deemed to have terminated and the Applicable Margin for the next succeeding
period shall immediately become effective.
ARRANGER. BancBoston Robertson Stephens Inc.
ASSIGNMENT AND ACCEPTANCE. See Sections 20.1.1 and 20.1.2.
BALANCE SHEET DATE. March 31, 1999.
BANKBOSTON. See the preamble to this Agreement.
BASE RATE. The higher of (i) the annual rate of interest announced from
time to time by the Administrative Agent at its Head Office in Boston,
Massachusetts, as its "base rate" for loans denominated in Dollars, and (ii)
one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the
purposes of this definition, "FEDERAL FUNDS EFFECTIVE RATE"shall mean for any
day, the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Administrative Agent from three funds brokers of recognized standing
selected by the Administrative Agent.
<PAGE> 9
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COMPANY. See preamble.
BRIDGE LOAN. See Section 2.1.
BRIDGE LOAN COMMITMENT. See Section 2.1.
BRIDGE NOTES. The promissory notes of the Company in the form of
EXHIBIT A attached hereto issued to each of the Lenders pursuant to Section 2.1
hereof, together with any Secondary Bridge Notes issued pursuant to
Section 4.l(c) hereof, and any Bridge Notes issued upon transfer or exchange
thereof.
BUSINESS. The businesses engaged in by the Company and its Subsidiaries
at the Closing Date, and businesses reasonably related or incidental thereto.
BUSINESS DAY. Any day (other than a Saturday or Sunday) on which
commercial banks are open for business in Boston, Massachusetts.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); PROVIDED that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by the
Company or any of its Subsidiaries in connection with the purchase or lease by
the Company or any of its Subsidiaries of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such Person in accordance
with generally accepted accounting principles.
CAPITALIZED LEASES. Leases (unless otherwise stated, under which the
Company or any of its Subsidiaries is the lessee or obligor), the discounted
future rental payment obligations under which are required to be capitalized on
the balance sheet of the lessee or obligor in accordance with generally accepted
accounting principles.
CERCLA. See Section 8.18.
CHANGE OF CONTROL. The occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), (ii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule l3d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
<PAGE> 10
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Company (measured by voting power rather than number of shares), or (iii) during
any period of twelve consecutive calendar months, individuals who were directors
of the Company on the first day of such period shall cease to constitute a
majority of the board of directors of the Company.
CLOSING DATE. The first date on which the conditions set forth in
Section 12 and Section 13 have been satisfied and the Bridge Loan is to be made
hereunder.
CODE. The Internal Revenue Code of 1986.
COMMITMENT. As to any Lender, such Lender's Bridge Loan Commitment or
Term Loan Commitment, as the case may be, and collectively, the Bridge Loan
Commitments and the Term Loan Commitments.
COMMITMENT PERCENTAGE. With respect to each Lender, the percentage set
forth on SCHEDULE 1 hereto as such Lender's percentage of the aggregate Bridge
Loan Commitments and Term Loan Commitments of all of the Lenders.
COMMISSION. The Securities and Exchange Commission.
CONSOLIDATED or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Company and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED EBITDA. With respect to any Reference Period, Earnings
Before Interest and Taxes for such Reference Period, before provision for any
depreciation and amortization, as determined in accordance with generally
accepted accounting principles.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Company and its Restricted Subsidiaries, after deduction of all
expenses, taxes and other proper charges, determined in accordance with
generally accepted accounting principles.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any Reference Period, the
aggregate amount of interest required to be paid or accrued by the Company and
its Subsidiaries during such Reference Period on all Indebtedness of the Company
and its Subsidiaries outstanding during all or any part of such Reference
Period, whether such interest was or is required to be reflected as an item of
expense or capitalized, including payments consisting of interest in respect of
the Senior Debt or Capitalized Leases and including commitment fees, agency
fees, facility fees and similar fees or expenses in connection with the
borrowing of money.
CONVERSION DATE. The Initial Maturity Date.
CONVERSION MARGIN. With respect to the first Interest Period commencing
on or after the Conversion Date, zero, and for each Interest Period thereafter,
an
<PAGE> 11
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increase of 0.50% over the Conversion Margin in effect in the preceding Interest
Period.
CONVERSION RATE. With respect to any Interest Period commencing on or
after the Conversion Date, the rate per annum equal to the highest of the
following as determined as of the commencement of such Interest Period:
(a) the Final Bridge Loan Rate PLUS 0.50%;
(b) the LIBOR Rate for such Interest Period PLUS 8.00%; or
(c) the Treasury Rate PLUS 8.00%.
DEFAULT. See Section 14.1.
DESIGNATED SENIOR DEBT. Any Indebtedness outstanding under the Senior
Credit Agreement, and any other Senior Debt permitted hereunder, the principal
amount of which is $25,000,000 or more and that has been designated by the
Company as "Designated Senior Debt" by written notice to the Administrative
Agent and each of the Lenders; PROVIDED, HOWEVER, that so long as the Senior
Credit Agreement remains in effect, the Majority Lenders (as defined therein)
shall have consented, in writing, to such designation of additional Indebtedness
as Designated Senior Debt.
DISQUALIFIED STOCK. Any equity security that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), requires the issuer thereof
to pay current Distributions thereon in cash, or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or at any time prior to the date that is 91 days after
the date on which the Term Notes mature; PROVIDED, HOWEVER, that any equity
security that would constitute Disqualified Stock solely because the holders
thereof have the right to require the Company to repurchase such securities upon
the occurrence of a Change of Control or a sale of all or substantially all of
the assets of the TransTechnology Group shall not constitute Disqualified Stock
if the terms of such securities provide that the Company may not repurchase any
such securities pursuant to such provisions unless such repurchase complies with
Section 4 hereof.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Company, other than
dividends payable solely in shares of common stock of the Company; the purchase,
redemption, or other retirement of any shares of any class of capital stock of
the Company, directly or indirectly through a Subsidiary of the Company or
otherwise; the return of capital by the Company to its shareholders as such; or
any other distribution on or in respect of any shares of any class of capital
stock of the Company.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
<PAGE> 12
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DOMESTIC SUBSIDIARIES. Those Subsidiaries of the Company which are
incorporated in or organized under the laws of any state, district or territory
of the United States, Canada or the Commonwealth of Puerto Rico.
EARNINGS BEFORE INTEREST AND TAXES. The consolidated earnings (or loss)
from the operations of the Company and its Subsidiaries for any period, after
all expenses and other proper charges but before payment or provision for any
income taxes or interest expense for such period, determined in accordance with
generally accepted accounting principles, after eliminating therefrom all
non-recurring items of income (or loss) resulting from the discontinuation of
operations.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Company or any ERISA
Affiliate, other than a Multiemployer Plan.
ENVIRONMENTAL LAWS. See Section 8.18(a).
EQUITY INTERESTS. Any shares of capital stock, partnership interests or
membership interests in any Person, or any other equity interest that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person, and all warrants, options or
other rights to acquire any such shares or interests (but excluding any debt
security that is convertible into, or exchangeable for, any such shares or
interests).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
the Company under Section 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
ESCROW AGENT. State Street Bank and Trust Company, in its capacity as
the Escrow Agent under the Exchange Escrow Agreement and the Warrant Escrow
Agreement.
EUROCURRENCY BUSINESS DAY. Any day (other than a Saturday or Sunday) on
which commercial banks are open for international business (including dealings
in Dollar deposits) in London, England.
EUROCURRENCY RESERVE RATE. For any day, the maximum rate (expressed as
a decimal) at which any lender subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor or similar regulations relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that term is used in
Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Rate.
<PAGE> 13
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EVENT OF DEFAULT. See Section 14.1.
EXCHANGE ACT. The Securities Exchange Act of 1934.
EXCHANGE DATE. See Section 5(a).
EXCHANGE ESCROW AGREEMENT. The Escrow Agreement among the Company, the
Administrative Agent and the Escrow Agent, pursuant to which the Indenture and
the Exchange Notes shall be held in escrow.
EXCHANGE NOTES. The promissory notes of the Company in the form of
EXHIBIT C attached hereto issued in favor of each of the Lenders pursuant to
Section 5(a) hereof, together with any Secondary Exchange Notes issued in
connection therewith, and any Exchange Notes issued upon transfer or exchange
thereof pursuant to the Indenture.
FEE LETTER. The letter agreement or agreements between BankBoston, the
Arranger and the Company dated or to be dated on or prior to the Closing Date
with respect to the amount of certain fees payable or to be paid by the Company
under or in respect of this Agreement.
FINAL BRIDGE LOAN RATE. The interest rate applicable to the Bridge Loan
on the Conversion Date.
FIXED CHARGE COVERAGE RATIO. As of any date of testing, the ratio of
(a) Consolidated EBITDA for the Reference Period most recently ended prior
thereto from which internal financial statements are available, to (b) the
aggregate amount of (i) Consolidated Total Interest Expense for such Reference
Period, PLUS (ii) the aggregate amount of payments of principal of any Funded
Indebtedness of the Company and its Subsidiaries actually made or required to be
made during such Reference Period (including, for the avoidance of doubt, any
such payments made or required to be made hereunder or with respect to the Term
Loan under and as defined in the Senior Credit Agreement), but excluding any
such amounts required to be repaid pursuant to Section 4 of the Senior Credit
Agreement or Section 4 hereof.
FIXED RATE. See Section 4.1(b).
FIXED RATE NOTE. Any Note bearing interest at the Fixed Rate.
FOREIGN SUBSIDIARIES. Those Subsidiaries of the Company other than the
Domestic Subsidiaries.
FUNDED INDEBTEDNESS. At any time of determination, the aggregate
principal amount of all funded Indebtedness for borrowed money (including, for
the avoidance of doubt, all Subordinated Debt of the Company and any of its
Subsidiaries), PLUS all obligations, contingent and otherwise, to reimburse the
issuer in respect of any letters of credit, performance bonds, bankers'
acceptances, guarantees or other similar instruments, PLUS Capitalized Leases,
of the Company and its Subsidiaries.
<PAGE> 14
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (b) consistently applied with past financial statements of the Company
adopting the same principles, PROVIDED that a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Company or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
GUARANTOR. Each Subsidiary of the Company which is a party to the
Subsidiary Guaranty.
HAZARDOUS SUBSTANCES. See Section 8.18(b).
HEDGING OBLIGATIONS. With respect to any Person, the obligations of
such Person under interest rate swap agreements, interest rate cap agreements,
interest rate cap obligations and any other agreements or arrangements designed
or intended to protect such Person against fluctuations in interest rate or
currency changes.
HOLDER. Any Person in whose name a Note is registered on the Note
Register at any given time.
INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any Lien existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit, performance bonds,
bankers' acceptances, guarantees or other similar instruments; but EXCLUDING all
liabilities in respect of Operating Leases.
INDENTURE. An Indenture among the Company and the Trustee substantially
in the form attached hereto as EXHIBIT D, with such changes therein (a) as the
<PAGE> 15
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Administrative Agent and TransTechnology shall approve, or (b) as may be
required by applicable law or as may be reasonably deemed necessary by the
Administrative Agent, or (c) at such time as any Exchange Notes issued
thereunder are sold in an public offering, to reflect such public offering, as
such Indenture may be amended and in effect from time to time.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. Section 24, Seventh).
INITIAL MATURITY DATE. The first anniversary of the Closing Date.
INTEREST PAYMENT DATE. The date that is 3 months from the Closing Date
and each date 3 months thereafter.
INTEREST PERIOD. Prior to the Conversion Date, a period of one month
commencing with the Closing Date, and after the Conversion Date, a period of
three months commencing with the Conversion Date, subject in each case to the
following:
(a) if any Interest Period would otherwise end on a day that
is not a Eurocurrency Business Day, that Interest Period shall be
extended to the next succeeding Eurocurrency Business Day, unless the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end
on the immediately preceding Eurocurrency Business Day;
(b) any Interest Period shall end on the numerically
corresponding day in the calendar month at the end of such Interest
Period, PROVIDED that if any Interest Period begins on the last
Eurocurrency Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Eurocurrency
Business Day of a calendar month; and
(c) any Interest Period that would otherwise extend beyond the
Conversion Date or the Term Loan Maturity Date, as the case may be,
shall end on the Conversion Date or the Term Loan Maturity Date, as
applicable.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
<PAGE> 16
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repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LENDERS. The Lenders referred to on SCHEDULE 1 hereto, collectively,
and each individually being referred to as a "Lender".
LIBOR RATE. For any Interest Period, the rate of interest equal to (i)
the rate determined by the Administrative Agent at which Dollar deposits for
such Interest Period are offered based on information presented on Telerate Page
3750 as of 11:00 a.m. London time on the second Eurocurrency Business Day prior
to the first day of such Interest Period, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Loan or portion thereof to which such Interest
Period applies, divided by (ii) a number equal to 1.00 minus the Eurocurrency
Reserve Rate, if applicable. If for any reason the rate referred to in clause
(i) is unavailable, then there shall be substituted therefor the rate per annum
(rounded upwards to the nearest 1/16 of one percent) for the Reference Bank at
which the Reference Bank's London office is offered Dollar deposits two
Eurocurrency Business Days prior to the beginning of the applicable Interest
Period in the London interbank eurodollar market, for delivery on the first day
of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Loan or portion thereof to which such
Interest Period applies.
LIEN. With respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
LOAN DOCUMENTS. This Agreement, the Notes, the Subsidiary Guarantee,
the Fee Letter, the Indenture, the Warrant Agreement, the Warrants, the Warrant
Holders' Agreement, the Warrant Escrow Agreement, the Registration Rights
Agreement, the Exchange Escrow Agreement, together with any other documents from
time to time entered into and identified therein as a "Loan Document" hereunder.
LOANS. The Bridge Loan and the Term Loan.
MAJORITY HOLDERS. As of any time, so long as there is only one Holder,
such Holder, and so long as there are at least two Holders, two or more Holders
holding at least fifty-one percent (51%) of the outstanding principal amount of
the Notes, and if no such amounts are then outstanding, two or more Holders who
held at least
<PAGE> 17
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fifty-one percent (51%) of the outstanding principal amount of the Notes
immediately prior to no such amounts being outstanding.
MAXIMUM RATE. See Section 4.1(d).
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Company or any ERISA
Affiliate.
NET CASH PROCEEDS. If from a sale of assets or of equity, the cash
proceeds received from such sale, net of all costs of sale, underwriting or
brokerage costs, and taxes paid or payable as a result thereof by the Company
and its Subsidiaries, and if from the incurring of Indebtedness, the cash
proceeds received from such incurring of Indebtedness, net of all costs thereof
incurred and fees and all expenses payable in connection therewith, and taxes
paid or payable as a result thereof, by the Company and its Subsidiaries.
NON-RECOURSE DEBT. Indebtedness: (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise) or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness (other than the Notes) of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
NOTES. The Bridge Notes, the Term Notes and the Exchange Notes.
NOTIFIED VARIABLE RATE Holder. Any Holder who is designated by written
notice given to it and to the Company in connection with, and no later than one
(1) Business Day prior to, the assignment to such Holder of any Term Notes or
Exchange Notes by a Variable Rate Holder that such Holder is a Variable Rate
Holder.
OBLIGATIONS. All indebtedness, obligations and liabilities of any of
the Company and its Subsidiaries to any of the Lenders and the Administrative
Agent, individually or collectively, existing on the date of this Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Loan Documents or in respect
of any of the Loans made or any of the Notes or other instruments at any time
evidencing any thereof.
<PAGE> 18
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OPERATING LEASES. Leases (unless otherwise stated, under which the
Company or any of its Subsidiaries is the lessee or obligor) of any property,
whether real, personal or mixed, which are not Capitalized Leases.
OUTSTANDING. With respect to any Loan or Note, the aggregate unpaid
principal thereof as of any date of determination.
PAYMENT BLOCKAGE NOTICE. See Section 11.3.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
PERMANENT FINANCING. The refinancing of the Notes through the Company's
issuance of high-yield bonds or other securities, to the extent permitted
hereunder and under the Senior Credit Agreement.
PERMANENT FINANCING OFFERING DOCUMENTS. See Section 9.14(b).
PERMITTED INVESTMENTS. See Section 10.3.
PERMITTED JUNIOR SECURITIES. Equity Interests in the Company or any
Guarantor or debt securities that are unsecured and subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to at least
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Debt pursuant hereto (without limiting the forgoing, such Permitted
Junior Securities shall have no required principal payments or equity redemption
requirements until at least 91 days after the final maturity of all Senior
Debt).
PERMITTED LIENS. Liens permitted by Section 10.2 of the Senior Credit
Agreement as in effect on the date hereof.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PROJECTIONS. See Section 8.4.3.
REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by the Company or any of its Subsidiaries.
RECORD. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
REFERENCE BANK. BankBoston.
REFERENCE PERIOD. A period of four (4) consecutive fiscal quarters.
<PAGE> 19
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REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement in
substantially the form of EXHIBIT E attached hereto, by and among the Company,
the Guarantors referred to therein, and the Administrative Agent for and on
behalf of the Holders, as such agreement may be amended, modified and
supplemented and in effect from time to time.
RELATED FUND. With respect to any Lender that is an investment fund
that invests in commercial loans, any other such fund that is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
RESTRICTED INVESTMENTS. See Section 10.3.
RESTRICTED PAYMENT. See Section 10.4.
RESTRICTED SUBSIDIARY. With respect to any Person, each Subsidiary of
such Person that is not an Unrestricted Subsidiary.
SECONDARY BRIDGE NOTE. See Section 4.1(c).
SECONDARY TERM NOTE. See Section 4.1(c).
SECONDARY NOTES. Collectively, the Secondary Bridge Notes and the
Secondary Term Notes, and each individually, a "SECONDARY NOTE".
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Lender, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
SENIOR CREDIT AGREEMENT. The Second Amended and Restated Credit
Agreement, dated of even date herewith, by and between the Company,
TransTechnology Seeger Orbis GmbH, TransTechnology (GB) Limited, BankBoston and
the other Senior Lenders referred to therein, BHF-BANK Aktiengesellschaft, as DM
Fronting Bank, BankBoston, acting through its London branch, as Sterling
Fronting Bank, BankBoston as Issuing Bank, ABN AMRO Bank N.V., as Syndication
Agent, The First National Bank of Chicago, as Documentation Agent, and
BankBoston as Administrative Agent, as amended, modified, restated, re-funded,
replaced or refinanced from time to time.
SENIOR DEBT. (a) All principal, premium, interest, fees, expenses and
other obligations or liabilities of any kind together with available undrawn
amounts under letters of credit issued or guaranteed under the Senior Credit
Agreement (including, without limitation, post-petition interest whether or not
allowed as a claim in any bankruptcy, reorganization, insolvency, receivership
or similar proceeding) with respect to Indebtedness outstanding under the Senior
Credit Agreement and all Hedging Obligations with respect thereto, (b) any other
Indebtedness permitted to be incurred by the Company under the terms of this
Agreement, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes, and (c) all
<PAGE> 20
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obligations with respect to the foregoing. Senior Debt, as used herein, will not
include (i) any liability for federal, state, local or other taxes owed or owing
by the Company or any of its Subsidiaries, (ii) any Indebtedness of the Company
to any of its Subsidiaries or other Affiliates, excluding any Indebtedness owed
to any Affiliate that was incurred prior to such Person becoming an Affiliate in
connection with the acquisition by the Company or any Subsidiary of a business
or Person from such Affiliate, (iii) any trade payables, or (iv) any
Indebtedness that is incurred in violation of this Agreement.
SENIOR LENDERS. The "Lenders" under and as defined in the Senior Credit
Agreement, together with any other holders from time to time of any Senior Debt.
SENIOR LENDER REPRESENTATIVE. The "Administrative Agent" under and as
defined in the Senior Credit Agreement, together with any other representative
or agent from time to time of any Senior Lender.
SENIOR LOAN DOCUMENTS. The "Loan Documents" under and as defined in the
Senior Credit Agreement.
SUBORDINATED DEBT. Unsecured Indebtedness of the Company or any of its
Subsidiaries in an amount, containing other terms and conditions, and expressly
subordinated and made junior to the payment and performance in full of the
Senior Debt pursuant to a written instrument containing subordination provisions
in each respect satisfactory to and approved by the Majority Holders and the
Administrative Agent in writing.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
SUBSIDIARY GUARANTY. The Guaranty dated of even date herewith and in
substantially the form of EXHIBIT G hereto, entered into by the Company's
Domestic Subsidiaries in favor of the Administrative Agent and the Lenders.
TERM LOAN. See Section 2.4.
TERM LOAN COMMITMENT. See Section 2.4.
TERM LOAN MATURITY DATE. The tenth anniversary of the Closing Date.
TERM NOTES. The promissory notes of the Company in the form of EXHIBIT
B attached hereto issued to each of the Lenders pursuant to Section 2.4 hereof,
together with any Secondary Term Notes issued pursuant to Section 4.1(c) hereof,
and any Term Notes issued upon transfer or exchange thereof.
TERM. NOTE RECORD. A Record with respect to a Term Note.
TINNERMAN. See preamble.
<PAGE> 21
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TINNERMAN ACQUISITION. The acquisition by the Company or certain
Subsidiaries of the Company of substantially all of Eaton Corporation's
Engineered Fastener Division pursuant to in accordance with the Tinnerman
Acquisition Agreement dated as of July 9, 1999 by and between the Company and
Eaton Corporation.
TINNERMAN ACQUISITION AGREEMENT. See preamble.
TINNERMAN ACQUISITION DOCUMENTS. The Tinnerman Acquisition Agreement
and each of the other documents entered into by the Company or any of its
Subsidiaries pursuant thereto.
TRANSTECHNOLOGY GROUP. The Company and all of its Subsidiaries on a
consolidated basis.
TREASURY RATE. At any time, the highest rate per annum payable at such
time on any of the direct obligations of the United States of America having a
maturity of ten (10) years or less.
TRUSTEE. State Street Bank and Trust Company, or any other bank or
trust company which the Company may nominate prior to the Conversion Date to act
as Trustee under the Indenture, so long as at the time of such nomination and
for so long as such Trustee shall serve in such capacity, such bank or trust
company is (a) organized and does business in and under the laws of the United
States of America or any of the states thereof, (b) is authorized under
applicable federal and/or state laws to exercise corporate trust powers, (c) is
subject to supervision, examination and regulation by federal and/or state
authority, (d) is in good standing under applicable federal and/or state
authorities, and (e) has a combined capital and surplus of at least $50,000,000,
and is otherwise reasonably acceptable to the Majority Holders.
UNRESTRICTED SUBSIDIARY. Any Subsidiary that is designated by the Board
of Directors of the Company as an Unrestricted Subsidiary, but only to the
extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse
Debt; (ii) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company; (iii) is a
Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (A) to subscribe for
additional Equity Interests or (B) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; (iv) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries; and (v) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such
<PAGE> 22
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designation by the Board of Directors of the Company shall be evidenced by the
Company's delivering to the Administrative Agent a certified copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 10.4 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Agreement and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 10.1
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; PROVIDED that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 10.1 hereof calculated on a pro forma basis as if such designation had
occurred at the beginning of the applicable Reference Period, and (ii) no
Default or Event of Default would be in existence following such designation.
VARIABLE RATE HOLDER. The original Lenders, any Affiliate or Related
Fund of an original Lender, and any Notified Variable Rate Holder.
VARIABLE RATE NOTE. Any Note which is, at the relevant time of
determination, held by a Variable Rate Holder.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
WARRANTS. The Common Stock Purchase Warrants of the Company issued from
time to time under and in accordance with the Warrant Agreement.
WARRANT AGENT. State Street Bank and Trust Company, in its capacity as
Warrant Agent under the Warrant Agreement.
WARRANT AGREEMENT. The Warrant Agreement between the Company and the
Warrant Agent, pursuant to which the Company agrees to issue to the Lenders on
the date hereof the Warrants, as such agreement may be amended, modified and
supplemented and in effect from time to time.
WARRANT ESCROW AGREEMENT. The Warrant Escrow Agreement among the
Company, the Administrative Agent for and on behalf of the Lenders, and the
Escrow Agent, pursuant to which the Company agrees to deliver the Warrants to
the Escrow Agent to be retained until the Initial Maturity Date, as such
agreement may be amended, modified and supplemented and in effect from time to
time.
<PAGE> 23
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WARRANT HOLDERS' AGREEMENT. The Warrant Holders' Agreement between the
Company, the Lenders and the Administrative Agent for and on behalf of the
Lenders.
YEAR 2000 PROBLEM. See Section 8.20.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in effect in the Commonwealth of Massachusetts, have the meanings assigned to
them therein, with the term "instrument" being that defined under Article 9 of
the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that section of this
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
2. SALE, PURCHASE AND CONVERSION OF BRIDGE NOTES
---------------------------------------------
2.1. BRIDGE LOAN COMMITMENT. Subject to the terms and conditions set
forth herein and in reliance on the Company's covenants, representations and
warranties set forth herein, each of the Lenders hereby agrees to purchase from
the Company, and the Company agrees to issue and sell to each of the Lenders, on
the Closing Date, Bridge Notes in the aggregate principal amount of seventy-five
million dollars ($75,000,000) (such aggregate amount, the "BRIDGE LOAN"), with
each Lender committing to purchase its Commitment Percentage of such aggregate
principal amount of Bridge Notes. The Lenders' commitment to purchase the Bridge
Notes
<PAGE> 24
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hereunder is called individually such Lender's "BRIDGE LOAN COMMITMENT", and
collectively the "BRIDGE LOAN COMMITMENTS".
2.2. THE BRIDGE NOTES. The Bridge Loan shall be evidenced by separate
Bridge Notes dated the Closing Date, which the Company shall execute and deliver
to each Lender completed with appropriate insertions. One Bridge Note shall be
payable to the order of each Lender in a principal amount equal to such Lender's
Bridge Loan Commitment, representing the obligation of the Company to pay to
such Lender such principal amount or, if less, the outstanding amount of such
Lender's Bridge Loan, plus interest accrued thereon. The Company irrevocably
authorizes each Lender to make or cause to be made a notation on such Lender's
Bridge Note Record reflecting the original principal amount of such Lender's
Bridge Loan Commitment and, at or about the time of such Lender's receipt of any
principal payment on such Lender's Bridge Note, an appropriate notation on such
Lender's Bridge Note Record reflecting such payment. The aggregate unpaid amount
set forth on such Lender's Bridge Note Record shall be PRIMA FACIE evidence of
the principal amount thereof owing and unpaid to such Lender, but the failure to
record, or any error in so recording, any such amount on such Lender's Bridge
Note Record shall not affect the obligations of the Company hereunder or under
any Bridge Note to make payments of principal of and interest on any Bridge Note
when due. The Bridge Notes (i) will be subordinated to the Senior Debt in
accordance with Section 11, (ii) will bear interest as set forth in Section 4
hereof (including the payment of certain interest in the form of Secondary
Bridge Notes), (iii) will be subject to optional or mandatory redemption under
certain circumstances as described in Section 4, and (iv) will be subject to
conversion into the Term Loan as provided in Section 2.4.
2.3. SCHEDULED MATURITY OF BRIDGE NOTES. The Company shall pay in full,
or convert to the Term Loan pursuant to Section 2.4, the outstanding amount of
the Bridge Notes and all interest thereon then outstanding and unpaid no later
than the Initial Maturity Date.
2.4. TERM LOAN COMMITMENT. Subject to the terms and conditions set
forth herein and in reliance on the Company's covenants, representations and
warranties set forth herein, each of the Lenders hereby agree, if the Bridge
Notes have not been repaid in full before the Initial Maturity Date and no
Default or Event of Default has occurred and is then continuing, to convert on
the Initial Maturity Date the then outstanding principal amount of the Bridge
Notes, together with all accrued and unpaid interest thereon then outstanding,
into Term Notes, the aggregate principal amount of which (such aggregate amount,
the "TERM LOAN") shall equal the outstanding principal amount of the Bridge
Notes on the Initial Maturity Date, PLUS the amount of all interest on the
Bridge Notes outstanding and unpaid on the Initial Maturity Date, with each
Lender committing to convert its Commitment Percentage of such aggregate
principal amount. The Lenders' commitment to convert the Bridge Notes into the
Term Notes hereunder is called individually such Lender's "TERM LOAN
COMMITMENT", and collectively the "TERM LOAN COMMITMENTS". If the Bridge Notes
have not been repaid in full before the Initial Maturity Date and no Default or
Event of Default has occurred and is then continuing, then the Bridge Notes
shall be converted into Term Notes in the
<PAGE> 25
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aggregate principal amount of the Term Loan automatically on the Initial
Maturity Date without further request or notice.
2.5. THE TERM NOTES. On making the Term Loan pursuant to Section 2.4,
each Lender shall cancel on its records the Bridge Note held by it and all
amounts outstanding thereunder, which corresponding amount shall be satisfied by
the conversion to the Term Loan and the issuance by the Company of Term Notes
with respect thereto. The Term Loan shall be evidenced by separate Term Notes
dated the Initial Maturity Date, which the Company shall execute and deliver to
each Lender completed with appropriate insertions. One Bridge Note shall be
payable to the order of each Lender in a principal amount equal to such Lender's
Term Loan Commitment, representing the obligation of the Company to pay to such
Lender such principal amount or, if less, the outstanding amount of such
Lender's Term Loan, plus interest accrued thereon. The Company irrevocably
authorizes each Lender to make or cause to be made a notation on such Lender's
Term Note Record reflecting the original principal amount of such Lender's Term
Loan Commitment and, at or about the time of such Lender's receipt of any
principal payment on such Lender's Term Note, an appropriate notation on such
Lender's Term Note Record reflecting such payment. The aggregate unpaid amount
set forth on such Lender's Term Note Record shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to such Lender, but the failure to
record, or any error in so recording, any such amount on such Lender's Term Note
Record shall not affect the obligations of the Company hereunder or under any
Term Note to make payments of principal of and interest on any Term Note when
due. The Term Notes (i) will be subordinated to the Senior Debt in accordance
with Section 11, (ii) will bear interest as set forth in Section 4 hereof
(including the payment of certain interest in the form of Secondary Term Notes),
(iii) will be subject to optional or mandatory redemption under certain
circumstances as described in Section 4, and (iv) will be subject to conversion
into Exchange Notes as provided in Section 5.
2.6. SCHEDULED MATURITY OF TERM NOTES. Subject to Section 5, the Term
Notes shall mature and the Company shall pay in full the outstanding amount of
the Term Notes and all accrued and unpaid interest thereon on the Term Loan
Maturity Date.
2.7. USE OF PROCEEDS. The Company agrees that it will use the proceeds
from the issuance and sale of Bridge Notes for the purpose of financing the
transactions contemplated by the Tinnerman Acquisition Agreement and paying
expense incurred in connection with the Tinnerman Acquisition. The proceeds from
the Term Loan hereunder shall be used to cancel the outstanding amount of the
Bridge Notes and all accrued and unpaid interest thereon on the Initial Maturity
Date.
3. PURCHASE AND SALE OF WARRANTS
-----------------------------
Subject to the terms and conditions set forth herein, and in the
Warrant Agreement and the Warrant Escrow Agreement, the Company agrees that it
shall issue to each of the Lenders, and the Lenders agree to acquire from the
Company, on the Closing Date, simultaneously with the purchase by the Lenders of
the Bridge
<PAGE> 26
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Notes, Warrants to purchase 731,197 shares of the Company's common stock,
representing 10.0% of the fully-diluted common stock of the Company then
outstanding (assuming exercise of the Warrants and all other warrants, options,
or other convertible securities exercisable for or convertible into shares of
the Company's common stock). The Warrants shall be delivered to the Escrow Agent
under and as defined in the Warrant Escrow Agreement on the Closing Date, duly
executed by the Company, to be held by such Escrow Agent pursuant to and subject
to the terms of the Escrow Agreement.
4. OTHER TERMS OF THE NOTES
4.1. PAYMENT OF INTEREST ON BRIDGE AND TERM NOTES.
(a) Subject to all other provisions of this Section 4 and Section
14.10, from the Closing Date until the Initial Maturity Date, the Bridge Notes
(including, for the avoidance of doubt, any Secondary Bridge Notes issued
pursuant to clause (c) below) outstanding from time to time shall bear interest,
payable in cash to the Holders of record on each Interest Payment Date, in
arrears, at an annual rate equal to the LIBOR Rate PLUS the Applicable Margin
then in effect.
(b) Subject to all other provisions of this Section 4, Section 5 and
Section 14.10, from the Initial Maturity Date until the Term Loan Maturity Date,
the Notes (including, for the avoidance of doubt, any Secondary Notes issued
pursuant to clause (c) below) outstanding from time to time shall bear interest,
payable in cash to the Holders of record on each Interest Payment Date, in
arrears, at an annual rate equal to the Conversion Rate then in effect PLUS the
Conversion Margin then in effect, PROVIDED however, that in the event of any
assignment of a Note or portion thereof to any Holder which is not at the time
of such assignment a Variable Rate Holder, the Note issuable to such assignee
Holder shall thereafter bear interest at the rate (the "FIXED RATE") in effect
on the date of such assignment (subject in any event to the provisions of
Section 14.10).
(c) The interest rates set forth above in clauses (a) and (b) shall be
subject to a maximum effective annual rate of 18% of the principal amount of
such Notes then outstanding and, to the extent that the then-applicable
effective annual rate of interest exceeds 14% for any Interest Period, the
Company shall issue Secondary Notes as described in this clause (c) in lieu of
the payment in cash of such excess portion. If the Company issues Secondary
Notes in lieu of the payment of cash interest on any Interest Payment Date, the
Company shall give notice to the Holders (which notice shall include the amount
of interest to be paid by issuance of Secondary Notes, the reason therefor and
the calculation of the amount of interest to be paid through the issuance of
Secondary Notes) at least five (5) Business Days prior to the applicable
Interest Payment Date (although failure to provide a timely notice shall not
affect the Company's ability or competence to issue Secondary Notes), and shall
execute and deliver to the Holder at the close of business on the Interest
Payment Date, (i) in the event that such excess portion of interest is due with
respect to a Bridge Note, an additional Bridge Note in the form of Exhibit A
hereto, dated such Interest Payment Date, in a principal amount equal to such
<PAGE> 27
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excess portion of interest (such additional Bridge Note being referred to herein
as a "SECONDARY BRIDGE Note"), and (ii) in the event that such excess portion of
interest is due with respect to a Term Note, an additional Term Note in the form
of Exhibit B hereto, dated such Interest Payment Date, in a principal amount
equal to such excess portion of interest (such additional Term Note being
referred to herein as a "SECONDARY TERM NOTE"). The due issuance and delivery of
such Secondary Notes shall constitute full payment of such excess portion of
interest; PROVIDED, however, that the Company shall increase the cash component
of any interest payment as required in order to avoid issuing any Secondary Note
in an amount that is not $1,000 or an integral multiple of $1,000. Each issuance
of Secondary Notes in lieu of the payment of cash interest on the Notes shall be
made pro rata with respect to all outstanding Notes. In the event that, on any
Interest Payment Date, the Company is unable to pay to the Holders an amount of
interest (in the appropriate form) which is sufficient to satisfy the Company's
current interest obligation under the Notes, then the Company shall pay such
interest ratably among the Holders based on their respective ownership of
principal amount of Notes, PROVIDED that the foregoing shall not constitute a
waiver of the Default or Event of Default occasioned by the failure to pay such
interest in full.
(d) It is not intended by the Holders of the Notes, and nothing
contained in this Agreement, the Notes or any other Loan Document shall be
deemed, to establish or require the payment of a rate of interest in excess of
the maximum interest rate permitted by applicable federal, state or other law
(the "MAXIMUM RATE"), and to prevent such an occurrence, any agreement which may
now or hereafter be in effect between the Company and the Holders of the Notes
regarding the payment of fees or interest to such Holders is hereby limited by
the provisions of this Section 4.1(d). If, during any period, the effective
interest rate applicable to the principal outstanding under the Notes, absent
the Maximum Rate limitation contained herein, would have exceeded the Maximum
Rate, then the effective interest rate applicable to the Notes for that period
shall be the Maximum Rate, and, if in any subsequent period, the effective
interest rate would otherwise be less than the Maximum Rate, then the effective
interest rate applicable to the Notes for such period shall be increased to the
Maximum Rate until such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid in respect of the Notes if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the principal outstanding under the Notes, redemption of all of the
outstanding Notes or conversion of such Notes, the total amount of interest paid
or accrued in respect of the Notes under the terms of this Agreement is less
than the total amount of interest which would have been paid or accrued in
respect of the Notes had the interest not been limited hereby to the Maximum
Rate, then the Company shall, to the extent permitted by such applicable
federal, state or other law, pay to each of the Holders an amount equal to the
excess, if any, of (i) the lesser of (A) the amount of interest which would have
been charged in respect of the Notes held by such Holder or its transferor or
assignor (whether direct or indirect) if the Maximum Rate had, at all times,
been in effect with respect to the Notes and (B) the amount of interest which
would have accrued in respect of the Notes held by such Holder or its transferor
or assignor (whether direct or indirect) had the effective interest rate
applicable with respect to the Notes at all
<PAGE> 28
-22-
times not been limited hereunder by the Maximum Rate over (ii) the amount of
interest actually paid or accrued in respect of the Notes held by such Holder or
its transferor or assignor (whether direct or indirect) under this Agreement. In
the event that the Holders of the Notes receive, collect or apply as interest
any sum in excess of the Maximum Rate, such excess amount shall be applied to
the reduction of principal outstanding under the Notes until payment in full
thereof, and if no such principal is then outstanding, such excess, or part
thereof remaining, shall be paid to the Company.
4.2. OPTIONAL REDEMPTION. Subject to the provisions hereof and of the
Senior Credit Agreement, the Company shall have the right to redeem, at any time
and without premium or penalty, all or any part of the outstanding principal of
the Notes at the amount of such principal PLUS any accrued but unpaid interest
thereon; PROVIDED, HOWEVER, that any such redemptions shall be made pro rata to
the Holders of the Notes in accordance with the amount of principal and interest
outstanding thereunder, and PROVIDED, further, that any such redemption shall be
made only at the end of an Interest Period, unless the Majority Holders
otherwise agree. If the Company intends to redeem all or any part of the Notes,
the Company shall, at least twenty (20) Business Days prior to the intended date
of redemption, deliver to each of the Holders of record of Notes a notice (the
"REDEMPTION NOTICE") stating such intent to redeem the Notes, the date proposed
therefor, and the amounts of principal and interest on the Notes to be paid to
such Holder, each partial prepayment to be in the principal amount of $100,000
or an integral multiple thereof. To the extent not inconsistent with this
Section 4.2, the provisions of Section 4.7 below shall apply to the conduct of
such redemption. Notwithstanding the foregoing, Notes other than the Variable
Rate Notes may not be redeemed at the Company's option until the fifth
anniversary of the Conversion Date, and from and after the fifth anniversary of
the Conversion Date the amount required to be paid in redemption of any such
Note shall be equal to the outstanding principal amount thereof, PLUS any
accrued but unpaid interest thereon, plus a premium equal to the product of (a)
the principal amount of such Note multiplied by the percentage calculated by
multiplying (i) the Fixed Rate applicable to such Note by (ii) the percentage
set forth in the table below opposite the period in which such redemption
occurs:
<PAGE> 29
-23-
<TABLE>
<CAPTION>
@@
Period Percentage
------ ----------
<S> <C>
From and including the fifth anniversary of the 50%
Conversion Date through the day preceding the sixth
anniversary of the Conversion Date
From and including the sixth anniversary of the 33.33%
Conversion Date through the day preceding the seventh
anniversary of the Conversion Date
From and including the seventh anniversary of the 16.66%
Conversion Date through the day preceding the eighth
anniversary of the Conversion Date
From and including the eighth anniversary of the 0%
Conversion Date through the Term Loan Maturity Date
@@
</TABLE>
4.3. MANDATORY PREPAYMENTS FROM ASSET SALES. in the event that any
member of the TransTechnology Group shall sell any of its assets (other than
inventory sold in the ordinary course of business) or group of related assets,
whether by sale of such assets or sale of the stock of any member of the
TransTechnology Group, where such asset sale would either be permitted pursuant
to Section 10.5.2 upon compliance with this Section 4.3 or is previously
consented to in writing by the Majority Holders, then, within 180 days after the
receipt of any Net Cash Proceeds from any such asset sale, the Company may apply
such Net Cash Proceeds, at its option (subject to the provisions of the Senior
Credit Agreement), (a) to repay Senior Debt, or (b) to the completion of any
Approved Acquisition under and as defined in the Senior Credit Agreement.
Pending the final application of any such Net Cash Proceeds, the Company may
temporarily reduce revolving credit borrowings, or otherwise invest such Net
Cash Proceeds in any manner permitted under Section 10.3. Any Net Cash Proceeds
from asset sales that are not applied or invested as provided in the first
sentence of this paragraph within 180 days after the receipt thereof will be
deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess
Proceeds exceeds $5,000,000, the Company will be required to make an offer to
all Holders of Notes (an "ASSET SALE OFFER") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of the principal amount thereof PLUS accrued and
unpaid interest thereon, if any, to the date of purchase, in accordance with the
procedures set forth in Section 4.7. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not
<PAGE> 30
-24-
otherwise prohibited by this Agreement. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
4.4. MANDATORY PREPAYMENT FROM PERMANENT FINANCING. In the event that
the Company issues any Subordinated Debt pursuant to the Permanent Financing,
the Company will be required to make an offer to all Holders of Notes to
purchase the maximum principal amount of Notes that may be purchased with all of
the Net Cash Proceeds of such Permanent Financing at an offer price in cash
equal to 100% of the principal amount thereof, PLUS accrued and unpaid interest
thereon, if any, to the date of purchase, in accordance with the procedures set
forth in Section 4.7, and the Holders of all of the Variable Rate Notes then
outstanding shall be required to sell such Notes to the Company pursuant to such
offer. To the extent any Net Cash Proceeds of such Permanent Financing remain
after consummation of such offer, the Company shall apply such excess Net Cash
Proceeds in accordance with the provisions of the Senior Credit Agreement.
4.5. MANDATORY PREPAYMENTS FROM NEW DEBT OR EQUITY. In the event that
the Company or any of its Restricted Subsidiaries shall after the Closing Date
either (a) incur any Indebtedness other than Subordinated Debt and which is
permitted under the Senior Credit Agreement, or (b) sell or issue any shares of
its stock, options (other than stock options awarded to employees and directors
pursuant to incentive compensation plans operated by members of the
TransTechnology Group) or warrants for the purchase of its stock or other equity
or equity instruments, then, and to the extent that (i) the Net Cash Proceeds of
such incurrence, sale or issuance are not required to be applied in prepayment
of amounts outstanding under the Senior Credit Agreement pursuant to Section 4
thereof and (ii) no Default or Event of Default is then continuing or would
arise as a result of such prepayment, the Company will be required to make an
offer to purchase the maximum principal amount of Notes that may be purchased at
an offer price in cash equal to 100% of the principal amount thereof, PLUS
accured and unpaid interest thereon, if any, out of the Net Cash Proceeds to the
TransTechnology Group from such incurrence of Indebtedness or sale or issuance
of new equity, in accordance with the procedures set forth in Section 4.7. To
the extent any Net Cash Proceeds of such incurrence, sale or issuance remain
after consummation of such offer, the Company may use such excess Net Cash
Proceeds for any purpose not otherwise prohibited by this Agreement.
4.6. MANDATORY PREPAYMENT UPON CHANGE OF CONTROL. Upon the occurrence
of a Change of Control, each Holder of Notes will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount then outstanding, PLUS accrued and unpaid interest
thereon to the date of completion of such repurchase. Within ten (10) Business
Days following the completion of a Change of Control, the Company shall send, by
first class mail, a notice to each of the Holders and to the Administrative
Agent describing the Change of Control and offering to purchase the Notes then
outstanding on a date specified in such notice, which shall be not earlier than
ten (10) Business Days and not later than thirty (60) days from the date such
notice is
<PAGE> 31
-25-
mailed. The Holders wishing to sell in such repurchase shall tender their
respective Notes to the Administrative Agent prior to the date so specified
together with instructions on the amount thereof to be sold, and upon payment of
the repurchase price for such amount, new Notes in the principal amount
remaining outstanding (if any) to each such Holder shall be executed and
delivered by the Company to each such Holder. Prior to complying with this
Section 4.6, the Company shall first have repaid in full all Senior Debt then
outstanding, or obtained the consent of the holders of such Senior Debt for such
repurchase.
4.7. TERMS OF REDEMPTION OFFERS. In the event that, pursuant to
Sections 4.3. 4.4 or 4.5 hereof, the Company shall be required to commence an
offer to all Holders to purchase Notes (an "Offer"), it shall follow the
procedures specified in this Section 4.7. The Offer shall remain open for a
period of 20 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the "OFFER
PERIOD"). No later than five Business Days after the termination of the Offer
Period (the "PURCHASE DATE"), the Company shall purchase the principal amount of
Notes required to be purchased pursuant to Sections 4.3. 4.4 or 4.5 hereof, as
applicable (the "OFFER AMOUNT"), or, if a principal amount of Notes less than
the Offer Amount has been tendered, all Notes tendered in response to the Offer.
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made. Upon the commencement of an Offer, the Company shall send, by
first class mail, a notice to each of the Holders and the Administrative Agent.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Offer. The Offer shall be made to all
Holders. The notice, which shall govern the terms of the Offer, shall state:
(a) the Section of this Agreement pursuant to which the Offer is being
made and the length of time the Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Offer shall cease to accrete or accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Offer
may only elect to have all of such Note purchased and may not elect to have only
a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Offer shall be required to surrender the Note to Company or a depositary, if
appointed by the Company, at the address specified in the notice at least three
days before the Purchase Date;
<PAGE> 32
-26-
(g) that Holders shall be entitled to withdraw their election if the
Company, or the depositary, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
such Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a PRO RATA basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Offer, or if
less than the Offer Amount has been tendered, all Notes tendered. In the case of
an Offer pursuant to Section 4.4, all Variable Rate Notes shall be tendered by
the Holders thereof. No Holder of a Fixed Rate Note shall be required to tender
any such Notes pursuant to any Offer under this Section 4.7. The Company shall
promptly (but in any case not later than five days after the Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof.
5. THE EXCHANGE NOTES.
(a) Subject to the terms and conditions set forth herein and in
reliance on the Company's covenants, representations and warranties set forth
herein, on the tenth (10th) Business Day following the written request to the
Company and the Administrative Agent of any Holder of a Term Note (as to any
such request, the "EXCHANGE DATE"), and so long as no Default or Event of
Default has occurred and is continuing, such Holder's Term Note(s) shall be
converted automatically into the right to receive (i) an Exchange Note due 2009
of the Company in the equivalent principal amount to such Term Note(s) and (ii)
the accrued and unpaid amount of interest then outstanding on such Term Note.
Upon the Exchange Date in accordance with the Exchange Escrow Agreement, the
Administrative Agent shall direct the Escrow Agent to release (A) to the
Trustee, in its capacity as Custodian under the Indenture, a global Exchange
Note, to be completed in the appropriate principal amount in accordance with the
Indenture and the Exchange Escrow Agreement, and (B) to the Trustee and to the
Company the original Indenture, each as fully executed by the Company and the
Guarantors on the Closing Date and
<PAGE> 33
-27-
retained in escrow by the Escrow Agent pursuant to the Exchange Escrow
Agreement.
(b) Subject to the conditions contained herein and in the Indenture,
the Company shall, on each Exchange Date, issue Exchange Notes under the
Indenture against delivery to the Company of the Term Notes, registered in the
names of the Holders surrendering such Term Notes. The Company shall issue
$1,000 principal amount of Exchange Notes for each $1,000 of principal
outstanding on the Exchange Date under the Term Notes then being exchanged, and
shall pay in full to the Holders of such Term Notes the aggregate amount of
interest accrued and outstanding thereon. To the extent that any Term Notes so
converted have, with respect to a single Holder and all of its Affiliates, a
principal amount plus interest that is not evenly divisible by $1,000, the
Company shall pay cash in the amount that is less than $1,000 in lieu of issuing
an Exchange Note.
(c) If a Default or an Event of Default under this Agreement has
occurred and is continuing at the time that the Term Notes are converted into
Exchange Notes and the facts, circumstances or events constituting such Default
or Event of Default would also constitute a default or event of default under
the Exchange Notes, (i) such Default or Event of Default shall continue to
constitute a default or an event of default under the Exchange Notes and (ii)
any grace or notice periods applicable to such default or event of default under
the Exchange Notes shall be reduced by any time elapsed under any such grace or
notice period prior to such exchange and any notice actually given under the
Term Notes shall be deemed to have been given with respect to the Exchange
Notes.
(d) In addition to the foregoing provisions in this Section 5 and the
conditions set forth in Section 13, the right of any Holder to convert Term
Notes is subject to the satisfaction of the following additional conditions
precedent:
(i) such conversion would not violate any law or regulation or
any order or decree of any Governmental Authority applicable to the
Company or such Holder; PROVIDED, HOWEVER, that the Holders agree to
cooperate with the Company, to the extent practicable, to attempt to
make such violation inapplicable to such conversion, but no such
cooperation shall entail making the terms of the Exchange Notes, the
Indenture or the Registration Rights Agreement any less favorable to
the Holders, in the reasonable judgment of such Holders;
(ii) the Indenture shall have been duly authorized, executed
and delivered by the Company, and the Exchange Notes to be issued
thereunder shall, upon any exchange, have been duly authorized,
executed, authenticated and issued, and the Indenture and the Exchange
Notes shall constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity, and each Holder
converting Term Notes shall have received
<PAGE> 34
-28-
evidence satisfactory to such Holder of the foregoing, including
officers' certificates, trustee's certificates and opinions of counsel
to the Company to the foregoing effect;
(iii) the Registration Rights Agreement shall have been duly
authorized, executed and delivered by the Company and shall constitute
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity;
(iv) the Trustee shall have executed and delivered to the
Escrow Agent signature pages for the Indenture; and
(v) all fees and other amounts owing to the Holder and/or to
the Administrative Agent hereunder shall have been paid in full.
(e) From and after the Exchange Date with respect to any Term Note, the
terms and provisions of the Indenture shall apply to and govern such Note as an
Exchange Note, and to the extent that there may be any inconsistencies between
the requirements of the Indenture and any requirement purporting to be
applicable to such Exchange Notes hereunder, the terms and provisions of the
Indenture shall control.
6. CERTAIN GENERAL PROVISIONS.
6.1. FEES. The Company agrees to pay on the Closing Date the fees in
the amounts agreed in the Fee Letter.
6.2. PAYMENT PROVISIONS.
6.2.1. CURRENCY OF ACCOUNT. Dollars are the currency of
account and payment for each and every sum at any time due from the
Company hereunder, under the Notes or under any other Loan Document.
6.2.2. APPLICATION OF INTEREST PAYMENTS. Interest payable by
the Company on the Notes shall be paid to the Administrative Agent for
the account of the Holders in the proportion of the respective
principal amount of each Holder's Note or Notes.
6.2.3. JUDGMENT CURRENCY. If any sum due from the Company
under this Agreement, the Notes, any other Loan Document or any order
or judgment given or made in relation hereto or thereto has to be
converted from the currency (the "FIRST CURRENCY") in which the same is
payable hereunder or under such order or judgment into another currency
(the "SECOND CURRENCY") for the purpose of (i) making or filing a claim
or proof against the Company, (ii) obtaining an order or judgment in
any court or other tribunal or (iii) enforcing any order or judgment
given or made in relation hereto, the Company shall indemnify and hold
harmless each of the Persons to whom
<PAGE> 35
-29-
such sum is due from and against any loss suffered as a result of any
discrepancy between (A) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second
currency and (B) the rate or rates of exchange at which such Person may
in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
6.2.4. TIME OF PAYMENT. On each date on which this Agreement,
the Notes or any other Loan Document requires an amount to be paid by
the Company or any of the Lenders hereunder, the Company or such Lender
shall make the same available to the Administrative Agent to such
account as the Administrative Agent shall have notified to the Company
or to such Lender, as the case may be. Each such payment which is made
for the account of a Person other than the Administrative Agent shall
be made in time to enable the Administrative Agent to make available
such other Person's portion thereof for value the same day.
6.2.5. PAYMENTS BY ADMINISTRATIVE AGENT. Where a sum is to be
paid hereunder to the Administrative Agent for the account of another
Person, the Administrative Agent shall not be obliged to make the same
available to that other Person until the Administrative Agent has been
able to establish to its satisfaction that it has actually received
such sum, but if the Administrative Agent does so and it proves to be
the case that the Administrative Agent has not actually received the
sum it paid out, then the Person to whom such sum was so made available
shall on request refund the same to the Administrative Agent, together
with an amount sufficient to reimburse the Administrative Agent for any
amount it may have been required to pay out by way of interest on
moneys borrowed to fund the sum in question during the period beginning
on the due date for payment thereof and ending on the date on which it
receives the same.
6.2.6. NO OFFSET, ETC. All payments by the Company hereunder,
under the Notes or under any other Loan Document shall be made without
setoff or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless the Company is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Company with
respect to any amount payable by it hereunder, under the Notes or under
any other Loan Document, the Company will make such deduction or
withholding, will pay the full amount deducted or withheld to the
applicable authority, and will also pay to the Administrative Agent,
for its own account or for the account of the Holders, on the date on
which such amount is due and payable hereunder, under the Notes or
under such other Loan Document, such additional amount as shall be
necessary to enable the Holders or the Administrative Agent (as the
case may be) to receive the same
<PAGE> 36
-30-
net amount in the same currency which the Holders or the Administrative
Agent would have received on such due date had no such obligation been
imposed upon the Company. The Company will deliver, within thirty (30)
days of any such deduction or payment, to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Company
hereunder, under the Notes or under such other Loan Document.
6.3. COMPUTATIONS. All computations of interest on the Notes shall,
unless otherwise expressly provided herein, be based on a 360-day year and paid
for the actual number of days elapsed. Whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business Day, the
due date for such payment shall be extended to the next succeeding Business Day,
and interest shall accrue during such extension. The outstanding amount of the
Loans as reflected on the applicable Note Records from time to time shall be
considered correct and binding on the Company unless within five (5) Business
Days after receipt of any notice by the Administrative Agent or any of the
Holders of such outstanding amount, the Administrative Agent or such Holder
shall notify the Company to the contrary.
6.4. ILLEGALITY; INABILITY TO DETERMINE LIBOR RATE. In the event that
any present or future law, regulation, treaty or directive or the interpretation
or application thereof shall make it unlawful for any of the Lenders or Holders
to make Loans or hold promissory notes bearing interest at rates based on the
LIBOR Rate, or if prior to the commencement of any Interest Period, the
Administrative Agent shall determine that adequate and reasonable methods do not
exist for ascertaining the LIBOR Rate, then the applicable Lender(s) or
Holder(s) or the Administrative Agent, as the case may be, shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Company and the other Holders) to the Company and the other Holders. In such
event the Treasury Rate shall be substituted for the LIBOR Rate in any
calculation of interest payable for such Interest Period.
6.5. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or Holder or the Administrative Agent by any
central bank or other fiscal, monetary or other authority (whether or not having
the force of law), shall:
(a) subject any Lender or Holder or the Administrative Agent
to any tax, levy, impost, duty, charge, fee, deduction or withholding
of any nature with respect to this Agreement, the Notes, the other Loan
Documents, such Lender's Commitment, the Loans or any payment of
interest or fees payable with respect to the Loans or any Notes (other
than taxes based upon
<PAGE> 37
-31-
or measured by the income or profits of such Lender, Holder or
Administrative Agent, or bank franchise taxes), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits or bank franchise taxes) of
payments to any Lender or Holder of the principal of or the interest on
any Loans or any other amounts payable to any Lender or Holder or the
Administrative Agent under this Agreement, the Notes or any of the
other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of any office of any
Lender or Holder, or
(d) impose on any Lender or Holder or the Administrative Agent
any other conditions or requirements with respect to this Agreement,
the Notes, the other Loan Documents, the Loans, such Lender's
Commitment, or any class of loans or commitments of which any of the
Loans, the Notes or such Lender's Commitment forms a part, and the
result of any of the foregoing is:
(i) to increase the cost to any such Lender or Holder
of making, funding, issuing, renewing, extending or
maintaining any of the Loans or such Lender's Commitment or
any Note, or
(ii) to reduce the amount of principal, interest, or
other amount payable to such Lender or Holder or the
Administrative Agent hereunder on account of such Lender's
Commitment, any Note or any of the Loans, or
(iii) to require such Lender or Holder or the
Administrative Agent to make any payment or to forego any
interest or other sum payable hereunder or under any of the
Notes, the amount of which payment or foregone interest or
other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Lender or Holder
or the Administrative Agent from the Company hereunder,
then, and in each such case, within fifteen (15) days after demand made by such
Lender or Holder or the Administrative Agent at any time and from time to time
and as often as the occasion therefor may arise, the Company will pay to such
Lender, Holder or Administrative Agent such additional amounts as will be
sufficient to compensate such Lender, Holder or Administrative Agent, as the
case may be, for such additional cost, reduction, payment or foregone interest
or other sum.
<PAGE> 38
-32-
6.6. CAPITAL ADEQUACY. If after the date hereof any Lender or Holder
determines that (i) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (ii) compliance by such Lender or
Holder or any corporation controlling such Lender or Holder with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Lender's Commitment or such Holder's Notes
to a level below that which such Lender or Holder could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
Holder's then existing policies with respect to capital adequacy and assuming
full utilization of such entity's capital) by any amount deemed by such Lender
or Holder to be material, then such Lender or Holder may notify the Company of
such fact. To the extent that the amount of such reduction in the return on
capital is not reflected in the applicable interest rate hereunder, the Company
agrees to pay such Lender or Holder for the amount of such reduction in the
return on capital as and when such reduction is determined upon presentation by
such Lender or Holder of a certificate in accordance with Section 6.8 hereof.
Each Lender and Holder shall allocate such cost increases among its customers in
good faith and on an equitable basis.
6.7. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Sections 6.6 or 6.7 and a brief explanation of such amounts
which are due, submitted by any Lender, Holder or the Administrative Agent to
the Company, shall be conclusive, absent manifest error, that such amounts are
due and owing.
6.8. INDEMNITY. The Company agrees to indemnify each Lender and Holder
and to hold each Lender and Holder harmless from and against any loss, cost or
expense (including loss of anticipated profits) that such Lender or Holder may
sustain or incur as a consequence of (i) default by a the Company in payment of
the principal amount of or any interest on any Notes as and when due and
payable, including any such loss or expense arising from interest or fees
payable by any such Lender to lenders of funds obtained by it in order to make
or maintain its Loans, (ii) default by the Company in making a borrowing or
conversion after such Company has given (or is deemed to have given) a request
therefor, or (iii) the making of any payment on a day that is not the last day
of the applicable Interest Period with respect thereto, including interest or
fees payable by any such Lender to lenders of funds obtained by it in order to
maintain any such Loans.
6.9. INTEREST AFTER DEFAULT.
6.9.1. OVERDUE AMOUNTS. Subject in any event to the provisions
of Sections 4.1(c) and (d), overdue principal and (to the extent
permitted by applicable law) interest on the Notes and all other
overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest compounded monthly and payable on demand
at a rate per annum. equal to the sum of two
<PAGE> 39
-33-
percent (2%) per annum, PLUS the interest rate otherwise applicable
thereto, until such amount shall be paid in full (after as well as
before judgment).
6.9.2. AMOUNTS NOT OVERDUE. Subject in any event to the
provisions of Sections 4.1(c) and (d), during the continuance of a
Default or an Event of Default, the principal of the Notes not overdue
shall, until such Default or Event of Default has been cured or
remedied or such Default or Event of Default has been waived by the
Majority Holders pursuant to Section 27, bear interest at a rate per
annum equal to the sum of two percent (2%) PLUS the interest rate
otherwise applicable thereto.
7. GUARANTY.
7.1. SUBSIDIARY GUARANTY. The Obligations shall be guaranteed by each
of the Company's Domestic Subsidiaries pursuant to the terms of the Subsidiary
Guaranty. In the event that any Subsidiary of the Company (including any Foreign
Subsidiary) enters into any guaranty of any Senior Debt, the Company shall
procure that such Subsidiary promptly thereafter joins as a Guarantor under the
Subsidiary Guarantee.
7.2. SUBORDINATION. The obligations of the Guarantors under the
Subsidiary Guaranty shall be subordinate to the obligations of such Guarantors
under their respective guaranties of the Senior Debt on the same terms and
subject to the same provisions as are set forth in Section 11.
8. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Lenders, the Holders and the
Administrative Agent, at the Closing Date and the Conversion Date, as follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. The Company and each of
its Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of its place of incorporation, (ii)
has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (iii) is
in good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of the
Company or such Subsidiary.
8.1.2. AUTHORIZATION. The execution, delivery and performance
of this Agreement, the Notes and the other Loan Documents to which the
Company or any of its Subsidiaries are or are to become a party and the
transactions contemplated hereby and thereby (i) are within the
corporate authority of such Person, (ii) have been duly authorized by
all necessary corporate proceedings, (iii) do not conflict with or
result in any breach or contravention of any provision of law, statute,
rule or regulation to which the
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Company or any of its Subsidiaries, or any of the assets of the Company
or any of its Subsidiaries, are subject or any judgment, order, writ,
injunction, license or permit applicable to the Company or any of its
Subsidiaries and (iv) do not conflict with any provision of the
corporate charter, bylaws or memorandum and articles of association of,
or any agreement or other instrument binding upon, the Company or any
of its Subsidiaries.
8.1.3. ENFORCEABILITY. The execution and delivery of this
Agreement, the Notes and the other Loan Documents to which the Company
or any of its Subsidiaries are or are to become a party will result in
valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
8.2. GOVERNMENTAL APPROVALS. Except as set forth on SCHEDULE 8.2
hereto, the execution, delivery and performance by the Company and its
Subsidiaries of this Agreement, the other Loan Documents and the Tinnerman
Acquisition Documents to which the Company or any of its Subsidiaries are or are
to become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained.
8.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 8.3
hereto, (a) the Company and its Subsidiaries own all of the assets reflected in
the consolidated balance sheet of the Company and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date)
subject to no Liens or rights of others, except Permitted Liens, and (b) all of
the Company's and its Subsidiaries' assets are reflected in the consolidated
balance sheet as at the Balance Sheet Date described in Section 8.4.1.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
8.4.1. FINANCIAL STATEMENTS. There has been furnished to each
of the Lenders a consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Company and its Subsidiaries for the fiscal year then
ended, certified by Deloitte & Touche LLP. Such balance sheet and
statement of income have been prepared in accordance with generally
accepted accounting principles and fairly present the financial
condition of the Company as at the close of business on the date
thereof and the results of operations for the fiscal year then ended.
There are no liabilities of the Company or any of its Subsidiaries,
contingent or otherwise, as of such date involving material amounts,
known
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to the officers of the Company, which were not disclosed in such
balance sheet and the notes related thereto.
8.4.2. PROJECTIONS. There has been furnished to each of the
Lenders projections (dated July 23, 1999) of the annual operating
budgets of the Company and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 2000 to 2004 fiscal
years (the "PROJECTIONS"), which fairly disclose all assumptions made
with respect to general economic, financial and market conditions used
in their formulation. To the knowledge of the Company, no facts exist
that (individually or in the aggregate) would result in any material
change in any of the Projections. The Projections are based upon
reasonable estimates and assumptions, have been prepared on the basis
of the assumptions stated therein and reflect the reasonable estimates
of the Company of the results of operations and other information
projected therein.
8.5. NO MATERIAL CHANGES, ETC.
(a) Since the Balance Sheet Date there has occurred no materially
adverse change in the financial condition or business of the Company or any of
its Subsidiaries or any material assets of the Company or any of its
Subsidiaries as shown on or reflected in the consolidated balance sheet of the
Company and its Subsidiaries as at the Balance Sheet Date, or the consolidated
statement of income for the fiscal year then ended, other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Company or any of its Subsidiaries or any material assets of the Company
or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries (before and after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents) (i) is solvent, (ii) has assets having a fair value in excess of its
liabilities, (iii) has assets having a fair value in excess of the amount
required to pay its liabilities on existing debts as such debts become absolute
and matured, and (iv) has, and expects to continue to have, access to adequate
capital for the conduct of its business and the ability to pay its debts from
time to time incurred in connection with the operation of its business as such
debts mature.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC . The Company and each of its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
8.7. LITIGATION. Except as set forth in SCHEDULE 8.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Company or any of its Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial
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condition or business of the Company or any of its Subsidiaries or materially
impair the right of the Company or any of its Subsidiaries to carry on business
substantially as now conducted by them, or result in any substantial liability
not adequately covered by insurance, or for which adequate reserves are not
maintained on the consolidated balance sheet of the Company and its
Subsidiaries, or which question the validity of this Agreement or any of the
other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Company nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries is a party to any contract or agreement
that is in default or has or is expected, in the judgment of the Company's
officers, to have any materially adverse effect on the business of the Company
or any of its Subsidiaries.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Company
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, act, statute, license, rule, regulation or other law, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of the Company or any of its Subsidiaries.
8.10. TAX STATUS. Except as disclosed on SCHEDULE 8.10 hereto, the
Company and each of its Subsidiaries (i) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject, (ii) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Company
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor are the Company
or any of its Subsidiaries an "investment company", or an "affiliated company"
or a "principal underwriter" of an "investment company", as such terms are
defined in the Investment Company Act of 1940.
<PAGE> 43
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8.13. ABSENCE OF FINANCING STATEMENTS, ETC. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage, lease or
other document filed or recorded with any filing records, registry or other
public office, or otherwise, that purports to cover, affect or give notice of
any present or possible future Lien on any assets or property of the Company or
any of its Subsidiaries or any rights relating thereto, except with respect to
Permitted Liens.
8.14. DISCLOSURE. The written information, reports, financial
statements, exhibits and schedules furnished by the Company or any of its
Subsidiaries to the Administrative Agent or the Lenders in connection with the
preparation and negotiation of the Loan Documents and the Senior Loan Documents,
or included therein or delivered pursuant thereto (but excluding the
Projections), do not contain any material misstatement of fact and do not omit
to state any material fact necessary to make the statements made therein, in the
light of the circumstances in which made, not materially misleading.
8.15. CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which the Company or any of its Subsidiaries or any officer,
director or employee of the Company or such Subsidiary makes payments in the
ordinary course of business upon terms no less favorable than the Company, such
Subsidiary, officer, director or employees could obtain from third parties, none
of the officers, directors, or employees of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any of
its Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. The Company has heretofore delivered to the
Administrative Agent the most recently completed annual report, Form
5500, with all required attachments, and actuarial statement required
to be submitted under Section 103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(l) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, Part 6 of
ERISA or as provided in the Tinnerman Acquisition Agreement). Except as
provided in the Tinnerman Acquisition Agreement, the Company or an
ERISA Affiliate, as appropriate, may terminate each such
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Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of the Company or
such ERISA Affiliate without liability to any Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of Section 302(f) of ERISA, or otherwise, has been
timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by
the Company or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any
other event or condition which presents a material risk of termination
of any Guaranteed Pension Plan by the PBGC. Except with respect to the
Guaranteed Pension Plan to be established by TransTechnology as
described in, and to the extent provided in, the Tinnerman Acquisition
Agreement, based on the latest valuation of each Guaranteed Pension
Plan (which in each case occurred within twelve months of the date of
this representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all
such Guaranteed Pension Plans within the meaning of Section 4001 of
ERISA did not exceed the aggregate value of the assets of all such
Guaranteed Pension Plans, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in
excess of benefit liabilities.
8.16.4. MULTIEMPLOYER PLANS. Other than (a) the Electronics
Local 431 Pension Fund relating to employees of Seeger Inc., a
Subsidiary of the Company, and (b) the Western Pennsylvania Teamster
and Employers Pension Fund relating to employees of the Company's
Breeze-Industrial division, neither the Company nor any ERISA Affiliate
is a member of any Multiemployer Plan. Neither the Company nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither the Company nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of Section 4241 or Section 4245
of ERISA or that any Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA.
8.16.5. COMPLIANCE WITH EMPLOYMENT BENEFIT LAWS. Except as set
forth in SCHEDULE 8.16.5 hereto, neither the Company nor any of its
Subsidiaries is in violation of any material provision of any
applicable pension, retirement funding or employee benefit legislation
in any jurisdiction.
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8.17. USE OF PROCEEDS. No portion of any Loan is to be used, and no
portion of any Letter of Credit is to be obtained, for the purpose of purchasing
or carrying any "margin security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224. No portion of the proceeds of any Loans is to be used,
and no portion of any Letter of Credit is to be obtained, for the purpose of (a)
knowingly purchasing, or providing credit support for the purchase of,
Ineligible Securities from a Section 20 Subsidiary during any period in which
such Section 20 Subsidiary makes a market in such Ineligible Securities, (b)
knowingly purchasing, or providing credit support for the purchase of, during
the underwriting or placement period, any Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary, or (c) making, or
providing credit support for the making of, payments of principal or interest on
Ineligible Securities underwritten or privately placed by a Section 20
Subsidiary and issued by or for the benefit of the Company or any Subsidiary or
other Affiliate of the Company.
8.18. ENVIRONMENTAL COMPLIANCE Each of the Company and its Subsidiaries
has taken all necessary steps to investigate the past and present condition and
usage of the Real Estate and the operations conducted thereon and, based upon
such diligent investigation, has determined that, except as set forth on
SCHEDULE 8.18 attached hereto:
(a) none of the Company, its Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any European Union, national, federal, state or local statute,
regulation, ordinance, order or decree relating to health, safety or
the environment (hereinafter "ENVIRONMENTAL LAWS"), which violation
would have a material adverse effect or the business, assets or
financial condition of any of the Company or its Subsidiaries or the
consummation of the transactions referred to in this Agreement;
(b) the Company and its Subsidiaries have conducted all
business operations on the Real Estate and continue to operate and
maintain their businesses in compliance in all material respects with
all applicable Environmental Laws and any other European Union,
national, federal, state and local laws, rules and regulation relating
to air emissions, water discharge, noise emissions, solid, or liquid
waste disposal, hazardous waste, or materials, or other environmental,
health or safety matters and there are no outstanding citations,
notices, or order of non-compliance issued to the Company or any of its
Subsidiaries, or relating to the respective businesses, assets, Real
Estate, other property, leaseholds, or equipment of the Company or any
of its Subsidiaries under any such laws, rules or regulations; and
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(c) None of the Company or its Subsidiaries or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby.
8.19. SUBSIDIARIES, ETC. A complete and correct list of the
Subsidiaries of the Company and the jurisdictions of their incorporation as of
the Closing Date is set forth on Schedule 8.19 hereto. Except as set forth on
SCHEDULE 8.19 hereto, neither the Company nor any of its Subsidiaries is engaged
in any joint venture or partnership with any other Person.
8.20. BANK ACCOUNTS. SCHEDULE 8.20 sets forth the account numbers and
location of all bank accounts of the Company and its Subsidiaries.
8.21. YEAR 2000 COMPLIANCE. The Company and its Subsidiaries have
undertaken a review, the extent of which the Company believe to be commercially
reasonable, of their critical business and operational systems which could be
adversely affected by, and have developed a program to address on a timely
basis, the "Year 2000 Problem" (i.e., the risk that computer applications used
by the Company or any of its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999). Based upon such review and the implementation of such
program, the Company reasonably believe that the "Year 2000 Problem" will not
have any materially adverse effect on the business or financial condition of the
Company or any of its Subsidiaries.
9. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make or convert any Loans:
9.1. PUNCTUAL PAYMENT. The Company will duly and punctually pay or
cause to be paid the principal and interest on the Notes, the fees and all other
amounts provided for in this Agreement, the Notes and the other Loan Documents
to which the Company or any of its Subsidiaries is a party, all in accordance
with the terms of this Agreement, the Notes and such other Loan Documents.
9.2. MAINTENANCE OF OFFICES. The Company will maintain its chief
executive office in Liberty Corner, New Jersey, or at such other place in the
United States of America as the Company shall designate upon written notice to
the Administrative Agent, where notices, presentations and demands to or upon
the Company in respect of the Notes and the other Loan Documents to which the
Company is a party may be given or made.
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9.3. RECORDS AND ACCOUNTS. The Company will, and will cause each of its
Subsidiaries to, (a) with respect to the Company and any such Subsidiary located
in the United States, keep true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) with respect to any such Subsidiary
located outside the United States, keep true and accurate records and books of
account in which full, true and correct entries will be made in accordance with
generally accepted accounting principles in the country in which such Subsidiary
is located. The Company will maintain adequate accounts and reserves for all
taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Company
will deliver to each of the Holders:
(a) as soon as practicable, but in any event not later than
one hundred (100) days after the end of each fiscal year of the
Company, the consolidated balance sheet of the Company and its
Subsidiaries and the consolidating balance sheet of the Company and its
Subsidiaries, each as at the end of such year, and the related
consolidated and consolidating statements of income and consolidated
statement of cash flow for such year, each setting forth in comparative
form the figures for the previous fiscal year and all such consolidated
and consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and certified
(as to the consolidated statements) without qualification by Deloitte &
Touche LLP or by other independent certified public accountants
satisfactory to the Administrative Agent, together with a written
statement from such accountants to the effect that they have read a
copy of this Agreement, and that, in making the examination necessary
to said certification, they have obtained no knowledge of any Default
or Event of Default, or, if such accountants shall have obtained
knowledge of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of Default;
PROVIDED that such accountants shall not be liable to the Holders for
failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
the Company, copies of the unaudited consolidated balance sheet of the
Company and its Subsidiaries and the unaudited consolidating balance
sheet of the Company and its Subsidiaries, each as at the end of such
quarter, and the related consolidated and consolidating statements of
income and consolidated statement of cash flow for the portion of the
Company's fiscal year then elapsed, all in reasonable detail and
prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of the Company that the information contained in such financial
statements fairly presents the financial position of the
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Company and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Company in substantially the form of EXHIBIT F hereto and setting forth
in reasonable detail computations evidencing compliance with the
covenants contained in Section 11 and (if applicable) reconciliations
to reflect changes in generally accepted accounting principles since
the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof,
copies of all material filed with the Securities and Exchange
Commission or sent to the stockholders of the Company which is either
of a financial nature or addresses the Year 2000 Problem;
(e) by April 30 of each year, the annual budget of the Company
and its Subsidiaries for the next fiscal year; and
(f) from time to time such other financial data and
information (including accountants' management letters) as the
Administrative Agent or any Holder may reasonably request.
9.5. NOTICES.
9.5.1. DEFAULTS. The Company will promptly notify the
Administrative Agent and each of the Holders in writing of the
occurrence of any Default or Event of Default. If any Person shall give
any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Agreement
or any other note, evidence of indebtedness, indenture or other
obligation to which or with respect to which any of the Company or its
Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, The Company shall forthwith give written notice
thereof to the Administrative Agent and each of the Holders of record,
describing the notice or action and the nature of the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. The Company will promptly give
notice to the Administrative Agent and each of the Holders of record
(i) of any violation of any Environmental Law that any of the Company
or its Subsidiaries reports in writing or is reportable by such Person
in writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially
affect the assets, liabilities, financial conditions or operations of
any of the Company or its Subsidiaries, or the Administrative Agent's
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mortgages, deeds of trust or security interests pursuant to the
Security Documents.
9.5.3. NOTICE OF LITIGATION AND JUDGMENTS. The Company will,
and will cause each of its Subsidiaries to, give notice to the
Administrative Agent and each of the Holders of record in writing
within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries is or becomes a party
involving an uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have a materially
adverse effect on the Company or any of its Subsidiaries and stating
the nature and status of such litigation or proceedings. The Company
will, and will cause each of its, Subsidiaries to, give notice to the
Administrative Agent and each of the Holders of record, in writing, in
form and detail satisfactory to the Administrative Agent, within ten
(10) days of any judgment not covered by insurance, final or otherwise,
against the Company or any of its Subsidiaries in an amount in excess
of $1,000,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries. The Company (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (iii) will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by them and in
related businesses; PROVIDED that nothing in this Section 9.6 shall prevent the
Company from discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its or their business and
that do not in the aggregate materially adversely affect the business of any of
the Company and its Subsidiaries on a consolidated basis.
9.7. INSURANCE. The Company will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent. Upon reasonable request from the Administrative Agent,
the Company shall furnish the Administrative Agent from time to time with
information concerning the Company's and its Subsidiaries' insurance, including
(when requested) copies of the certificates of insurance evidencing such
insurance.
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9.8. TAXES. The Company will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a Lien on any
of its property; PROVIDED that any such tax, assessment, charge, levy or claim
need not be paid if the validity or amount thereof shall currently be contested
in good faith by appropriate proceedings and if the Company or such Subsidiary
shall have set aside on its books adequate reserves with respect thereto; and
PROVIDED further that the Company and its Subsidiaries will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any Lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.9.1. GENERAL. The Company shall permit the Holders, through
the Administrative Agent or any of the Holders' other designated
representatives, to visit and inspect any of the properties of the
Company and any of its Subsidiaries, to examine the books of account of
the Company and its Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts
of the Company and its Subsidiaries with, and to be advised as to the
same by, its and their officers, all at such reasonable times and
intervals as the Administrative Agent or any Holder may reasonably
request. If an Event of Default shall have occurred and be continuing,
the Company upon the request of the Administrative Agent will obtain
and deliver to the Administrative Agent appraisal reports in form and
substance and from appraisers satisfactory to the Administrative Agent,
stating (i) the then current fair market, orderly liquidation and
forced liquidation values of all or any portion of the equipment or
real estate owned by the Company or any of its Subsidiaries and (ii)
the then current business value of the Company and its Subsidiaries.
All such appraisals shall be conducted and made at the expense of the
Company obtaining and delivering such appraisal reports.
9.9.2. ENVIRONMENTAL ASSESSMENTS. Whether or not an Event of
Default shall have occurred, the Administrative Agent may, from time to
time, in its discretion for the purpose of assessing and ensuring the
value of any Real Estate, obtain one or more environmental assessments
or audits of such Real Estate prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved
by the Administrative Agent to evaluate or confirm (i) whether any
Hazardous Materials are present in the soil or water at such Real
Estate and (ii) whether the use and operation of such Real Estate
complies with all Environmental Laws. Environmental assessments may
include without limitation detailed visual inspections of such Real
Estate including any and all storage areas, storage tanks, drains, dry
wells and leaching areas, and the taking of soil samples, surface water
samples and ground water samples, as well as such other investigations
or
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analyses as the Administrative Agent deems appropriate. All such
environmental assessments shall be conducted at the expense of the
Company.
9.9.3. COMMUNICATIONS WITH ACCOUNTANTS. The Company authorizes
the Administrative Agent and, if accompanied by the Administrative
Agent, any of the Holders to communicate directly with the Company's
independent certified public accountants, PROVIDED that the Company
shall have received advance notice of any such communications, and
authorizes such accountants to disclose to the Administrative Agent and
the Holders any and all financial statements and other supporting
financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other
affairs of the Company or any of its Subsidiaries. At the request of
the Administrative Agent, the Company shall deliver a letter addressed
to such accountants instructing them to comply with the provisions of
this Section 9.9.3.
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Company will, and will cause each of its Subsidiaries to, comply in all material
respects with (i) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws, (ii) the provisions of its charter
documents and, in the event such by-laws exist, its by-laws, (iii) all
agreements and instruments by which it or any of its properties may be bound and
(iv) all applicable decrees, orders, and judgments. If any authorization,
consent, approval, permit or license from any officer, agency or instrumentality
of any government shall become necessary or required in order that the Company
or any of its Subsidiaries may fulfill any of its obligations hereunder or any
of the other Loan Documents to which the Company or such Subsidiary is a party,
the Company will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
the Company or such Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Administrative Agent and the Holders with
evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. The Company will (i) promptly upon filing
the same with the United States Department of Labor or Internal Revenue Service,
upon request of the Administrative Agent, furnish to the Administrative Agent a
copy of the most recent actuarial statement required to be submitted under
Section 103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Administrative Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under Sections
302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA.
The Company and each of its Subsidiaries shall comply with all applicable
pension, retirement funding or employee benefit legislation in any jurisdiction.
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9.12. USE OF PROCEEDS. The proceeds of the issuance of the Bridge Notes
shall be used to finance the Tinnerman Acquisition and to pay certain expenses
incurred in connection therewith.
9.13. ADDITIONAL GUARANTORS. If, after the Closing Date, the Company or
any of its Subsidiaries acquires or creates any Subsidiary, such newly acquired
or created Subsidiary shall promptly join the Subsidiary Guaranty as Guarantor
thereunder, PROVIDED that any Subsidiary which is (a) both a Foreign Subsidiary
and not a guarantor of more than $30,000,000 in aggregate principal amount of
Designated Senior Debt, or (b) an Unrestricted Subsidiary, shall not be required
to so join the Subsidiary Guaranty, and, PROVIDED FURTHER at the time any
Subsidiary becomes an Unrestricted Subsidiary, such Subsidiary may be released
from its obligations under the Subsidiary Guaranty.
9.14. PERMANENT FINANCING. The Company hereby agrees, for the benefit
of the Administrative Agent and the Holders, that it shall comply with the
following provisions regarding the Permanent Financing:
(a) within sixty (60) days after the Closing Date, supply to the
Arranger, in a form reasonably acceptable for inclusion in a registration
statement to be filed under the Securities Act audited financial statements for
Tinnerman for the three years immediately preceding the completion of the
Tinnerman Acquisition;
(b) within sixty (60) days after the Closing Date, supply to the
Arranger, in form reasonably satisfactory to the Arranger, either an offering
memorandum for a private placement of debt securities pursuant to Rule 144A
under the Securities Act, or a registration statement under the Securities act
with respect to a public offering of such securities, together with such other
documentation in customary form for transactions of this type, including an
indenture and registration rights agreement, as the Arranger may in its sole
discretion require in connection with the Permanent Financing (collectively, the
documentation referred to in this clause (b) being referred to as the "PERMANENT
FINANCING OFFERING DOCUMENTS"); and
(c) within thirty (30) days after the delivery to the Arranger of the
Permanent Financing Offering Documents, the Company shall have made available to
the Arranger such officers and executive personnel of the Company and its
Subsidiaries as the arranger shall have requested for the purpose of (i)
meetings with rating agencies, (ii) meetings with prospective purchasers of the
securities to be issued in the Permanent Financing, and (iii) preparing and
presenting to such potential investors "road show" materials in a manner
consistent with and customary in the issuance and sale of high-yield debt
securities.
9.15. FURTHER ASSURANCES. The Company will, and will cause each of its
Subsidiaries to, cooperate with the Lenders and Holders and the Administrative
Agent and execute such further instruments and documents as the Lenders or
Holders or the Administrative Agent shall reasonably request to carry out to
their satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.
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10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make or convert any Loans:
10.1. RESTRICTIONS ON INDEBTEDNESS AND PREFERRED STOCK. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), or issue any
Disqualified Stock (other than any such issuance to the Company or another
Restricted Subsidiary); PROVIDED, HOWEVER, that the Company may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock if
the Fixed Charge Coverage Ratio for the Company's most recently ended Reference
Period for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.0:1, determined on a pro
forma basis (including a PRO FORMA application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such Reference Period;
PROVIDED that if such additional Indebtedness was incurred or such Disqualified
Stock issued in the financing of any Approved Acquisition (as defined in the
Senior Credit Agreement), the Earnings Before Interest and Taxes of the acquired
Target (as defined in the Senior Credit Agreement) shall also be included in
calculating such PRO FORMA Fixed Charge Coverage Ratio as though the applicable
Acquisition Closing Date had occurred at the beginning of such Reference Period.
The provisions of the first paragraph of this Section 10.1 shall not
apply to the incurrences of any of the following (collectively, "PERMITTED
INDEBTEDNESS").
(a) the Designated Senior Debt;
(b) Indebtedness to the Holders and the Administrative Agent
arising under any of the Loan Documents;
(c) current liabilities of any of the Company or its
Subsidiaries incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services;
(d) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 9.8;
(e) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as
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execution is not levied thereunder or in respect of which any of the
Company or Subsidiary shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(f) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(g) obligations under Capitalized Leases not exceeding
$8,000,000 in aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with (i) the
acquisition after the Closing Date of any real or personal property by
any of the Company or its Subsidiaries, and (ii) the issuance by any of
the Company or its Subsidiaries of any industrial revenue bonds,
industrial development bonds or similar instruments, PROVIDED that the
aggregate principal amount of Permitted Indebtedness of the Company and
its Subsidiaries incurred pursuant to this clause (h) shall not exceed
the aggregate amount of $10,000,000 at any one time;
(i) Indebtedness existing on the date hereof and listed and
described on SCHEDULE 10.1 hereto;
(j) Indebtedness of any Restricted Subsidiary of the Company
to the Company; PROVIDED that such Indebtedness shall be evidenced by
promissory notes duly executed by the obligor and in form and substance
satisfactory to the Administrative Agent; and
(k) Indebtedness incurred in the Permanent Financing, so long
as the Net Cash Proceeds thereof are applied immediately in prepayment
of the Notes pursuant to and in accordance with Section 4.
Without limiting the foregoing restrictions, the Company will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee, or be or
remain liable, contingently or otherwise, with respect to, any Indebtedness that
is subordinate to or junior in right of payment to any Designated Senior Debt
and senior in right of payment to the Notes.
10.2. RESTRICTIONS ON LIENS. The Company will not, and will not permit
any of its Subsidiaries to, create or incur or suffer to be created or incurred
or to exist any Lien of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom except for Permitted Liens.
10.3. RESTRICTIONS ON INVESTMENTS. Except as set forth in Section 10.4
below, the Company will not, and will not permit any of its Subsidiaries to,
make or permit to exist or to remain outstanding any Investment, other than the
following
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(collectively, "PERMITTED INVESTMENTS"; and all Investments other than Permitted
Investments being referred to herein as "RESTRICTED INVESTMENTS"):
(a) marketable direct or guaranteed obligations of the United
States of America, the Federal Republic of Germany or the United
Kingdom that mature within one (1) year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States or Canadian banks having
total assets in excess of $1,000,000,000 or, with respect to
Subsidiaries of the Company located outside the United States, deposit
accounts with local banks having total assets in excess of
$1,000,000,000 or the local currency equivalent thereof;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if
rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
SCHEDULE 10.3
(e) Investments with respect to Permitted Indebtedness under
Section 10.1(j) so long as such entities remain Restricted Subsidiaries
of the Company;
(f) Investments consisting of the Guaranties or Investments by
the Company in Restricted Subsidiaries of the Company;
(g) Investments consisting of promissory notes received as
proceeds of asset dispositions permitted hereunder;
(h) Investments consisting of loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $250,000 in the aggregate at
any time outstanding; and
(i) other Investments in an aggregate amount not in excess of
$100,000.
10.4. RESTRICTED PAYMENTS. The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly: (i) make any
Distribution, (ii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes; or (iii) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iii) above being
collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and
after giving effect to such Restricted Payment:
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(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(ii) the Company would, at the time of such Restricted Payment
and after giving PRO forma effect thereto as if such Restricted Payment
had been made at the beginning of the most recently completed Reference
Period for which internal financial statements are available, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 10.1 above; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the Closing Date (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv) and (v) of the next
succeeding paragraph), is less than the sum, without duplication, of
(i) 50% of Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the Closing Date to the end of the Company's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if there is a
Consolidated Net Deficit for such period, less 100% of such Deficit),
PLUS (ii) 100% of the aggregate Net Cash Proceeds received by the
Company since the Closing Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of
Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary
of the Company), PLUS (iii) to the extent that any Restricted
Investment that was made after the Closing Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such
Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any
Distribution within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions hereof;
(ii) the redemption, repurchase, retirement, defeasance or other acquisition of
any Indebtedness that is subordinated to the Notes or Equity Interests of the
Company in exchange for, or out of the Net Cash Proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of, other
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such Net Cash Proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph; (iii) the payment of
any dividend (in cash or otherwise) by a Restricted Subsidiary of the Company to
the holders of its common Equity Interests on a pro rata basis; (iv) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company, PROVIDED that
the aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests of the Company or any Subsidiary
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shall not exceed $2,000,000 in any twelve-month period and no Default or Event
of Default shall have occurred and be continuing immediately after such
transaction; or (v) so long as no Default or Event of Default has occurred and
is continuing or would result therefrom, the Company may declare and pay
dividends in cash on or in respect of any of its Equity Interests in an
aggregate amount not to exceed $2,000,000 paid in any period of twelve (12)
consecutive months.
The Board of Directors of the Company may designate any Restricted
Subsidiary (other than TransTechnology Engineered Components, LLC, a Delaware
limited liability company, or TransTechnology Canada Corporation, an Ontario
corporation) to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under clause (c) of this Section 10.4. All such
outstanding Investments will be deemed to constitute investments in an amount
equal to the greatest of (x) the net book value of such Investments at the time
of such designation, (y) the fair market value of such Investments at the time
of such designation and (z) the original fair market value of such investments
at the time they were made. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company, whose resolution with respect thereto shall be
delivered to the Administrative Agent, such determination to be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such fair market value exceeds $5,000,000. Not
later than the date of making any Restricted Payment, the Company shall deliver
to the Administrative Agent an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 10.4 were computed, together with a copy
of any opinion or appraisal required by this Section 10.4.
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1. MERGERS AND ACQUISITIONS. The Company will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, to convert the Company or any of its
Subsidiaries from one form of corporate organization or partnership to
another, or agree to or effect any asset acquisition or stock
acquisition, other than:
(a) the acquisition of assets (other than assets which
constitutes all or a substantial part of a business or division) in the
ordinary course of business consistent with the past practices of the
TransTechnology Group;
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(b) Approved Acquisitions under and as defined in the Senior
Credit Agreement, subject to fulfillment of the conditions set forth in
the definition thereof in the Senior Credit Agreement;
(c) the merger or consolidation of one or more of the
Subsidiaries of the Company with and into the Company; or
(d) the merger, conversion or consolidation of two or more
Subsidiaries of the Company, provided that no such Subsidiary which
prior to such merger or consolidation was a Guarantor shall, as a
result of such merger, conversion or consolidation, cease to be a
Guarantor.
10.5.2. DISPOSITION OF ASSETS. The Company will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than:
(a) the disposition of assets (other than assets which
constitutes all or a substantial part of a business or division) in the
ordinary course of business, consistent with the past practices of the
TransTechnology Group;
(b) the disposition of assets permitted under the Senior
Credit Agreement; or
(c) any other disposition of assets, PROVIDED that: (i) no
Default or Event of Default has occurred and is continuing or would
result therefrom, (ii) upon completion of such disposition and after
giving PRO FORMA effect thereto as if such disposition had been made at
the beginning of the most recently completed Reference Period for which
internal financial statements are available, the Company would have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 10.1 hereby, and (iii) the proceeds of such
disposition are applied in compliance with Section 4.3 hereof.
10.6. SALE AND LEASEBACK. The Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby the Company or Restricted Subsidiary shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that any member of the TransTechnology Group intends to use
for substantially the same purpose as the property being sold or transferred
unless (i) the Company or such Restricted Subsidiary could have incurred
Indebtedness in an amount equal to the Indebtedness relating to such sale and
leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set forth
in Section 10.1 above, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Administrative Agent) of the property that is the subject of
such sale and leaseback transaction, and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company or such
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Restricted Subsidiary applies the proceeds of such transaction in compliance
with, Section 4.3 above.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company will not, and
will not permit any of its Subsidiaries to, (i) construct or install on any of
the Real Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (ii) conduct any activity at any Real Estate or use any
Real Estate in any manner so as to cause any material release (i.e., releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping) of Hazardous Substances on, upon or
into the Real Estate, or (iii) otherwise conduct any activity at any Real Estate
or use any Real Estate in any manner that would be in material violation of any
Environmental Law or bring such Real Estate in material violation of any
Environmental Law.
10.8. EMPLOYEE BENEFIT PLANS. Neither the Company nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result in a
material liability for the Company or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA, whether or not
such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a Lien on the assets of the Company or any of its
Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of such
Plans, disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities.
10.9. MAINTENANCE OF BUSINESS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, materially change the business of
the Company or such Restricted Subsidiary from the Business.
11. SUBORDINATION
11.1. AGREEMENT TO SUBORDINATE. The Company agrees, and each Holder by
accepting a Note agrees, that the Indebtedness, interest and other Obligations
of any kind evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Section 11, to the prior payment in
full in cash of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
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11.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of the Company or any Guarantor whether in cash, properties,
securities or otherwise, in a liquidation or dissolution of the Company or any
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company, any Guarantor, or their property, an
assignment for the benefit of creditors or any marshaling of the Company's or
any Guarantor's assets and liabilities, the holders of Senior Debt shall be
entitled to receive payment in full in cash of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt whether or not
allowed as a claim in any such proceeding) before the Holders of Notes will be
entitled to receive any payment with respect to the Notes or under the
Subsidiary Guarantee, and until all obligations with respect to Senior Debt are
paid in full in cash, any distribution to which the Holders of Notes would be
entitled shall be made to the holders of Senior Debt (except that Holders of
Notes may receive and retain Permitted Junior Securities).
To the extent any payment of Senior Debt (whether by or on behalf of
the Company or any Subsidiary, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation to
repay any Senior Debt is declared to be fraudulent, invalid, or otherwise set
aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligations so declared fraudulent, invalid or otherwise
set aside (and all other amounts that would come due with respect thereto had
such obligation not been affected) shall be deemed to be reinstated and
outstanding as Senior Debt for all purposes hereof as if such declaration,
invalidity or setting aside had not occurred.
11.3. DEFAULT ON DESIGNATED SENIOR DEBT. The Company and the Guarantors
shall not make any payment upon or in respect of the Notes or the Subsidiary
Guarantees (except in Permitted Junior Securities) if (a) a default in the
payment of the principal of, or premium, if any, or interest on, Senior Debt
occurs and is continuing, or (b) any other default occurs and is continuing with
respect to Designated Senior Debt that currently, or with the passage of time or
giving of notice, permits holders of the Designated Senior Debt as to which such
default relates to accelerate its maturity and, in the case of any such default
described in this clause (b), the Administrative Agent receives a notice of such
default of the type referred to in this clause (b) (a "PAYMENT BLOCKAGE NOTICE")
from the Company, the Senior Lender Representative, or the holders of any
Designated Senior Debt. Payments on the Notes may and shall be resumed (i) in
the case of a payment default, upon the date on which such default is cured or
waived in writing by the holders of the applicable Senior Debt, and (ii) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived in writing
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by the holders of Designated Senior Debt or 179 days after the date on which the
applicable Payment Blockage Notice is received by the Administrative Agent,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage may be commenced under clause (ii) above unless and
until (A) 360 days have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice and (B) all scheduled payments of
principal of, and premium, if any, and interest on, the Notes that have come due
have been paid in full in cash. No nonpayment default that existed and was
continuing on the date of delivery of any Payment Blockage Notice to the
Administrative Agent shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived in writing or cured
for a period of not less than 90 days. In the event that the Company or any
Guarantor makes any payment to any Holder of any Note prohibited by the
foregoing, such payment will be required to be held in trust for and paid over
to the holders of Senior Debt (or the Senior Lender Representative on behalf
thereof).
11.4. ACCELERATION. If payment of the Notes is accelerated because of
an Event of Default, the Company shall promptly notify the holders of Senior
Debt and the Senior Lender Representative of the acceleration.
11.5. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the
Administrative Agent or any Holder receives any payment of any Obligations with
respect to the Notes at a time when the Administrative Agent or such Holder, as
applicable, has actual knowledge that such payment is prohibited by Section 11.2
or Section 11.3 hereof, such payment shall be held by the Administrative Agent
or such Holder, as the case may be, in trust for -the benefit of and shall be
paid forthwith over and delivered, upon written request, to, the holders of
Senior Debt as their interests may appear or the Senior Lender Representative on
their behalf, for application to the payment of all obligations with respect to
Senior Debt remaining unpaid, to the extent necessary to pay such obligations in
full in cash in accordance with their terms after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt. With
respect to the holders of Senior Debt and the Senior Lender Representative, the
Administrative Agent undertakes to perform only such obligations on the part of
the Administrative Agent as are specifically set forth in this Section 11, and
no implied covenants or obligations with respect to the holders of Senior Debt
shall be read into this Agreement against the Administrative Agent. The
Administrative Agent shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Administrative Agent shall pay over or distribute to or on behalf of the Holders
or the Company or any other Person money or assets to which any holders of
Senior Debt shall be entitled by virtue of this Section 11.
11.6. NOTICE BY COMPANY. The Company shall promptly notify the
Administrative Agent of any facts known to the Company that would cause a
payment of any Obligations with respect to the Notes to violate this Section 11,
but failure to give such notice shall not affect the subordination of the Notes
to the Senior Debt as provided in this Section 11.
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11.7. SUBROGATION. After all Senior Debt is paid in full in cash and
until the Notes are paid in full, Holders of Notes shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Holders of Notes have
been applied to the payment of Senior Debt. A distribution made under this
Section 11 to holders of Senior Debt that otherwise would have been made to
Holders of Notes is not, as between the Company and the Holders, a payment by
the Company on the Notes.
11.8. RELATIVE RIGHTS. This Section 11 defines the relative rights of
Holders of Notes and holders of Senior Debt. Nothing in this Agreement shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt;
(3) prevent the Administrative Agent or any Holder of Notes
from exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes;
(4) prevent the Company from making any prepayment of the
Notes required to be made pursuant to Section 4.4; or
(5) limit or restrict the conversion of the Bridge Notes to
Term Notes pursuant to Section 2.4 or the conversion of Term Notes to Exchange
Notes pursuant to Section 5.
If the Company fails because of this Section 11 to pay principal of or
interest on a Note or to comply with any of the conversion provisions hereof on
the due date, the failure is still a Default or Event of Default hereunder.
11.9. NO IMPAIRMENT BY COMPANY. No right of any holder of Senior Debt
to enforce the subordination of the Indebtedness evidenced by the Notes shall be
impaired by any act or failure to act by the Company or any Holder or by the
failure of the Company or any Holder to comply with this Agreement. The
Administrative Agent and the Holders agree that they will not challenge the
validity, enforceability or perfection of any Senior Debt or the Liens,
guarantees and security interests securing the same and that as between the
holders of the Senior Debt on the one hand and the Administrative Agent and the
Holders on the other, the terms hereof shall govern even if all or part of the
Senior Debt or such Liens, guarantees and security interests are avoided,
disallowed, subordinated, set aside or otherwise invalidated in any judicial
proceeding or otherwise, regardless of the theory upon which such action is
premised.
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Without in any way limiting the generality of this Section 11.9, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Administrative Agent or the Holders, without
incurring responsibility to the Administrative Agent or the Holders, and without
impairing or releasing the subordination provided in this Section 11 or the
obligations hereunder of the Holders to the holders of Senior Debt, do any one
or more of the following: (a) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Debt, the Senior Credit
Agreement or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding or secured; (b) sell, exchange, release, foreclose
against or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (c) release any Person liable in any manner for the
collection of Senior Debt; and/or (d) exercise or refrain from exercising any
rights against the Company, any Subsidiary thereof or any other Person.
11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of any Senior Debt, the
distribution may be made and the notice given to the Senior Lender
Representative. Upon any payment or distribution of assets of the Company
referred to in this Section 11.10, the Administrative Agent and the Holders of
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Senior Lender
Representative(s) or of the liquidating trustee or agent or other Person making
any distribution to the Administrative Agent or to the Holders of Notes for the
purpose of ascertaining the Persons entitled to participate in such
distribution, all holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Section
11.10.
11.11. RIGHTS OF ADMINISTRATIVE AGENT. Notwithstanding the provisions
of this Section 11 or any other provision of this Agreement, the Administrative
Agent shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Administrative
Agent, and the Administrative Agent may continue to distribute payments on the
Notes received by it, unless the Administrative Agent shall have received at its
Head Office at least two Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Section 11. Only the Company or the Senior Lender
Representative may give such notice. Nothing in this Section 11.12 shall impair
the claims of, or payments to, the Administrative Agent under or pursuant to
Section 16 hereof. The Administrative Agent hereunder in its individual or any
other capacity may hold Senior Debt with the same rights it would have if it
were not Administrative Agent. Any Agent may do the same with like rights.
11.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of Notes, by
such Holder's acceptance thereof, authorizes and directs the Administrative
Agent on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Section 11 and
the subordination of the Subsidiary Guarantee as provided therein, and appoints
the Administrative Agent to act as such Holder's attorney-in-fact for any and
all such purposes, including, in
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the event of any dissolution, winding up, liquidation or reorganization of the
Company or any Subsidiary (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise), the filing of a claim for the unpaid balance of its
Notes in the form required in those proceedings. If the Administrative Agent
does not file a proper proof of claim or proof of debt in the form required in
any bankruptcy, liquidation or other insolvency proceeding at least 30 days
before the expiration of the time to file such claim, the Senior Lender
Representative is hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
11.13. AMENDMENTS. The provisions of this Section 11 (including,
without limitation, any definitions or other sections included by reference or
incorporation) or the terms and conditions of the Subsidiary Guarantee shall not
be amended or modified without the written consent of the holders of all Senior
Debt.
12. CLOSING CONDITIONS.
The obligations of the Lenders to make the Bridge Loan on the Closing
Date shall be subject to the satisfaction of the following conditions precedent
on or prior to the Closing Date:
12.1 LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto and shall be in form
and substance satisfactory to each of the Lenders. Each of the Loan Documents
(other than the Indenture and the Exchange Notes) shall be in full force and
effect, and the Indenture and the Exchange Notes shall have been delivered in
fully-executed form to the Escrow Agent. The Administrative Agent shall have
received a fully executed copy of each such document.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Lenders shall
have received from the Company and each of its Subsidiaries a copy, certified by
a duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (i) its charter or other incorporation documents as in effect
on such date of certification, and (ii) its by-laws as in effect on such date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Company and each of its Subsidiaries
of this Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Lenders shall have been provided to each of the Lenders.
12.4. INCUMBENCY CERTIFICATE. Each of the Lenders shall have received
from the Company and each of its Subsidiaries an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of the Company or
such Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf of
the Company and such Subsidiary, each of the Loan Documents and the Tinnerman
Acquisition Documents to which the Company or such Subsidiary is or is to become
a
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party; and (ii) in the case of the Company, to give notices and to take other
action on behalf of the Company under the Loan Documents.
12.5. SENIOR LOAN DOCUMENTS; AVAILABILITY. The Senior Loan Documents
shall be in full force and effect, all of the conditions precedent to the
borrowing by the Company of a Term Loan in the principal amount of $50,000,000
and of Revolving Credit Loans of up to $200,000,00 (other than the effectiveness
of this Agreement) shall have been fulfilled, and the Company shall have
availability of at least $20,000,000 in Revolving Credit Loans under the Senior
Credit Agreement, after completion of the Tinnerman Acquisition and the
refinancing of the TransTechnology Group's existing credit facilities and all
related transactions, and the drawdown of all loans in connection therewith.
12.6. TINNERMAN ACQUISITION. All of the conditions precedent to the
completion of the Tinnerman Acquisition in accordance with the Tinnerman
Acquisition Agreement shall have been fulfilled.
12.7. SOLVENCY CERTIFICATE. Each of the Lenders shall have received an
officer's certificate of the Company dated as of the Closing Date as to the
solvency of the Company and its Subsidiaries following the consummation of the
transactions contemplated herein and in the Senior Loan Documents in form and
substance satisfactory to the Lenders and the Administrative Agent.
12.8. OPINIONS OF COUNSEL. Each of the Lenders and the Administrative
Agent shall have received a favorable legal opinion addressed to the Lenders and
the Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Lenders and the Administrative Agent, from:
(a) Hahn Loeser & Parks LLP, counsel to the Company and its
Subsidiaries in the United States; and
(b) if requested by the Administrative Agent, such other local counsel
to the Company in any jurisdiction where any of the Guarantors is organized.
12.9. PAYMENT OF FEES. The Company shall have paid to the
Administrative all fees payable pursuant under the Fee Letter, and shall have
paid the reasonable fees and expenses of the Administrative Agent's Special
Counsel incurred in connection with the preparation and negotiation of this
Agreement and the other Loan Documents.
12.10. DISBURSEMENT INSTRUCTIONS. The Administrative Agent shall have
received disbursement instructions from the Company indicating that
substantially all of the proceeds of the Bridge Loan are to be paid to Eaton
Corporation in payment of the purchase price under the Tinnerman Acquisition
Agreement.
13. CONDITIONS TO CLOSING AND CONVERSION.
The obligations of the Lenders to make the Bridge Loan, to convert the
Bridge Loan into the Term Loan, and to convert the Term Loan or any part thereof
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to Exchange Notes, shall also be subject to the satisfaction of the following
conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Company and any of its Subsidiaries
contained in this Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement shall be
true as of the date as of which they were made and shall also be true at and as
of the time of the making or conversion of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that singly
or in the aggregate are not materially adverse, and to the extent that such
individual representations and warranties relate expressly to an earlier date)
and no Default or shall have occurred and be continuing. Upon the request of the
Administrative Agent, the Company shall have delivered to the Administrative
Agent a certificate of the Company signed by an authorized officer of the
Company to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make or convert such Loan
pursuant to the provisions of this Agreement.
13.3. GOVERNMENTAL REGULATION. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System or any other applicable regulatory or supervisory body.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Agreement, the other Loan Documents, the
Acquisition Documents and all other documents incident thereto shall be
satisfactory in substance and in form to the Lenders and to the Administrative
Agent and the Administrative Agent's Special Counsel, and the Lenders, the
Administrative Agent and such counsel shall have received all information and
such counterpart originals or certified or other copies of such documents as the
Administrative Agent may reasonably request.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Company shall fail to pay any principal of the Notes
when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date
fixed for payment;
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(b) the Company or any of its Subsidiaries shall fail to pay
any interest on the Notes, any Liquidated Damages under and as defined
in the Registration Rights Agreement, or any fees or other sums due
hereunder or under any of the other Loan Documents, within three (3)
days after the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other
date fixed for payment;
(c) any of the Company or its Subsidiaries shall fail to
comply with any of its covenants contained in Section 9 or 10 or any of
the covenants contained in any of the Loan Documents;
(d) the Company or any of its Subsidiaries shall fail to
perform any other term, covenant or agreement contained herein (other
than those specified elsewhere in this Section 14.1 or those which by
their terms expressly exclude any grace period for any non-compliance
therewith) for fifteen (15) days after written notice of such failure
has been given to the Company by the Administrative Agent;
(e) any representation or warranty the Company or any of its
Subsidiaries in this Agreement or any of the other Loan Documents or in
any other document or instrument delivered pursuant to or in connection
with this Agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made or
repeated;
(f) the Company or any of its Subsidiaries shall (i) fail to
pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases in an aggregate amount in excess of $5,000,000, or
(ii) fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing such borrowed money or credit received or in respect of
such Capitalized Leases and the holder or holders thereof or of any
obligations issued thereunder shall have accelerated the maturity
thereof;
(g) any of the Company or its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of such Company or
Subsidiary or of any substantial part of the assets of such Company or
Subsidiary or shall commence any case or other proceeding relating to
any of the Company or its Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against or any of the Company or its Subsidiaries and any
of the Company or its Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such
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petition or application shall not have been dismissed within forty-five
(45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Company or
its Subsidiaries bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is
entered in respect of any of the Company or its Subsidiaries in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against any of the Company or its Subsidiaries that,
with other outstanding final judgments, undischarged, against the
Company and its Subsidiaries exceeds in the aggregate $5,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Holders (and, notwithstanding
anything herein to the contrary, if any Guaranty shall be cancelled,
terminated, revoked or rescinded without the consent of the Holders),
or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of the Company or any of its Subsidiaries party thereto
or any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Holders shall
have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of the Company or
any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan in
an aggregate amount exceeding $250,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
(l) the Company or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its
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business and such order has a material adverse effect on the business
or financial condition of the Company or such Subsidiary;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any property, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment
of revenue producing activities at any facility of any of the Company
or its Subsidiaries, if such event or circumstance is not also covered
by business interruption insurance and would have a material adverse
effect on the business or financial condition of the Company or such
Subsidiary;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Company or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of the Company or
such Subsidiary; or
(o) any of the Company or its Subsidiaries shall be indicted
for a state or federal crime, or any civil or criminal action shall
otherwise have been brought against any of the Company or its
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of such Company or Subsidiary having a fair
market value in excess of $5,000,000;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Holders shall, by
notice in writing to the Company declare all amounts owing with respect to this
Agreement, the Loans, the Notes and the other Loan Documents to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; provided that in the event of any Event
of Default specified in Section 14.1(g) or 14.1(h), all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Administrative Agent or any Holder.
14.2. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Administrative Agent or
the Majority Holders shall have accelerated the maturity of the Notes pursuant
to Section 14.1, each Holder, if owed any amount with respect to the Notes, may,
with the consent of the Majority Holders but not otherwise, proceed to protect
and enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations to such Holder are evidenced, including as
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of such Holder. No remedy herein conferred upon any Holder or
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the Administrative Agent is intended to be exclusive of any other remedy herein
or in any of the other Loan Documents and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
under any of the other Loan Documents or now or hereafter existing at law or in
equity or by statute or any other provision of law.
14.3. DISTRIBUTION OF PROCEEDS. In the event that, following the
occurrence or during the continuance of any Default or Event of Default, the
Administrative Agent or any Holder, as the case may be, receives any monies in
connection with the enforcement of any of the Loan Documents, such monies shall
be distributed for application as follows, subject to Section 11:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent, for the
exercise, protection or enforcement by the Administrative Agent of all
or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Agreement or any of the other Loan
Documents or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or Liens which by law shall
have, or may have, priority over the rights of the Administrative Agent
to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Holders may determine; provided, however,
that distributions in respect of such obligations shall be made
Obligations owing to the Holders with respect to each type of
Obligation such as interest, principal, fees and expenses, shall be
made among the Holders pro rata; and provided, further, that the
Administrative Agent may in its discretion make proper allowance to
take into account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Holders and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to Section 9-504(1)(c) of the
Uniform Commercial Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Company or to such other Persons as are entitled thereto.
15. SETOFF.
During the continuance of any Event of Default, any deposits or other
sums credited by or due from any of the Holders to the Company and any
securities or other property of the Company in the possession of such Holder may
be applied to or set off by such Holder against the payment of Obligations and
any and all other liabilities, direct, or indirect, absolute or contingent, due
or to become due, now
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existing or hereafter arising, of the Company to such Holder. Each of the
Holders agrees with each other Holder that (i) if an amount to be set off is to
be applied to Indebtedness of the Company to such Holder, other than
Indebtedness evidenced by the Notes held by such Holder, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Holder, and (ii) if such Holder shall receive from
the Company, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes held
by such Holder by proceedings against the Company at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Holder any amount in excess of its ratable
portion of the payments received by all of the Holders with respect to the Notes
held by all of the Holders, such Holder will make such disposition and
arrangements with the other Holders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Holder receiving in respect of the Notes held by it, its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Holder, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
16. THE ADMINISTRATIVE AGENT.
16.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action
on behalf of each of the Lenders and Holders and to exercise all such
powers as are hereunder and under any of the other Loan Documents and
any related documents delegated to the Administrative Agent, together
with such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Administrative Agent.
(b) The relationship between the Administrative Agent and each
of the Lenders and Holders is that of an independent contractor. The
use of the term "Administrative Agent" is for convenience only and is
used to describe, as a form of convention, the independent contractual
relationship between the Administrative Agent and each of the Lenders
and Holders. Nothing contained in this Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Administrative Agent and any of the
Lenders and Holders.
(c) As an independent contractor empowered by the Lenders and
Holders to exercise certain rights and perform certain duties and
responsibilities hereunder and under the other Loan Documents, the
Administrative Agent is nevertheless a "representative" of the Lenders
and Holders, as that term is defined in Article 1 of the Uniform
Commercial Code, for purposes of actions for the benefit of the Lenders
and Holders and the
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Administrative Agent with respect to all security and guaranties
contemplated by the Loan Documents. Such actions include the
designation of the Administrative Agent as "secured party", "mortgagee"
or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests,
mortgages or deeds of trust in collateral security intended to secure
the payment or performance of any of the Obligations, all for the
benefit of the Lenders and Holders and the Administrative Agent.
16.2. EMPLOYEES AND AGENTS. The Administrative Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Administrative Agent may utilize the services of such Persons as
the Administrative Agent in its sole discretion may reasonably determine, and
all reasonable fees and expenses of any such Persons shall be paid by the
Company.
16.3. NO LIABILITY. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Administrative
Agent or such other Person, as the case may be, may be liable for losses due to
its willful misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this Agreement,
the Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or for
the validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Company or any of its Subsidiaries, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or to inspect any of the
properties, books or records of the Company or any of its Subsidiaries. The
Administrative Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Company or any holder of any
of the Notes shall have been duly authorized or is true, accurate and complete.
The Administrative Agent has not made nor does it now make any representations
or warranties, express or implied, nor does it assume any liability to the
Lenders or the Holders, with respect to the credit worthiness or financial
conditions of the Company or any of its Subsidiaries. Each Lender acknowledges
that it has, independently and
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without reliance upon the Administrative Agent or any other Lender or Holder,
and based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by the
Company to the Administrative Agent hereunder, under the Notes or under
any of the other Loan Documents for the account of any Lender or Holder
shall constitute a payment to such Lender or Holder. The Administrative
Agent agrees promptly to distribute to each Holder such Holder's pro
rata share of payments received by the Administrative Agent for the
account of the Lenders or Holders, except as otherwise expressly
provided herein or in any of the other Loan Documents.
16.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in the
opinion of the Administrative Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any
of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution
shall have been adjudicated by a court of competent jurisdiction. If a
court of competent jurisdiction shall adjudge that any amount received
and distributed by the Administrative Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.
16.5.3. DELINQUENT LENDERS. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan
Documents, any Lender that fails (i) to make available to the
Administrative Agent its pro rata share of any Loan, or (iii) to comply
with the provisions of Section 15 with respect to making dispositions
and arrangements with the other Lenders, where such Lender's share of
any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the
Lenders, in each case as, when and to the full extent required by the
provisions of this Agreement, shall be deemed delinquent (a "Delinquent
Lender") and shall be deemed a Delinquent Lender until such time as
such delinquency is satisfied. A Delinquent Lender shall be deemed to
have assigned any and all payments due to it from the Company, whether
on account of outstanding Loans, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of,
their respective pro rata shares of all outstanding Loans. The
Delinquent Lender hereby authorizes the Administrative Agent to
distribute such payments to the nondelinquent Lenders in proportion to
their respective pro rata shares of all outstanding Loans. A Delinquent
Lender shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all
outstanding Loans of the nondelinquent Lenders, the Lenders' respective
pro rata shares of all outstanding Loans have returned to
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those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
16.6. HOLDERS OF NOTES. The Administrative Agent may deem and treat the
payee of any Note as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different name by
such payee or by a subsequent holder, assignee or transferee.
16.7. INDEMNITY. The Holders ratably agree hereby to indemnify and hold
harmless the Administrative Agent from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Administrative Agent has not been
reimbursed by the Company as required by Section 17), and liabilities of every
nature and character arising out of or related to this Agreement, the Notes, or
any of the other Loan Documents or the transactions contemplated or evidenced
hereby or thereby, or the Administrative Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Administrative Agent's willful misconduct or gross negligence.
16.8. ADMINISTRATIVE AGENT AS LENDER AND HOLDER. In its individual
capacity, BankBoston shall have the same obligations and the same rights, powers
and privileges in respect of its Commitments and the Loans made by it and as the
holder of any of the Notes, as it would have were it not also the Administrative
Agent.
16.9. RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving sixty (60) days prior written notice thereof to the
Holders and the Company. Upon any such resignation, the Majority Holders shall
have the right to appoint a successor Administrative Agent. Unless a Default or
Event of Default shall have occurred and be continuing, such successor
Administrative Agent shall be reasonably acceptable to the Company. If no
successor Administrative Agent shall have been so appointed by the Majority
Holders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Holders, appoint a successor
Administrative Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Agreement
and the other Loan Documents shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
17. EXPENSES.
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The Company agrees to pay (i) the reasonable costs of producing and
reproducing this Agreement, the other Loan Documents and the other agreements
and instruments mentioned herein, (ii) any taxes (including any interest and
penalties in respect thereto) payable by the Administrative Agent or any of the
Lenders or Holders (other than taxes based upon the Administrative Agent's or
any Lender's or Holder's net income) on or with respect to the transactions
contemplated by this Agreement (the Company hereby agreeing to indemnify the
Administrative Agent and each Lender and Holder with respect thereto), (iii) the
reasonable fees, expenses and disbursements of the Administrative Agent's
Special Counsel or any local counsel to the Administrative Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(iv) the fees, expenses and disbursements of the Administrative Agent incurred
by the Administrative Agent in connection with the preparation, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums, asset and/or collateral examiners' and
commercial finance examiners' fees and surveyor, engineering and appraisal
charges, (v) any fees, costs, expenses and bank charges, including bank charges
for returned checks, incurred by the Administrative Agent in establishing,
maintaining or handling agency accounts, lock box accounts and other accounts
for the collection of any funds; and (vi) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of any Lender or Holder or the Administrative Agent,
and reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Lender or Holder or the
Administrative Agent in connection with (A) the enforcement of or preservation
of rights under any of the Loan Documents against the Company or any of its
Subsidiaries or the administration thereof after the occurrence of a Default or
Event of Default and (B) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to any Lender's or Holder's or the
Administrative Agent's relationship with the Company or any of its Subsidiaries.
The covenants of this Section 17 shall survive payment or satisfaction of all
other Obligations.
18. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the Administrative
Agent, the Arranger and each of the Lenders and Holders, and their respective
shareholders, directors, agents, officers, Subsidiaries and Affiliates (each, an
"Indemnified Party") from and against any and all claims, actions, suits or
causes of action whether groundless or otherwise, and from and against any and
all liabilities, losses, damages, settlement payments, obligations, and
reasonable costs and expenses of every nature and character arising out of this
Agreement, the Notes or any of the other Loan Documents or the transactions
contemplated hereby or thereby, including, without limitation, (i) any actual or
proposed use by the Company or any of its Subsidiaries of the proceeds of any of
the Loans, (ii) the reversal or withdrawal of any provisional credits granted by
the Administrative Agent or any Lender or Holder upon the transfer of funds from
bank agency or lock
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box accounts or in connection with the provisional honoring of checks or other
items, (iii) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Company or any of its
Subsidiaries, (iv) the Company or any of its Subsidiaries entering into or
performing this Agreement, the Notes or any of the other Loan Documents, or (v)
with respect to the Company and its Subsidiaries and their respective properties
and assets, the violation of any Environmental Law, the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release or threatened
release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding, but excluding any such liabilities, losses, damages, settlement
payments, obligations, costs and expenses resulting from the gross negligence or
willful misconduct of the applicable Indemnified Party. In litigation, or the
preparation therefor, each of the Lenders or Holders, the Arranger and the
Administrative Agent shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Company agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Company under this Section 18 are unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law. The covenants contained in this Section 18 shall survive payment
or satisfaction in full of all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Company or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders, the
Holders and the Administrative Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by any
of the Lenders of any of the Loans as herein contemplated, and shall continue in
full force and effect so long as any amount due under this Agreement or the
Notes or any of the other Loan Documents remains outstanding or any Lender has
any obligation to make any Loans, and for such further time as may be otherwise
expressly specified in this Agreement. All statements contained in any
certificate or other paper delivered to any Lender or Holder or the
Administrative Agent at any time by or on behalf of the Company or any of its
Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by the Company or such
Subsidiary hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT. Except as provided herein, each Lender
and/or Holder may assign all or a portion of its interests, rights and
obligations as a Lender or Holder under this Agreement (including all or a
portion of any such
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Lender's Commitment Percentage and Commitment, and the same portion of the Loans
at the time owing to any such Lender or Holder and the Notes held by any such
Lender or Holder); provided that (a) any such assignment of a Lender's
Commitment Percentage and Commitment shall be of a constant, and not a varying,
percentage of all the assigning Lender's rights and obligations as a Lender
under this Agreement, (b) each assignment shall be in an amount that is at least
$500,000 or a greater multiple of $100,000, PROVIDED, however, that assignments
that are made on the same day to two or more Related Funds may be treated as a
single assignment for purposes of the minimum amount, and (c) the parties to
such assignment shall execute and deliver to the Administrative Agent, for
recording in the Note Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of EXHIBIT H hereto (an "ASSIGNMENT AND
ACCEPTANCE"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in any such Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender and
Holder hereunder, and (ii) the assigning Lender or Holder shall, to the extent
provided in such assignment and upon payment to the Administrative Agent of the
registration fee referred to in Section 20.3, be released from its obligations
under this Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Lender or Holder makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, the Notes, the other Loan Documents or any
other instrument or document furnished pursuant hereto,
(b) the assigning Lender or Holder makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Company and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations,
or the performance or observance by the Company and any of its
Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under
this Agreement, the Notes or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto;
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(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
referred to in Section 8.4 and Section 9.4 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Lender or Holder, the Administrative Agent or any
other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement;
(e) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto;
(f) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender or Holder; and
(g) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
20.3. REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"Note Register") for the recordation of (a) the names and addresses of the
Lenders and Holders, (b) the Commitment Percentages of each of the Lenders, and
(c) the Notes held by each of the Holders from time to time. The entries in the
Note Register shall be conclusive, in the absence of manifest error, and the
Company, the Administrative Agent and each of the Lenders and Holders may treat
each Person whose name is recorded in the Note Register as a Lender and Holder
hereunder for all purposes of this Agreement. The Note Register shall be
available for inspection by the Company and the Holders 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 Lenders or from a
Lender to an Affiliate or a Related Fund of such Lender, the assigning Holder
agrees to pay to the Administrative Agent a registration fee in the sum of
$3,500.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Administrative Agent shall (i) record the information
contained therein in the Note Register, and (ii) give prompt notice thereof to
the Company and the Holders (other than the assigning Holder). Within five (5)
Business Days after receipt of such notice, the Company, at its own expense,
shall execute and deliver to the Administrative Agent in exchange for each
surrendered Note, a new Note to the order of such assignee in an amount equal to
the amount assumed by such assignee
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pursuant to such Assignment and Acceptance and, if the assigning Holder has
retained some portion of its obligations hereunder, a new Note or Notes to the
order of the assigning Holder in an amount equal to the amount of the Loans
retained by it. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such in Assignment and Acceptance and shall otherwise be
substantially the form of the assigned Notes. Upon the request of the recipient
of new Notes or the Administrative Agent, within five (5) days of issuance of
such new Notes pursuant to this Section 20.4, the Company shall deliver an
opinion of counsel, which may be the general counsel of the Company, addressed
to the recipients of the new Notes and the Administrative Agent, relating to the
due authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
recipients of the new Notes, the Administrative Agent and the Administrative
Agent's Special Counsel. The surrendered Notes shall be cancelled and returned
to the Company.
20.5. PARTICIPATIONS. Each Holder may sell participations to one or
more banks or other entities in all or a portion of such Holder's rights and
obligations under this Agreement and the other Loan Documents; provided that (i)
any such sale or participation shall not affect the rights and duties of the
selling Holder hereunder to the Company, and (iii) the only rights granted to
the participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the interest rate on any Notes or extend any regularly scheduled payment
date for principal or interest.
20.6. DISCLOSURE. The Company agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Lender or
Holder may disclose information obtained by such Lender or Holder pursuant to
this Agreement to assignees or participants and potential assignees or
participants hereunder; provided that such assignees or participants or
potential assignees or participants shall agree (i) to treat in confidence such
information unless such information otherwise becomes public knowledge, (ii) not
to disclose such information to a third party, except as required by law or
legal process and (iii) not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or participation.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE COMPANY. If any
assignee Holder is an Affiliate of the Company, then any such assignee Holder
shall have no right to vote as a Holder hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to Section
14.1 or Section 14.2, and the determination of the Majority Holders shall for
all purposes of this Agreement and the other Loan Documents be made without
regard to such assignee Holder's interest in any of the Notes. If any Holder
sells a participating interest in any of the
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Notes to a participant, and such participant is the Company or an Affiliate of
the Company, then such transferor Holder shall promptly notify the
Administrative Agent of the sale of such participation. A transferor Holder
shall have no right to vote as a Holder hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Administrative Agent pursuant to Section 14.1
or Section 14.2 to the extent that such participation is beneficially owned by
the Company or any Affiliate of the Company, and the determination of the
Majority Holders shall for all purposes of this Agreement and the other Loan
Documents be made without regard to the interest of such transferor Holder in
the Notes to the extent of such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Holder shall
retain its rights to be indemnified pursuant to Section 17 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Holder is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder, under the Notes or under any of the other Loan Documents for
its account, deliver to the Company and the Administrative Agent certification
as to its exemption from deduction or withholding of any United States federal
income taxes. If the Reference Bank transfers all of its interest, rights and
obligations under this Agreement, the Administrative Agent shall, in
consultation with the Company and with the consent of the Company and the
Majority Holders, appoint another financial institution to act as the Reference
Bank hereunder, and in the absence of such consent the Administrative Agent
shall act as Reference Bank. Anything contained in this Section 20 to the
contrary notwithstanding, any Holder may at any time pledge all or any portion
of its interest and rights under this Agreement (including all or any portion of
its Notes) to any of the twelve Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the pledgor Holder from its obligations
hereunder or under any of the other Loan Documents.
20.9. ASSIGNMENT BY THE COMPANY. The Company shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Holders.
21. NOTICES, ETC.
Except as otherwise expressly provided in this Agreement, all notices
and other communications made or required to be given pursuant to this Agreement
or the Notes shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail or, if either the Person
giving the notice or the Person being notified is outside the United States, by
registered or recorded-delivery air mail, in each case postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as follows:
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(a) if to the Company, 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 the Company shall last have furnished
in writing to the Person giving the notice;
(b) if to the Administrative Agent, at 100 Federal Street,
Boston, Massachusetts 02110, USA, Attention: Maura C. Wadlinger, Vice
President, or such other address for notice as the Administrative Agent
shall last have furnished in writing to the Person giving the notice;
(c) if to any Lender or Holder, at such Lender's or Holder's
address set forth on SCHEDULE 1 hereto, or such other address for
notice as such Lender or Holder shall have last furnished in writing to
the Person giving the notice; and
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile,
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof, and (iii) if sent by
registered or recorded-delivery air mail, on the fifth Business Day following
the mailing thereof.
22. GOVERNING LAW.
THIS AGREEMENT, THE NOTES AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE COMPANY
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT, OR THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE COMPANY CONSENTS TO
THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON IT BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21. THE
COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
23. HEADINGS.
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The captions in this Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as provided
in Section 27.
26. WAIVER OF JURY TRIAL.
The Company and each of the Lenders hereby waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Agreement, the Notes or any of the other Loan Documents,
any rights or obligations hereunder or thereunder or the performance of which
rights and obligations. Except as prohibited by law, the Company hereby waives
any right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Company (a)
certifies that no representative, agent or attorney of any Lender, Holder or the
Administrative Agent has represented, expressly or otherwise, that such Lender,
Holder or the Administrative Agent would not, in the event of litigation, seek
to enforce the foregoing waivers and (b) acknowledges that each of the
Administrative Agent and the Lenders and Holders has been induced to enter into
this Agreement, the other Loan Documents to which it is a party by, among other
things, the waivers and certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
27.1. VOTING PROCEDURES.
(a) Except as set forth in clauses (b) - (e) below, any term, covenant,
agreement or condition of this Agreement or any of the Loan Documents may be
amended or waived and any departure therefrom may be consented to by the
Majority Holders if, but only if, such amendment, waiver or consent is in
writing signed by the Majority Holders and, in the case of an amendment (other
than an amendment described in Section 27.2), by the Company and, in any such
event, the failure to observe, perform or discharge any such term, covenant,
agreement or condition (whether such amendment is executed or such waiver or
consent is given before or after such failure) shall not be construed as a
breach of such term, covenant,
<PAGE> 83
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agreement or condition or as a Default or an Event of Default. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given. Anything herein to the contrary notwithstanding, the Majority
Holders shall have the right to waive any Default or Event of Default and the
consequences hereunder of such Default or Event of Default and shall have the
right to enter into an agreement with the Company providing for the forbearance
from the exercise of any remedies provided hereunder or under the other Loan
Documents without waiving any Default or Event of Default.
(b) Except as otherwise set forth in this Agreement, without the prior
written consent of the Holders of such Note, no amendment, consent or waiver
shall extend the originally scheduled time or times of payment of the principal
of any Note or alter the time or times of payment of interest on such Note or
the amount of the principal thereof or the rate of interest thereon or permit
any subordination of the principal or interest on any such Note other than as
expressly provided in Section 11.
(c) Except as otherwise set forth in this Agreement, (i) without the
prior written consent of each Lender, no amendment, consent or waiver shall
affect the amounts or extend the time of any of the Lenders' Commitments and
(ii) without the prior written consent of the Administrative Agent, no
amendment, consent or waiver shall affect the right or duties of the
Administrative Agent, including without limitation the provisions of Section 16.
(d) No Restricted Subsidiary of the Company which is a "significant
subsidiary" (as defined in Regulation S-X under the Securities Exchange Act of
1934) shall be released from the Subsidiary Guaranty without the prior unanimous
written consent of each of the Holders pursuant to this Section 27.1(d).
(e) Neither the definition of "Majority Holders", nor the provisions of
this Section 27.1, may be amended without the prior unanimous written consent of
each of the Holders.
27.2. COMPANY'S CONSENT NOT REQUIRED FOR CERTAIN AMENDMENTS.
Notwithstanding any provision of this Agreement or the other Loan Documents to
the contrary, no consent, written or otherwise, of the Company shall be
necessary or required in connection with any amendment to Section 16, and any
such amendment shall be effected solely by and among Administrative Agent and
the Holders, provided that no such amendment shall impose any obligation on the
Company.
27.3. COURSE OF DEALING. No course of dealing or delay or omission on
the part of the Administrative Agent or any Lender or Holder in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Company shall entitle the Company to other or
further notice or demand in similar or other circumstances.
28. SEVERABILITY.
<PAGE> 84
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The provisions of this Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
29. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
29.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Company
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Company or one or more of its
Subsidiaries, in connection with this Agreement or otherwise, by a Section 20
Subsidiary. The Company, for itself and each of its Subsidiaries, hereby
authorizes (a) such Section 20 Subsidiary to share with the Administrative
Agent, each Lender and each Holder any information delivered to such Section 20
Subsidiary by the Company or any of its Subsidiaries, and (b) the Administrative
Agent, each Lender and each Holder to share with such Section 20 Subsidiary any
information delivered to the Administrative Agent, such Lender or such Holder by
the Company or any of its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement or of
such Holder to purchase any Note; it being understood, in each case, that any
such Section 20 Subsidiary receiving such information shall be bound by the
confidentiality provisions of this Agreement. Such authorization shall survive
the payment and satisfaction in full of all of Obligations.
29.2. CONFIDENTIALITY. Each of the Lenders, the Holders and the
Administrative Agent agrees, on behalf of itself and each of its affiliates,
directors, officers, employees and representatives, to use reasonable
precautions to keep confidential, in accordance with their customary procedures
for handling confidential information of the same nature and in accordance with
safe and sound banking practices, any non-public information supplied to it by
the Company or any of its Subsidiaries pursuant to this Agreement that is
identified by such Person as being confidential at the time the same is
delivered to any of the Lenders, the Holders or the Administrative Agent,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this Section 29, (b) to the extent required by statute, rule,
regulation or judicial process, (c) to counsel, auditors or accounts for any of
the Lenders, the Holders or the Administrative Agent, (d) to bank examiners or
any other regulatory authority having jurisdiction over any of the Lenders, the
Holders or the Administrative Agent, (e) to the Administrative Agent, any
Lender, any Holder or any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Lenders, the Administrative Agent or
any Section 20 Subsidiary is a party, or in connection with the enforcement of
rights or remedies hereunder or under any other Loan Document, (g) to a
Subsidiary or affiliate of such Lender or such Holder as provided in Section
29.1 or (h) to any assignee! or participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by the
provisions of Section 20.6.
<PAGE> 85
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29.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Lenders, the Holders and the Administrative
Agent shall, prior to disclosure thereof, notify the Company of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender, such Holder or the
Administrative Agent by such governmental agency) or pursuant to legal process,
and shall consult with the Company on the advisability of taking legally
available steps to resist or narrow any such request. In the event that such
steps are not available or effective, or are deemed inadvisable by counsel to
such Lender, such Holder or the Administrative Agent, as the case may be, or in
the event that the Company waives compliance with the provisions of this Section
29.3, such Lender, such Holder or the Administrative Agent, and/or its
respective representatives, as the case may be, may disclose to any tribunal
only that portion of such non-public information which it is advised by counsel
is legally required to be disclosed, and shall exercise reasonable efforts to
obtain assurances that confidential treatment will be accorded such non-public
information.
29.4. OTHER. In no event shall any Lender, Holder or the Administrative
Agent be obligated or required to return any materials furnished to it or any
Section 20 Subsidiary by the Company or any of its Subsidiaries which such
Lender, Holder Section 20 Subsidiary or Administrative Agent is required to
retain pursuant to any requirement of law or rule or regulation of any
governmental agency. The obligations of each Lender and each Holder under this
Section 29 shall supersede and replace the obligations of such Lender or such
Holder under any confidentiality letter in respect of this financing signed and
delivered by such Lender or such Holder to the Company prior to the date hereof
and shall be binding upon any assignee of, or purchaser of any participation in,
any interest in any of the Notes from any Lender or any Holder.
<PAGE> 86
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Joseph F. Spanier
--------------------------------------
Name: Joseph F. Spanier
Title: Vice President & CFO
BANKBOSTON, N.A., individually and as
Administrative Agent
By: /s/ Robert W. MacElhiney
--------------------------------------
Name: Robert W. MacElhiney
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ Lisa Megeaski
--------------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Edward D. Puckhaber
--------------------------------------
Name: Edward D. Puckhaber
Title: Assistant Vice President
FIRST CHICAGO CAPITAL CORPORATION
By: /s/ Kevin J. Rooney
--------------------------------------
Name: Kevin Rooney
Title: Director
<PAGE> 87
EXHIBIT A
PAYMENT OF THIS BRIDGE NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR
PAYMENT IN FULL IN CASH OR CASH EQUIVALENTS OF ALL SENIOR DEBT, AS DEFINED IN
THAT CERTAIN PURCHASE AGREEMENT REFERRED TO BELOW, A COPY OF WHICH WILL BE MADE
AVAILABLE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE ADMINISTRATIVE AGENT.
FORM OF BRIDGE NOTE
$[___________] _____________ __, ____"
FOR VALUE RECEIVED, the undersigned TRANSTECHNOLOGY CORPORATION, a
Delaware corporation ("TransTechnology"), hereby promises to pay (without setoff
or counterclaim) to the order of [INSERT LENDER], a [insert entity] (the
"Lender"), at the Administrative Agent's Head Office (as defined in the Purchase
Agreement referred to below):
(a) prior to or on August __, 2004" \@ "MMMM d, yyyy" \*
charformat August __, 2000 the principal amount of [INSERT AMOUNT]
DOLLARS ($____), evidencing the portion of the Bridge Loan made by the
Lender to TransTechnology pursuant to the Senior Subordinated Note
Purchase Agreement dated as of August 31, 1999 (as amended, restated,
modified, varied and in effect from time to time, the "Purchase
Agreement"), by and among TransTechnology, the lending institutions
party thereto (the "Lenders"), and BankBoston, N.A., as administrative
agent for the Lenders (the "Administrative Agent");
(b) the principal outstanding hereunder from time to time at
the times provided in the Purchase Agreement; and
(c) interest from the date hereof on the principal amount from
time to time outstanding to and including the maturity hereof at the
rates and terms and in all cases in accordance with the terms of the
Purchase Agreement.
This Note evidences borrowings under and has been issued by
TransTechnology in accordance with the terms of the Purchase Agreement. The
Lender and any holder hereof is entitled to the benefits of the Purchase
Agreement and the other Loan Documents, and may enforce the agreements of
TransTechnology contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Purchase Agreement.
TransTechnology irrevocably authorizes the Lender to make or cause to
be made, at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record,
<PAGE> 88
-2-
including computer records, reflecting the receipt of such payment. The
outstanding amount of the Lender's portion of the Bridge Loan set forth on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Lender with
respect to its portion of the Bridge Loan shall be PRIMA FACIE evidence of the
principal amount of the Lender's portion of the Bridge Loan owing and unpaid to
the Lender, but the failure to record, or any error in so recording, any such
amount on any such grid, continuation or other record shall not limit or
otherwise affect the obligation of TransTechnology hereunder or under the
Purchase Agreement to make payments of principal of and interest on this Note
when due.
TransTechnology has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Purchase
Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Purchase Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
TransTechnology and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Note is subject to conversion into a Term Note on the terms and
conditions specified in the Purchase Agreement.
THIS NOTE AND THE OBLIGATIONS OF TRANSTECHNOLOGY HEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). TRANSTECHNOLOGY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON
TRANSTECHNOLOGY BY MAIL AT THE ADDRESS SPECIFIED IN SS.21 OF THE PURCHASE
AGREEMENT. TRANSTECHNOLOGY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 89
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TRANSTECHNOLOGY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
<PAGE> 90
-4-
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
under seal in its corporate name by its duly authorized officer as of the day
and year first above written.
TRANSTECHNOLOGY CORPORATION
By: _____________________________________________
Name:
Title:
<PAGE> 91
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Amount Amount of Balance of
of Bridge Loan Principal Paid Principal Notation
Date or Prepaid Unpaid Made By:
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<PAGE> 92
EXHIBIT B
PAYMENT OF THIS TERM NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR
PAYMENT IN FULL IN CASH OR CASH EQUIVALENTS OF ALL SENIOR DEBT, AS DEFINED IN
THAT CERTAIN PURCHASE AGREEMENT REFERRED TO BELOW, A COPY OF WHICH WILL BE MADE
AVAILABLE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE ADMINISTRATIVE AGENT.
FORM OF TERM NOTE
$[___________] _____________ __, ____
FOR VALUE RECEIVED, the undersigned TRANSTECHNOLOGY CORPORATION, a
Delaware corporation ("TransTechnology"), hereby promises to pay (without setoff
or counterclaim) to the order of [INSERT LENDER], a [insert entity] (the
"Lender"), at the Administrative Agent's Head Office (as defined in the Purchase
Agreement referred to below):
(a) prior to or on August __, 2004" \@ "MMMM d, yyyy" \*
charformat August __, 2009 the principal amount of [INSERT AMOUNT]
DOLLARS ($____), evidencing the portion of the Term Loan made by the
Lender to TransTechnology pursuant to the Senior Subordinated Note
Purchase Agreement dated as of August 31, 1999 (as amended, restated,
modified, varied and in effect from time to time, the "Purchase
Agreement"), by and among TransTechnology, the lending institutions
party thereto (the "Lenders"), and BankBoston, N.A., as administrative
agent for the Lenders (the "Administrative Agent");
(b) the principal outstanding hereunder from time to time at
the times provided in the Purchase Agreement; and
(c) interest from the date hereof on the principal amount from
time to time outstanding to and including the maturity hereof at the
rates and terms and in all cases in accordance with the terms of the
Purchase Agreement.
This Note evidences borrowings under and has been issued by
TransTechnology in accordance with the terms of the Purchase Agreement. The
Lender and any holder hereof is entitled to the benefits of the Purchase
Agreement and the other Loan Documents, and may enforce the agreements of
TransTechnology contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Purchase Agreement.
TransTechnology irrevocably authorizes the Lender to make or cause to
be made, at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the receipt of such payment. The outstanding
<PAGE> 93
-2-
amount of the Lender's portion of the Term Loan set forth on the grid attached
to this Note, or the continuation of such grid, or any other similar record,
including computer records, maintained by the Lender with respect to its portion
of the Term Loan shall be prima facie evidence of the principal amount of the
Lender's portion of the Term Loan owing and unpaid to the Lender, but the
failure to record, or any error in so recording, any such amount on any such
grid, continuation or other record shall not limit or otherwise affect the
obligation of TransTechnology hereunder or under the Purchase Agreement to make
payments of principal of and interest on this Note when due.
TransTechnology has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Purchase
Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Purchase Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any future occasion.
TransTechnology and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF TRANSTECHNOLOGY HEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). TRANSTECHNOLOGY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON
TRANSTECHNOLOGY BY MAIL AT THE ADDRESS SPECIFIED IN SS.21 OF THE PURCHASE
AGREEMENT. TRANSTECHNOLOGY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
TRANSTECHNOLOGY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY
RIGHTS OR OBLIGATIONS
<PAGE> 94
-3-
HEREUNDER, OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
<PAGE> 95
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IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
under seal in its corporate name by its duly authorized officer as of the day
and year first above written.
TRANSTECHNOLOGY CORPORATION
By: __________________________________________
Name:
Title:
<PAGE> 96
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Amount Amount of Balance of
of Term Loan Principal Paid Principal Notation
Date or Prepaid Unpaid Made By:
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<PAGE> 97
EXHIBIT C
[FORM OF EXCHANGE NOTE]
(Face of Note)
================================================================================
CUSIP #______
[Series A] [Series B] Senior Subordinated Notes due 2009
No.__ $_____
TransTechnology Corporation
promises to pay to______________________________________________
or registered assigns,
the principal sum of________________________________________
Dollars on ________, 2009.
Interest Payment Dates: August 31, November 30, February 28 and May 31
Record Dates: August 15, November 15, February 14 and May 15
DATED: ____________, 200_
TRANSTECHNOLOGY CORPORATION
BY:
------------------------------
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:
---------------------------
Name:
Title:
================================================================================
<PAGE> 98
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(Back of Note)
[Series A] [Series B] Senior Subordinated Notes due 2009
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. TransTechnology Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at [if subject to the Fixed Rate, insert Fixed Rate][the Variable Rate, as
defined in the Indenture to which this Note is subject]% per annum from
__________________ until maturity and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages semi-annually on August 31,
November 31, February 28 and May 31 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand to the extent lawful at a rate that is 2% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the August 15, November
15, February 14, or May 15 next preceding the Interest Payment Date, even if
such Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. Principal, premium, if any, and interest and Liquidated
Damages on the Notes will be payable at the office or agency of the Company
maintained for such purpose or, at the option of the Company, payment of
interest and Liquidated Damages may be made by check mailed to the Holders of
the Notes at their respective addresses set forth in the register of Holders of
Notes; provided that all payments of principal, premium, interest and Liquidated
Damages with respect to Notes the Holders of which have given wire transfer
instructions to the Company prior to the Record Date will be required to be made
by wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's office
or agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
<PAGE> 99
-3-
4. INDENTURE AND SUBORDINATION. The Company issued the Notes
under an Indenture dated as of August 31, 2000 ("the Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are general unsecured
obligations of the Company limited to $75.0 million in aggregate principal
amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. OPTIONAL REDEMPTION.
(a) The Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 10 nor more than
30 days' notice, at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon and Liquidated Damages under
and as defined in the Registration Right Agreement referred to below with
respect thereto, to the applicable redemption date.
(b) Notwithstanding the provisions of clause (a), any Notes held
by a Fixed Rate Holder (as defined in the Indenture) shall not be subject to
redemption at the Company's option until August 31, 2005, and from and after
August 31, 2005 the amount required to be paid in redemption of any such Note
shall be equal to the outstanding principal amount thereof, PLUS any accrued but
unpaid interest and Liquidated Damages thereon, to the applicable redemption
date, PLUS a premium equal to the product of (i) the principal amount of such
Note multiplied by (ii) the percentage calculated by multiplying (A) the fixed
interest rate applicable to such Note by (B) the percentage set forth in the
table below opposite the period in which such redemption occurs:
Period Percentage
------ ----------
From and including August 31, 2005 through 50%
August 30, 2006
From and including August 31, 2006 through 33.33%
August 30, 2007
From and including August 31, 2007 through 16.66%
August 30, 2008
From and including August 31, 2008 through 0%
August 30, 2009
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Notes will
have the right to require the Company to make an offer (a "Change of Control
Offer") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages
<PAGE> 100
-4-
thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within 15 Business Days following any Change of Control, the
Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) If the Company or a Restricted Subsidiary consummates any
Asset Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million
the Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed by
first class mail at least 10 days but not more than 30 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes) and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding
<PAGE> 101
-5-
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes). Without the consent
of any Holder of Notes, the Company and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, or sale of all or substantially
all of the Company's assets, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) default in payment when due of principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (iii) failure by the Company or any of its Subsidiaries for
30 days after notice to comply with Section 4.07, 4.09, 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created
after the date of the Indenture, which default results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness the maturity of which has been so accelerated, aggregates $5.0
million or more (other than Existing Indebtedness to the extent it is secured by
or paid by the drawing against a letter of credit permitted to be issued under
the Indenture); (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries as set forth in the Indenture; and (viii) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid in any material respect or
shall cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least a majority in principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency as set forth in
the Indenture, with respect to the Company, any Significant Subsidiary or any
group of Subsidiaries, that taken together would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
<PAGE> 102
-6-
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees, the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of August 31, 1999, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07893
Attention: Chief Financial Officer
<PAGE> 103
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ___________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:________________ Your Signature:_________________________
(Sign exactly as your name
appears on the Note)
SIGNATURE GUARANTEE:
- -------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 104
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $_____
Date:______ Your Signature:______________________________
(Sign exactly as your name appears on
the Note)
Tax Identification No:________________________
SIGNATURE GUARANTEE
_____________________________
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 105
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following changes of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Signature of
Principal Principal Global Note authorized officer
Amount of Amount of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
<S> <C> <C> <C> <C>
- ---------------- ---------------- ---------------- ---------------------- ------------------
</TABLE>
(1) This should be included only if the Note is issued in global form.
<PAGE> 106
EXHIBIT D
- -------------------------------------------------------------------------------
TRANSTECHNOLOGY CORPORATION
SERIES A AND SERIES B
SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
---------------------------------------
Dated as of August 31, 2000
---------------------------------------
STATE STREET BANK AND TRUST COMPANY
Trustee
- -------------------------------------------------------------------------------
<PAGE> 107
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
(a) TRUST INDENTURE
Act Section Indenture Section
<S> <C>
310(a)(1)........................................................................................7.10
(a)(2)...........................................................................................7.10
(a)(3)...........................................................................................N.A.
(a)(4)...........................................................................................N.A.
(a)(5)...........................................................................................7.10
(i)(b)...........................................................................................7.10
(ii)(c)..........................................................................................N.A.
311(a)...........................................................................................7.11
(b)..............................................................................................7.11
(iii(c)..........................................................................................N.A.
312(a)...........................................................................................2.05
(b)..............................................................................................11.03
(iv)(c)..........................................................................................11.03
313(a)...........................................................................................7.06
(b)(2)...........................................................................................7.07
(v)(c)...........................................................................................7.06;
12.02
(vi)(d)..........................................................................................7.06
314(a)...........................................................................................4.03;
12.02
(c)(1)...........................................................................................12.04
(c)(2)...........................................................................................12.04
(c)(3)...........................................................................................N.A.
(vii)(e).........................................................................................11.05
(f)..............................................................................................NA
315 (a)..........................................................................................7.01
(b)..............................................................................................7.05,
12.02
(A)(c)...........................................................................................7.01
(d)..............................................................................................7.01
(e)..............................................................................................6.11
316 (a)(last sentence)...........................................................................2.09
(a)(1)(A)........................................................................................6.05
(a)(1)(B)........................................................................................6.04
(a)(2)...........................................................................................N.A.
(b)..............................................................................................6.07
(B)(c)...........................................................................................2.12
317(a)(1)........................................................................................6.08
(a)(2)...........................................................................................6.09
(b)..............................................................................................2.04
318 (a)..........................................................................................12.01
(b)..............................................................................................N.A.
(c)..............................................................................................12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY
REFERENCE...............................................................................................1
Section 1.01. Definitions..............................................................1
Section 1.02. Other Definitions........................................................19
Section 1.03. Terms of Tia.............................................................19
Section 1.04. Rules of Construction....................................................20
ARTICLE 2. THE NOTES....................................................................................20
Section 2.01. Form and Dating..........................................................20
Section 2.02. Execution and Authentication.............................................22
Section 2.03. Registrar and Paying Agent...............................................22
Section 2.04. Paying Agent to Hold Money in Trust......................................23
Section 2.05. Holder Lists.............................................................23
Section 2.06. Transfer and Exchange....................................................24
Section 2.07. Replacement Notes........................................................28
Section 2.08. Outstanding Notes........................................................28
Section 2.09. Treasury Notes...........................................................29
Section 2.10. Temporary Notes..........................................................29
Section 2.11. Cancellation.............................................................29
Section 2.12. Defaulted Interest.......................................................30
SECTION 2.13 Special Transfer Provisions..............................................30
ARTICLE 3. REDEMPTION AND PREPAYMENT....................................................................34
Section 3.01. Notices to Trustee.......................................................34
Section 3.02. Selection of Notes to Be Redeemed........................................34
Section 3.03. Notice of Redemption.....................................................35
Section 3.04. Effect of Notice of Redemption...........................................36
Section 3.05. Deposit of Redemption Price..............................................36
Section 3.06. Notes Redeemed in Part...................................................36
Section 3.07. Optional Redemption......................................................36
Section 3.08. Mandatory Redemption.....................................................37
Section 3.09. Offer to Purchase by Application of Excess Proceeds......................37
ARTICLE 4. COVENANTS....................................................................................39
Section 4.01. Payment of Notes.........................................................39
Section 4.02. Maintenance of Office or Agency..........................................40
Section 4.03. Reports..................................................................40
Section 4.04. Compliance Certificate...................................................41
Section 4.05. Taxes....................................................................42
Section 4.06. Stay, Extension and Usury Laws...........................................42
</TABLE>
<PAGE> 109
ii
<TABLE>
<S> <C>
Section 4.07. Restricted Payments......................................................43
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries...........45
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock...............46
Section 4.10. Asset Sales.............................................................49
Section 4.11. Transactions with Affiliates.............................................50
Section 4.12. Liens....................................................................51
Section 4.13. No Senior Subordinated Debt..............................................51
Section 4.14. Corporate Existence......................................................51
Section 4.15. Offer to Repurchase Upon Change of Control...............................52
Section 4.16. Payments for Consent.....................................................53
Section 4.17. Additional Subsidiary Guarantees.........................................53
ARTICLE 5. SUCCESSORS...................................................................................53
Section 5.01. Merger, Consolidation, or Sale of Assets.................................53
Section 5.02. Successor Corporation Substituted........................................54
ARTICLE 6. DEFAULTS AND REMEDIES........................................................................54
Section 6.01. Events of Default........................................................54
Section 6.02. Acceleration.............................................................56
Section 6.03. Other Remedies...........................................................57
Section 6.04. Waiver of Past Defaults..................................................57
Section 6.05. Control by Majority......................................................57
Section 6.06. Limitation on Suits......................................................58
Section 6.07. Rights of Holders of Notes to Receive Payment............................58
Section 6.08. Collection Suit by Trustee...............................................58
Section 6.09. Trustee May File Proofs of Claim.........................................59
Section 6.10. Priorities...............................................................59
Section 6.11. Undertaking for Costs....................................................60
ARTICLE 7. TRUSTEE......................................................................................60
Section 7.01. Duties of Trustee........................................................60
Section 7.02. Rights of Trustee........................................................61
Section 7.03. Individual Rights of Trustee.............................................62
Section 7.04. Trustee's Disclaimer.....................................................62
Section 7.05. Notice of Defaults.......................................................62
Section 7.06. Reports by Trustee to Holders of the Notes...............................63
Section 7.07. Compensation and Indemnity...............................................63
Section 7.08. Replacement of Trustee...................................................64
Section 7.09. Successor Trustee by Merger, etc.........................................65
Section 7.10. Eligibility; Disqualification............................................65
Section 7.11 Preferential Collection of Claims Against Company........................66
</TABLE>
<PAGE> 110
iii
<TABLE>
<S> <C>
ARTICLE 8. [intentionally omitted].....................................................................66
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.............................................................66
Section 9.01. Without Consent of Holders of Notes......................................66
Section 9.02. With Consent of Holders of Notes.........................................67
Section 9.03. Compliance with Trust Indenture Act......................................68
Section 9.04. Revocation and Effect of Consents........................................68
Section 9.05. Notation on or Exchange of Notes.........................................69
Section 9.06. Trustee to Sign Amendments, etc..........................................69
ARTICLE 10. SUBORDINATION...............................................................................69
Section 10.01. Agreement to Subordinate.................................................69
Section 10.02. Certain Definitions......................................................70
Section 10.03. Liquidation; Dissolution; Bankruptcy.....................................70
Section 10.04. Default on Designated Senior Debt........................................71
Section 10.05. Acceleration of Securities...............................................72
Section 10.06. When Distribution Must Be Paid over......................................72
Section 10.07. Notice by Company........................................................73
Section 10.08. Subrogation..............................................................73
Section 10.09. Relative Rights..........................................................73
Section 10.10. Subordination May Not Be Impaired by Company.............................74
Section 10.11. Distribution or Notice to Representative.................................74
Section 10.12. Rights of Trustee and Paying Agent.......................................75
Section 10.13. Authorization to Effect Subordination....................................75
Section 10.14. Amendments...............................................................75
ARTICLE 11. SUBSIDIARY GUARANTEES.......................................................................76
Section 11.01. Guarantee................................................................76
Section 11.02. Subordination of Subsidiary Guarantee....................................77
Section 11.03. Limitation on Guarantor Liability........................................77
Section 11.04. Execution and Delivery of Subsidiary Guarantee...........................78
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.......................78
Section 11.06. Releases Following Sale of Assets or capital stock.......................79
ARTICLE 12. MISCELLANEOUS...............................................................................79
Section 12.01. Trust Indenture Act Controls.............................................79
Section 12.02. Notices..................................................................79
Section 12.03. Communication by Holders of Notes with Other Holders of Notes............81
Section 12.04. Certificate and Opinion as to Conditions Precedent.......................81
Section 12.05. Statements Required in Certificate or Opinion............................81
Section 12.06. Rules by Trustee and Agents..............................................82
Section. 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders.82
</TABLE>
<PAGE> 111
iv
<TABLE>
<S> <C>
Section 12.08. Governing Law............................................................82
Section 12.09. No Adverse Interpretation of Other Agreements............................82
Section 12.10. Successors...............................................................82
Section 12.11. Severability.............................................................83
Section 12.12. Counterpart Originals....................................................83
Section 12.13. Table of Contents, Headings, etc.........................................83
</TABLE>
<PAGE> 112
v
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF SUBORDINATED SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
<PAGE> 113
INDENTURE dated as of August 31, 2000 between TransTechnology
Corporation, a Delaware corporation (the "Company"), the Guarantors named
herein, and State Street Bank and Trust Company, a Massachusetts trust company,
as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Company's
Series A Senior Subordinated Notes due 2009 (the "Series A Notes") and the
Company's Series B Senior Subordinated Notes due 2009 (the "Series B Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Administrative Agent" means BankBoston, N.A., in its capacity as
Administrative Agent under the Note Purchase Agreement, and any successor
Administrative Agent under the Note Purchase Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person but in any event excluding the agent and
lenders under the Senior Credit Facility. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
<PAGE> 114
2
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
of any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by Sections 4.15
or 5.01 and not by Section 4.10 hereof) and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing, the following items shall
not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a
Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary, and (iii) a
Restricted Payment that is permitted by Section 4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or
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3
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Senior Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition and (vi) money market funds at least
95% of the assets of which constitute Cash Equivalents of the kinds described in
clauses (i) - (v) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
Company (measured by voting power rather than number of shares); or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Company" means TransTechnology Corporation, a Delaware corporation,
and any and all successors thereto.
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4
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income, minus
(v) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash expenses of, a
Restricted Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior governmental approval (that
has not been obtained), and without direct or indirect restriction pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a
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5
Guarantor, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred equity (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred equity, less (a) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) effected subsequent to the date of this
Indenture in the book value of any asset owned by such Person or a consolidated
Restricted Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
(except, in each case, Permitted Investments), and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture, or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Conversion Date" means August 31, 2000.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
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6
"Credit Facilities" means, with respect to the Company and its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Senior Credit Facility) or commercial paper facilities with
banks, insurance companies, commercial finance companies or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit or Hedging Obligations, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Domestic Restricted Subsidiary" means, with respect to the Company,
any Restricted Subsidiary of the Company that was formed under the laws of the
United States of America or any state, possession or commonwealth thereof or the
District
<PAGE> 119
7
of Columbia, or that guarantees or otherwise provides credit support for any
Indebtedness of the Company.
"Domestic Subsidiary" means each current and any future Subsidiary of
the Company that is organized under the laws of the United States or any state,
possession or commonwealth thereof or the District of Columbia.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the Senior Credit
Facility) in existence on the date of this Indenture, until such Indebtedness is
repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined
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8
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person and its Restricted Subsidiaries for such
period. In the event that the referent Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees or redeems or prepays any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, redemption or prepayment of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"Fixed Rate" means, with respect to any Note, the Fixed Rate payable
thereon pursuant to and as defined in the Note Purchase Agreement.
"Fixed Rate Holder" means any Holder of a Note other than (i) an
original holder of a Bridge Note issued pursuant to the Note Purchase Agreement,
(ii) an Affiliate of such an original holder, (iii) in the case of any such
original holder or Affiliate which is an investment fund, any other such fund
that is managed or advised by the same advisor of such original holder or
Affiliate, or by an Affiliate of such investment advisor, or (iv) any transferee
of a Note from any Person described in the foregoing clauses (i) - (iii) who
shall have taken such Note as a "Variable Rate Holder" under and as defined in
the Note Purchase Agreement.
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9
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantors" means (i) each current and future Domestic Restricted
Subsidiary of the Company, and (ii) any other Subsidiary of the Company that
executes a Guarantee in accordance with the provisions of this Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency changes.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person
<PAGE> 122
10
of any indebtedness of any other Person. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the case
of any Indebtedness issued with original issue discount, and (ii) the principal
amount thereof in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
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"Liquidated Damages" means, at any time, all liquidated damages then
owing pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received directly or
indirectly by the Company or any of its Restricted Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received upon the sale
or other disposition of any non-cash consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under the
Senior Credit Facility) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness: (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
<PAGE> 124
12
"Notes" means the Series A Notes and the Series B Notes.
"Note Purchase Agreement" means that certain Senior Subordinated Note
Purchase Agreement, dated as of August 31, 1999, by and among the Companies,
BankBoston N.A., as administrative agent and purchaser and the other purchaser
named therein, providing for the purchase and sale of up to $75.0 million in
aggregate principal amount of Senior Subordinated Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment in
Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company and a Guarantor or (ii) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Restricted Subsidiary of the Company that is a Guarantor; (d) any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;
(e) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; (f) Investments
existing on the date of the Indenture; (g)
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13
receivables owing to the Company or any Wholly Owned Restricted Subsidiary of
the Company if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided that
such trade terms may include concessionary terms as the Company or such
Restricted Subsidiary deems reasonable under the circumstances; (h) loans or
advances to employees permitted by Section 4.11 hereof; (i) stock obligations or
securities received in settlement of debts created in the ordinary course of
business and owning to the Company or any of its Restricted Subsidiaries or in
satisfaction of judgments; (j) any Investment by the Company or any Restricted
Subsidiary of the Company consisting of intercompany loans to a Restricted
Subsidiary of the Company that is not a Guarantor; (k) Hedging Obligations
incurred to protect the Company and/or its Subsidiaries against fluctuations in
interest rates or currency exchange rates and not for purposes of speculation;
and (l) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (l) that are at the time outstanding, not to exceed
$5.0 million.
"Permitted Liens" means (i) Liens on assets of the Company, any of its
Restricted Subsidiaries or any of the Guarantors securing Senior Debt that was
permitted by the terms of this Indenture to be incurred; (ii) Liens in favor of
the Company; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property or assets existing at the time of acquisition
thereof or the acquisition of a Person owning such property or assets by the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition; (v) Liens to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of Section 4.09 hereof covering only the
assets acquired or financed with such Indebtedness; (vii) Liens existing on the
date of this Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (ix) Liens
incurred in the ordinary course of business of the Company or any Restricted
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or
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14
materially impair the use thereof in the operation of business by the Company or
such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights Agreement
with respect to the Notes, dated as of August 31, 1999, by and among the Company
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
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15
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.
"Resale Restriction Termination Date" means, as to any Note, the date
which is two years after the later of the date of issuance thereof and the last
date on which the Company or any of its Affiliates held any beneficial interest
in such Note or a predecessor to such Note.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means, with respect to any person, each
Subsidiary of such Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
<PAGE> 128
16
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means that certain Second Amended and Restated
Credit Agreement, dated as of July 30, 1995, amended and restated as of July 24,
1998, and further amended and restated as of August 31, 1999, by and among the
Company, certain of its Subsidiaries, the financial institutions named therein
as Lenders, BHF-BANK Aktiengesellschaft, as DM Fronting Bank, ABN AMRO Bank
N.V., as Syndication Agent, The First National Bank of Chicago, as Documentation
Agent, and BankBoston, N.A., as Sterling Fronting Bank, Issuing Bank, and
Administrative Agent, providing for up to $250.0 million of revolving credit and
term loan borrowings, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"Senior Subordinated Notes" means the Bridge Notes issued pursuant to
the Note Purchase Agreement and the Term Notes.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Guaranty" means the Subordinated Guaranty by each
Guarantor of the Company's payment obligations under the Senior Subordinated
Notes, executed pursuant to the provisions of the Note Purchase Agreement.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any
<PAGE> 129
17
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"Subsidiary Guarantee" means a Guarantee of the Notes by any Guarantor.
"Term Notes" means the Term Notes issued pursuant to the Note Purchase
Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary: (i) has no Indebtedness
other than Non-Recourse Debt; (ii) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (iii) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (A) to subscribe for additional Equity Interests or (B) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (iv) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (v) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
<PAGE> 130
18
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation compiled with the foregoing conditions and was
permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof the Company shall be in default of such covenant). The Board of Directors
of the Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section 4.09
hereof calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period, and (ii) no Default or Event
of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Variable Rate" means, as to any Notes other than a Note bearing
interest at a Fixed Rate at any time, the variable rate of interest then
applicable to such Note under the terms of the Note Purchase Agreement, as shall
be certified by the Administrative Agent to the Trustee or any Holder upon three
(3) Business Days' prior written request.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned" means, when used with respect to any Subsidiary or
Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as
<PAGE> 131
19
appropriate) of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries (or
Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and one or
more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as
appropriate) of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"......................................................4.11
"Asset Sale Offer"...........................................................3.09
"Authentication Order".......................................................2.02
"Change of Control Offer"....................................................4.15
"Change of Control Payment"..................................................4.15
"Change of Control Payment Date" ............................................4.15
"Commission".................................................................4.03
"Designated Senior Debt".....................................................10.02
"Event of Default"...........................................................6.01
"Excess Proceeds"............................................................4.10
"incur"......................................................................4.09
"Offer Amount"...............................................................3.09
"Offer Period"...............................................................3.09
"Paying Agent"...............................................................2.03
"Payment Blockage Notice"....................................................10.04
"Permitted Debt".............................................................4.09
"Permitted Junior Securities"................................................10.02
"Purchase Date"..............................................................3.09
"Registrar"..................................................................2.03
"Representative".............................................................10.02
"Restricted Payments"........................................................4.07
"Senior Debt"................................................................10.02
"Payment Blockage Notice"....................................................10.04
</TABLE>
SECTION 1.03. TERMS OF TIA.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
<PAGE> 132
20
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the Company
and the Guarantors, respectively, and any successor obligor upon the Notes and
the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to
time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
<PAGE> 133
21
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A-1 or A-2 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in the
form of Exhibit A-1 attached hereto (but without the Global Note Legend thereon
and without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or by the
Custodian, at the direction of the Trustee, in accordance with instructions
given by or on behalf of the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its Corporate Trust Office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Restricted Period shall be terminated
upon the receipt by the Trustee of (i) a written certificate from the
Depositary, together with copies of certificates from Euroclear and Cedel
certifying that they have received certification of non-United States beneficial
ownership of 100% of the aggregate principal amount of the Regulation S
Temporary Global Note (except to the extent of any beneficial owners thereof who
acquired an interest therein during the Restricted Period pursuant to another
exemption from registration under the Securities Act and who will take delivery
of a beneficial ownership interest in a 144A Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S
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22
Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel shall be applicable to transfers of beneficial
interests in the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or
<PAGE> 135
23
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
The Company shall, prior to the Record Date, notify the Paying Agent of
any wire transfer instructions for payments that it receives from Holders.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably
<PAGE> 136
24
require of the names and addresses of the Holders of Notes and the Company shall
otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) The Global Notes. The Notes initially shall (i) be issued in the
form of Global Notes, (ii) be registered in the name of the Depositary or the
nominee of such Depositary, (iii) be delivered to the Trustee as custodian for
such Depositary and (iv) bear legends as set forth in subparagraph (g)(ii)
below.
Participants in, the Depositary shall have no rights under this
Indenture with respect to any Global Note held on their behalf by the
Depositary, or the Trustee as its Custodian, or under the Global Notes, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of each Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee, or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices governing the exercise of the rights of a
Holder of any Note.
(b) Transfer of Global Notes. Transfers of Global Notes shall be
limited to transfers in whole, but not in part, to the Depositary, its
successors, or their respective nominees. Interests of beneficial owners in the
Global Notes may be transferred or exchanged for Definitive Notes in accordance
with the rules and procedures of the Depositary and this Indenture. In addition,
Definitive Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for any Global
Note, or that it will cease to be a "Clearing Agency" under the Exchange Act,
and in either case a successor Depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a written request from the Depositary
to issue Definitive Notes.
(c) Issuance of Definitive Notes. In connection with any transfer or
exchange of a portion of the beneficial interest in any Global Note to
beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more
Definitive Notes are to be issued) reflect on its books and records the date and
a decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Definitive Note of like tenor and principal amount of
authorized denominations.
(d) Surrender of Global Notes. In connection with the transfer of
Global Notes as an entirety to beneficial owners pursuant to paragraph (b), the
Global
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25
Notes shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount at
maturity of Definitive Notes of like tenor of authorized denominations.
(e) Private Placement Legend. Any Definitive Note delivered in exchange
for an interest in a Global Note pursuant to subparagraph (b), (c) or (d) of
this Section 2.06 shall, except as otherwise provided by Section 2.13 hereof,
bear the Private Placement Legend.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
Broker-Dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes
and Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially
the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE
<PAGE> 138
26
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS
OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES
AND OTHER JURISDICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to Section 2.06(f) or in
accordance with any of Section 2.13(d)(i) - (iii) (and all
Notes issued in exchange therefor or substitution thereof)
shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE,
(II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in substantially
the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED
<PAGE> 139
27
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN)."
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
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28
(v) The Registrar shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (c) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance
<PAGE> 141
29
with the provisions hereof, and those described in this Section as not
outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease
to be outstanding because the Company or an Affiliate of the Company holds the
Note; however, Notes held by the Company or a Subsidiary of the Company shall
not be deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of any thereof) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes
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30
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13. SPECIAL TRANSFER PROVISIONS.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following additional provisions shall apply with respect to the registration of
any proposed transfer of a Note to any Institutional Accredited Investor which
is not a QIB:
(i) the Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the Resale Restriction Termination Date or
(y) the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit C hereto and any legal
opinions and certifications required thereby;
(ii) if the proposed transferor is a Participant seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
(x) written instructions given in accordance with the Depositary's and
the Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any
required legal opinions and certifications, the Registrar shall
register the transfer and reflect on its books and records the date and
a decrease in the principal amount of the Global Note from which such
interests are to be transferred in an amount equal to
<PAGE> 143
31
the principal amount of the Notes to be transferred and the Company
shall execute and upon the order of the Company accompanied by an
Officers' Certificate, the Trustee shall authenticate Definitive Notes
in a principal amount equal to the principal amount of the Global Notes
to be transferred.
(b) Transfers to Non-U.S. Persons. The following additional provisions
shall apply with respect to the registration of any proposed transfer of an
Initial Note to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Initial
Note, whether or not such Note bears the Private Placement Legend, if
(x) the requested transfer is after the Resale Restriction Termination
Date or (y) the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto;
(ii) if the proposed transferee is a Participant and the Notes
to be transferred consist of Definitive Notes which after transfer are
to be evidenced by an interest in the Regulation S Global Note upon
receipt by the Registrar of (x) written instructions given in
accordance with the Depositary's and the Registrar's procedures and (y)
the appropriate certificate, if any, required by clause (y) of
paragraph (i) above, together with any required legal opinions and
certifications, the Registrar shall register the transfer and reflect
on its books and records the date and an increase in the principal
amount of the Regulation S Global Note in an amount equal to the
principal amount of Definitive Notes to be transferred, and the Trustee
shall cancel the Definitive Notes so transferred;
(iii) if the proposed transferor is a Participant seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
(x) written instructions given in accordance with the Depositary's and
the Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any
required legal opinions and certifications, the Registrar shall
register the transfer and reflect on its books and records the date and
(A) a decrease in the principal amount of the Global Note from which
such interests are to be transferred in an amount equal to the
principal amount of the Notes to be transferred and (B) an increase in
the principal amount of the Regulation S Global Note in an amount equal
to the principal amount of the Global Note to be transferred; and
(iv) until the first day after the end of the Restricted
Period, an owner of a beneficial interest in the Regulation S Temporary
Global Note may not transfer such interest to a transferee that is a
U.S. person or for the account or benefit of a U.S. person within the
meaning of Rule 902(o) of the Securities Act. During the Restricted
Period, all beneficial interests in the Regulation S Temporary Global
Note shall be transferred only through Cedel
<PAGE> 144
32
or Euroclear, either directly if the transferor and transferee are
participants in such systems, or indirectly through organizations that
are participants, in accordance with (x) the written instructions given
in accordance with the Depositary's, Euroclear or Cedel's and the
Registrar's procedures and (y) if the proposed transferor has delivered
to the Registrar a certificate substantially in the form of Exhibit D
hereto; and
(v) upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Temporary Global Note may be
exchanged for interests in the Regulation S Permanent Global Note upon
certification to the Registrar that such interest are owned either by
Non-U.S. Persons or U.S. Persons who purchased such interests pursuant
to an exemption from, or transfer not subject to, the registration
requirements of the Securities Act.
Upon the expiration of the Restricted Period, the Company shall prepare
and execute the Regulation S Permanent Global Note in accordance with
the terms of this Indenture and deliver it to the Trustee for
authentication. The Trustee shall retain the Regulation S Permanent
Global Note as custodian for the Depositary. Any transfers of
beneficial ownership interests in the Regulation S Temporary Global
Note made in reliance on Regulation S shall thenceforth be recorded by
the Trustee by making an appropriate increase in the principal amount
of the Regulation S Permanent Global Note and a corresponding decrease
in the principal amount of the Regulation S Temporary Global Note. At
such time as the principal amount of the Regulation S Temporary Global
Note has been reduced to zero, the Trustee shall cancel the Regulation
S Temporary Global Note and deliver it to the Company.
(c) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note to a QIB
(excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the Resale Restriction Termination Date or
(y) such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed a certification stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing
the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account
is a QIB within the meaning of Rule 144A, and is aware that the sale to
it is
<PAGE> 145
33
being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A;
(ii) if the proposed transferee is a Participant and the Notes
to be transferred consist of Definitive Notes which after transfer are
to be evidenced by an interest in the 144A Global Note, upon receipt by
the Registrar of written instructions given in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall
register the transfer and reflect on its book and records the date and
an increase in the principal amount of the 144A Global Note in an
amount equal to the principal amount of Definitive Notes to be
transferred, and the Trustee shall cancel the Definitive Note so
transferred; and
(iii) if the proposed transferor is a Participant seeking to
transfer an interest in a Global Note, upon receipt by the Registrar of
written instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall register the transfer and
reflect on its books and records the date and (A) a decrease in the
principal amount of the Global Note from which interests are to be
transferred in an amount equal to the principal amount of the Notes to
be transferred and (B) an increase in the principal amount of the 144A
Global Note in an amount equal to the principal amount of the Global
Note to be transferred.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 2.13 exist, (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (iii) such Note has been sold pursuant to an effective registration
statement under the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Definitive
Restricted Note or any interest in a Global Restricted Note pursuant to any
exemption from the registration requirements of the Securities Act other than as
provided for by Section 2.13(a), (b) and (c) hereof, the Registrar shall only
register such transfer or exchange if such transferor delivers an Opinion of
Counsel satisfactory to the Company and the Registrar that such transfer is in
compliance
<PAGE> 146
34
with the Securities Act and the terms of this Indenture; provided, however, that
the Company may, based upon the opinion of its counsel, instruct the Registrar
by order accompanied by an Officers' Certificate not to register such transfer
in any case where the proposed transferee is not a QIB, Non-U.S. Person or
Institutional Accredited Investor.
(f) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.06 hereof or this Section
2.13. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable prior written notice to the Registrar.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected
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35
shall be in amounts of $1,000 or whole multiples of $1,000; except that if all
of the Notes of a Holder are to be redeemed, the entire outstanding amount of
Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
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36
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Notes will be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 10 nor more than 30
days' notice, at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, to the
applicable redemption date.
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37
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
any Notes held by a Fixed Rate Holder shall not be subject to redemption at the
Company's option until the fifth anniversary of the Conversion Date, and from
and after the fifth anniversary of the Conversion Date the amount required to be
paid in redemption of any such Note shall be equal to the outstanding principal
amount thereof, PLUS any accrued but unpaid interest and Liquidated Damages
thereon, to the applicable redemption date, PLUS a premium equal to the product
of (a) the principal amount of such Note multiplied by (b) the percentage
calculated by multiplying (i) the Fixed Rate applicable to such Note by (ii) the
percentage set forth in the table below opposite the period in which such
redemption occurs:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
From and including August 31, 2005 through August 30, 2006 50%
From and including August 31, 2006 through August 30, 2007 33.33%
From and including August 31, 2007 through August 30, 2008 16.66%
From and including August 31, 2008 through August 30, 2009 0%
</TABLE>
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall
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38
purchase the principal amount of Notes required to be purchased pursuant to
Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer. Payment
for any Notes so purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
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39
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of
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10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
2% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with
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the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company shall file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
(b) In addition, for so long as any Notes remain outstanding, the
Company and the Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Any
materials required to be furnished to Holders of Notes by this Section 4.03
shall discuss, in reasonable detail, either on the face of the financial
statements included therein or in the footnotes thereto and in any Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if
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any, on the Notes is prohibited or if such event has occurred, a description of
the event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
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SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii), (iv), (v) and (vi) of the next succeeding paragraph), is
less than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the date of this
Indenture to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds
received by the Company since the date of this Indenture as a contribution to
its common equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or
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44
sale of Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of the
Company), plus (iii) to the extent that any Restricted Investment that was made
after the date of this Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness that is subordinated to the Notes or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of Indebtedness that is
subordinated to the Notes with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend (in cash or
otherwise) by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company; provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity Interests of the
Company or any Subsidiary shall not exceed $2.0 million in any twelve-month
period and no Default or Event of Default shall have occurred and be continuing
immediately after such transaction; or (vi) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, the Company
may declare and pay dividends in cash on or in respect of any of its Equity
Interests in an aggregate amount not to exceed $2.0 million paid in any period
of twelve (12) consecutive months.
The Board of Directors of the Company may designate any Restricted
Subsidiary (other than TransTechnology Engineered Components, LLC, a Delaware
limited liability company, or TransTechnology Canada Corporation, an Ontario
corporation) to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under clause (c) of this Section 4.07. All such
outstanding investments will be deemed to constitute investments in an amount
equal to the greatest of (x)
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the net book value of such investments at the time of such designation, (y) the
fair market value of such investments at the time of such designation and (z)
the original fair market value of such investments at the time they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any opinion or appraisal required by this
Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) the Senior Credit Facility as in effect as of the date of this Indenture,
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are not materially more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in the Senior Credit Facility as in effect on the date of
this Indenture as determined in good faith by the Company's Board of Directors,
(c) the Note Purchase Agreement, the Notes and the Subsidiary
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Guarantees, (d) applicable law, (e) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in leases and other
contracts, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) any agreement for the sale of a
Restricted Subsidiary or a substantial portion of a Restricted Subsidiary's
assets that restricts distributions by that Restricted Subsidiary pending its
sale, (i) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are not materially more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced as determined in good
faith by the Company's Board of Directors, (j) Liens securing Indebtedness
otherwise permitted to be incurred pursuant to the provisions of Section 4.12
that limit the right of the debtor to dispose of the assets securing such
Indebtedness, (k) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business and (l) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock (other than to a Company or
the Restricted Subsidiaries of the Company); provided, however, that the Company
and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt)
or issue shares of Disqualified Stock and the Company's Restricted Subsidiaries
may incur Indebtedness (including Acquired Debt) and issue any shares of
preferred stock (to the extent otherwise permitted by this Indenture) if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro
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forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of
Indebtedness and letters of credit (with letters of credit being deemed
to have a principal amount equal to the stated amount thereof) and
other obligations under Credit Facilities in an aggregate principal
amount that does not exceed at any one time $25.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied to repay
Indebtedness under a Credit Facility pursuant to Section 4.10 hereof
(other than temporary paydowns pending final application of such Net
Proceeds);
(ii) the incurrence by the Company and the Guarantors of the
Existing Indebtedness and letters of credit (including reimbursement
obligations with respect thereto) supporting Existing Indebtedness
whether such letters of credit are incurred under the Senior Credit
Facility or otherwise;
(iii) the incurrence by the Company of Indebtedness
represented by the Notes;
(iv) the incurrence by the Company or any of the Guarantors of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant
to this clause (iv), not to exceed $8.0 million at any time
outstanding;
(v) the incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that is permitted by this Indenture to
be incurred under the first paragraph hereof or clauses (ii) or (iii)
of this paragraph;
(vi) the incurrence by the Company or any of the Guarantors of
intercompany Indebtedness between or among the Company and any
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Guarantor; provided, however, that (i) if the Company is the obligor on
such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
Notes and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Guarantor thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Guarantor, as the case may be, that was not permitted by this clause
(vi);
(vii) the incurrence by the Company or any of the Guarantors
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(viii) the guarantee by the Company or any of its Subsidiaries
or any of the Guarantors of Indebtedness of the Company or another
Guarantor that was permitted to be incurred by another provision of
this Section 4.09;
(ix) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt, provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company that was not permitted by this
clause (ix), and the issuance of preferred stock by Unrestricted
Subsidiaries;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness pursuant to this clause
(x) not to exceed $5.0 million at any time outstanding); or
(xi) the incurrence by the Restricted Subsidiaries that are
not Guarantors of International Facility Loans under (and as defined
in) the Senior Credit Facility; provided that the aggregate principal
amount of all Indebtedness outstanding under such International
Facility Loans after giving effect to such incurrence does not exceed
an amount equal to $35.0 million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies
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with this Section 4.09. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges of the
Company as accrued (to the extent not already included in Fixed Charges).
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or the Subsidiary
Guarantees) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) in the case of any Asset Sale
constituting the transfer (by merger or otherwise) of all of the Capital Stock
of a Restricted Subsidiary, any liabilities (as shown on such Restricted
Subsidiary's most recent balance sheet) of such Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms subordinated
to the Notes or the Subsidiary Guarantees) that will remain outstanding after
such transfer and will not be a liability of the Company or any other Restricted
Subsidiary of the Company following such transfer and (z) any securities, notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are contemporaneously (subject to ordinary settlement
periods) converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Debt, (b) to the acquisition of a majority of the assets of, or a
majority of the Voting Stock of, another business, (c) the making of a capital
expenditure, or (d) the acquisition of other long-term assets, in each case, in,
or used or useful in, the same or a similar line of business as the Company or
one of its Subsidiaries was engaged in on the date of this Indenture or any
reasonable extension or expansion thereof. Pending
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the final application of any such Net Proceeds, the Company may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $5.0 million, the Company will be required to
make an offer to all Holders of Notes and all holders of other pari passu
Indebtedness containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes
and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
this Indenture and such other Indebtedness. To the extent that any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes and such other Indebtedness tendered
into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and such other Indebtedness
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following
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items shall not be deemed to be Affiliate Transactions: (i) any employment
agreement entered into by the Company or any of its Restricted Subsidiaries, or
loans or advances to any employees of the Company or any of its Restricted
Subsidiaries, in each case in the ordinary course of business and consistent
with reasonable commercial practices, (ii) transactions between or among the
Company and/or its Subsidiaries, (iii) payment of reasonable directors fees to
Persons who are not otherwise Affiliates of the Company, (iv) Restricted
Payments that are permitted by Section 4.07 hereof, and (v) Affiliate
Transactions existing on the date of this Indenture and permitted under the
terms of the Credit Facilities.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, securing
Indebtedness or trade payables, except Permitted Liens.
SECTION 4.13. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Notes, and (ii) no
Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
Senior Debt of such Guarantor and senior in any respect in right of payment to
the Subsidiary Guarantees.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
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SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within fifteen Business Days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being repurchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unrepurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.15, but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the repurchase of Notes required by
this Section 4.15. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section
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4.15 and Section 3.09 hereof and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.16. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall become a Guarantor and execute a
Supplemental Indenture and deliver an Opinion of Counsel, in accordance with the
terms of this Indenture; provided, that all Subsidiaries that have properly been
designated as Unrestricted Subsidiaries in accordance with this Indenture (i)
shall not be subject to the requirements of this Section 4.17 and (ii) shall be
released from all Obligations under any Subsidiary Guarantee, in each case for
so long as they continue to constitute Unrestricted Subsidiaries.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) except in the case of a merger or consolidation of the Company
with or into a Wholly Owned Restricted Subsidiary of the Company, the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Registration
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Rights Agreement, the Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger or consolidation of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, the Company or the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes (whether or not
prohibited by the subordination provisions of this Indenture);
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(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of this Indenture);
(c) failure by the Company or any of its Subsidiaries for 30 days after
notice to comply with any of the provisions of Sections 4.07, 4.09, 4.10, 4.15
or 5.01 hereof;
(d) the Company or any of its Subsidiaries fails to comply with any
other covenant, representation, warranty or other agreement in this Indenture or
the Notes for 60 days after notice;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
Guarantee now exists, or is created after the date of this Indenture, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness the maturity of which
has been so accelerated, aggregates $5.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5.0 million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
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(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee is
held in any judicial proceeding to be unenforceable or invalid in any material
respect or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least a majority in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable without further action or notice. Holders of the Notes may not
enforce this Indenture or the Notes except as provided in this Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
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relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may,
subject to Article 10, pursue any available remedy to collect the payment of
principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on the Notes (including any waiver obtained in connection with a purchase of,
tender offer or exchange offer for Notes)(provided, however, that the Holders of
a majority in aggregate principal amount of the then outstanding Notes may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability.
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SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least a majority in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture and subject to
Article 10 and Section 11.02, the right of any Holder of a Note to receive
payment of principal, premium and Liquidated Damages, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection,
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including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall,
subject to Article 10, pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
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(c) The Trustee may not be relieved from liabilities for its own bad
faith, negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or
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Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default, in good faith, relating to the payment of principal or
interest on any Note, the Trustee may withhold the notice if it determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its gross
negligence, willful misconduct or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
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SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8.
[INTENTIONALLY OMITTED]
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may (subject to Section 10.14) amend or supplement this Indenture or the
Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's (and Guarantors')
obligations to the Holders of the Notes in the case of a merger or consolidation
or sale of all or substantially all of the Company's (and Guarantors') assets
pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; and
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to
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enter into such amended or supplemental Indenture that affects its own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02 and in Section 10.14, the
Company and the Trustee may amend or supplement this Indenture (including
Section 3.09, 4.10 and 4.15 hereof), or the Notes and any Subsidiary Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding voting as a single
class (including, without limitation, consents obtained in connection with a
purchase of, tender offer or exchange offer for, Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a purchase of, tender offer or exchange offer for,
Notes). Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder
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affected, an amendment or waiver under this Section 9.02 may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes except as
provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes; or
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof or make any change in
Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of this
Indenture (which relate to subordination) will require the consent of the
Holders of at least 75% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may
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revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness, interest and other Obligations of any kind evidenced by the
Notes and this Indenture is subordinated in right of payment, to the extent and
in the manner provided in this Article 10, to the prior payment in full in cash
of all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.
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SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Senior Credit Facility and (ii) any other Senior Debt permitted under this
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt"; provided, however,
that so long as the Senior Credit Facility remains in effect, lenders holding a
majority in aggregate amount of the loan commitments thereunder shall have
consented, in writing, to such designation of additional Indebtedness as
Designated Senior Debt.
"Permitted Junior Securities" means Equity Interests in the Company or
any Guarantor or debt securities that are unsecured and subordinated to all
Senior Debt (and any debt securities issued in exchange for Senior Debt) to at
least the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt pursuant to this Indenture (without limiting the
forgoing, such Permitted Junior Securities shall have no required principal
payments or equity redemption requirements until after the final maturity of all
Senior Debt).
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Senior Debt" means (i) all principal, premium, interest, fees,
expenses and other obligations or liabilities of any kind together with
available undrawn amounts under letters of credit issued or guaranteed under the
Senior Credit Facility (including, without limitation, post-petition interest
whether or not allowed as a claim in any bankruptcy, reorganization, insolvency,
receivership or similar proceeding) with respect to Indebtedness outstanding
under Credit Facilities and all Hedging Obligations with respect thereto, (ii)
any other Indebtedness permitted to be incurred by the Company under the terms
of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes and (iii) all Obligations with respect to the foregoing.
Senior Debt will not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company to
any of its Subsidiaries or other Affiliates, excluding any Indebtedness owed to
any Affiliate that was incurred prior to such Person becoming an Affiliate in
connection with the acquisition by the Company or any Subsidiary of a business
or Person from such Affiliate, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of this Indenture.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company or any Guarantor
whether in cash, properties, securities or otherwise, in a liquidation or
dissolution of the Company or any Guarantor or in a bankruptcy, reorganization,
insolvency,
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receivership or similar proceeding relating to the Company, any Guarantor, or
their property, an assignment for the benefit of creditors or any marshaling of
the Company's or any Guarantor's assets and liabilities, the holders of Senior
Debt shall be entitled to receive payment in full in cash of all Obligations due
in respect of such Senior Debt (including interest after the commencement of any
such proceeding at the rate specified in the applicable Senior Debt whether or
not allowed as a claim in any such proceeding) before the Holders of Notes will
be entitled to receive any payment with respect to the Notes or under the
Subsidiary Guarantee, and until all Obligations with respect to Senior Debt are
paid in full in cash, any distribution to which the Holders of Notes would be
entitled shall be made to the holders of Senior Debt (except that Holders of
Notes may receive and retain Permitted Junior Securities and payments made from
the trust created pursuant to Article 8 hereof).
To the extent any payment of Senior Debt (whether by or on behalf of
the Company or any Subsidiary, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation to
repay any Senior Debt is declared to be fraudulent, invalid, or otherwise set
aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligations so declared fraudulent, invalid or otherwise
set aside (and all other amounts that would come due with respect thereto had
such obligation not been affected) shall be deemed to be reinstated and
outstanding as Senior Debt for all purposes hereof as if such declaration,
invalidity or setting aside had not occurred.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company and the Guarantors also may not make any payment upon or in
respect of the Notes or the Subsidiary Guarantees (except in Permitted Junior
Securities or from the trust created pursuant to Article 8 hereof) if (i) a
default in the payment of the principal of, premium, if any, or interest on
Senior Debt occurs and is continuing or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that currently, or with the
passage of time or giving of notice, permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and, in the
case of any such default described in this clause (ii), the Trustee receives a
notice of such default of the type referred to in this clause (ii) (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior Debt.
Payments on the Notes may and shall be resumed (a)
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in the case of a payment default, upon the date on which such default is cured
or waived in writing by the holders of the applicable Senior Debt and (b) in
case of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived in writing by the holders of Designated Senior Debt
or 179 days after the date on which the applicable Payment Blockage Notice is
received by the Trustee, unless the maturity of any Designated Senior Debt has
been accelerated. No new period of payment blockage may be commenced under
clause (ii) above unless and until (i) 360 days have elapsed since the initial
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal of, premium, if any, and interest on the Notes
that have come due have been paid in full in cash. No nonpayment default that
existed and was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived in writing or cured
for a period of not less than 90 days. In the event that the Company or any
Guarantor makes any payment to the Trustee or any Holder of any Note prohibited
by the foregoing, such payment will be required to be held in trust for and paid
over to the holders of Senior Debt (or the representative thereof). The Trustee
and the Holders of the Notes will not challenge or contest the enforceability or
validity of the Senior Credit Facility or any obligation, Lien or encumbrance
thereunder.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Sections
10.03 or 10.04 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in cash in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee
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shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and
shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person money
or assets to which any holders of Senior Debt shall be entitled by virtue of
this Article 10, except if such payment is made as a result of the bad faith or
willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full in cash and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
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SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Trustee and Holders agree that they will not challenge the validity,
enforceability or perfection of any Senior Debt or the liens, guarantees and
security interests securing the same and that as between the holders of the
Senior Debt on the one hand and the Trustee and Holders on the other, the terms
hereof shall govern even if all or part of the Senior Debt or such liens and
security interests are avoided, disallowed, subordinated, set aside or otherwise
invalidated in any judicial proceeding or otherwise, regardless of the theory
upon which such action is premised.
Without in any way limiting the generality of this section 10.10, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder of
the Holders to the holders of Senior Debt, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Debt, the Senior Credit Facility or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding or
secured: (b) sell, exchange, release, foreclose against or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Debt; (c) release
any Person liable in any manner for the collection of Senior Debt; and (d)
exercise or refrain from exercising any rights against the Company, any
Subsidiary thereof or any other Person.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
any Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative(s) or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, all holders of the Senior Debt and other Indebtedness of the
Company, the amount
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thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10 and the subordination of the Subsidiary Guarantees as provided in
Section 11.02, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes, including, in the event of any dissolution,
winding up, liquidation or reorganization of the Company or any Subsidiary
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise),
the filing of a claim for the unpaid balance of its Notes in the form required
in those proceedings. If the Trustee does not file a proper proof of claim or
proof of debt in the form required in any proceeding referred to in Section 6.09
hereof at least 30 days before the expiration of the time to file such claim,
the Representatives are hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 or Section 11.02 or 11.06 (including,
without limitation, any definitions or other sections included by reference or
incorporation or the terms and conditions of the Subsidiary Guarantees) shall
not be amended or modified without the written consent of the holders of all
Senior Debt.
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ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
<PAGE> 189
77
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article 11 shall be junior and subordinated to the prior
payment in full in cash of the Senior Debt of such Guarantor on the same basis
as the Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
<PAGE> 190
78
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President, Treasurer or one of its Vice Presidents. Further, the Company shall
cause all future Guarantors to execute a Supplemental Indenture substantially in
the form of Exhibit F.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.17 hereof the
Company shall cause such Subsidiaries to execute supplemental indentures to this
Indenture and Subsidiary Guarantees in accordance with Section 4.17 hereof and
this Article 11, to the extent applicable; provided, that all Subsidiaries that
have properly been designated as Unrestricted Subsidiaries in accordance with
this Indenture (i) will not be subject to the requirements of Section 4.17
hereof and (ii) will be released from all Obligations under any Subsidiary
Guarantee, in each case for so long as they continue to constitute Unrestricted
Subsidiaries.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or other
entity whether or not affiliated with such Guarantor unless (i) subject to the
provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture, in form and
substance reasonably satisfactory to the Trustee, under the Notes, the Indenture
and the Registration Rights Agreement; (ii) immediately after giving effect to
such transaction, no
<PAGE> 191
79
Default or Event of Default exists; and (iii) except in the case of a merger of
a Guarantor with or into another Guarantor or a merger of a Guarantor with or
into the Company, the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS OR CAPITAL STOCK.
In the event of a sale or other disposition of all or substantially all
of the assets of any Guarantor (other than to the Company or another Guarantor),
by way of merger, consolidation or otherwise, or a sale or other disposition of
all of the Capital Stock of any Guarantor (other than to the Company or another
Guarantor), then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee and any such acquiring corporation will not be required to assume any
obligations of such Guarantor under the applicable Subsidiary Guarantee;
provided that such sale or other disposition complies with all applicable
provisions of this Indenture including, without limitation, Section 4.10 or
Article 10 hereof. The Trustee will provide any written confirmation or evidence
of the termination of such Subsidiary Guarantee as reasonably required by the
Representative.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the other's address
<PAGE> 192
80
If to the Company and/or any Guarantor:
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07938
Telecopier No.: (908) 903-1616
Attention: General Counsel
With a copy to:
Hahn Loeser & Parks LLP
3300 BP Tower
200 Public Square
Cleveland, OH 44114
Telecopier No. (216) 241-2825
Attention: Ronald F. O'Keefe
If to the Trustee:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02101
Telecopier No. (617)-662-1465
Attention: Thomas Belamarich
Re: TransTechnology Corporation
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice
<PAGE> 193
81
or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE> 194
82
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION. 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the
Subsidiary Guarantees, this Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
<PAGE> 195
83
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE> 196
Dated as of ______, _____ SIGNATURES:
THE COMPANY:
TRANSTECHNOLOGY CORPORATION
By: /s/ Joseph F. Spanier
-----------------------------------
Name:Joseph F. Spanier
Title: Vice President
THE GUARANTORS:
TRANSTECHNOLOGY ACQUISITION CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
PALNUT FASTENERS, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
INDUSTRIAL RETAINING RING COMPANY
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
RETAINERS, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 197
RANCHO TRANSTECHNOLOGY CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SYSTEMS & SERVICES, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELECTRONIC CONNECTIONS AND
ASSEMBLIES, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INDUSTRIES
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INTERNATIONAL SALES, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 198
TRANSTECHNOLOGY SEEGER, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SEEGER INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TCR CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
NORCO, INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
AEROSPACE RIVET MANUFACTURERS CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELLISON RING & WASHER INC.
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 199
TRANSTECHNOLOGY ENGINEERED
COMPONENTS, LLC
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY CANADA CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY INTERNATIONAL
CORPORATION
By: /s/ Gerald C. Harvey
-----------------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 200
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE
By: /s/ Jill Olson
-----------------------------------
Name: JILL OLSON
Title: Vice President
<PAGE> 201
EXHIBIT A-1
(Face of Note)
=============================================================================
CUSIP:
[Series A] [Series B] Senior Subordinated Notes due 2009
No.: $_____________
TransTechnology Corporation
promises to pay to____________________________________________________________
or registered assigns,
the principal sum of__________________________________________________________
Dollars on __________, 2009.
Interest Payment Dates: August 31, November 30, February 28 and May 31
Record Dates: August 15, November 15, February 14 and May 15
DATED: ____________, 200_
TRANSTECHNOLOGY CORPORATION
BY:____________________________
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:_____________________________
Name:
Title:
==============================================================================
<PAGE> 202
(Back of Note)
[Series A] [Series B] Senior Subordinated Notes due 2009
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. TransTechnology Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at [if
Fixed Rate, insert applicable Fixed Rate] [the Variable Rate, as such term is
defined in the Indenture to which this Note is subject] per annum from
_____________ until maturity and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages semi-annually on August 31,
November 31, February 28 and May 31 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand to the extent lawful at a rate that is 2% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the August 15, November
15, February 14, or May 15 next preceding the Interest Payment Date, even if
such Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. Principal, premium, if any, and
<PAGE> 203
interest and Liquidated Damages on the Notes will be payable at the office or
agency of the Company maintained for such purpose or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders of the Notes at their respective addresses set forth in the
register of Holders of Notes; provided that all payments of principal, premium,
interest and Liquidated Damages with respect to Notes the Holders of which have
given wire transfer instructions to the Company prior to the Record Date will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The Notes will be issued in denominations
of $1,000 and integral multiples thereof. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE AND SUBORDINATION. The Company issued the Notes
under an Indenture dated as of August 31, 2000 ("the Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are general unsecured
obligations of the Company limited to $75.0 million in aggregate principal
amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. OPTIONAL REDEMPTION.
(a) The Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 10 nor more than
30 days' notice, at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon and Liquidated
<PAGE> 204
Damages under and as defined in the Registration Rights Agreement referred to
below with respect thereto, to the applicable redemption date.
(b) Notwithstanding the provisions of clause (a), any Notes held
by a Fixed Rate Holder (as defined in the Indenture) shall not be subject to
redemption at the Company's option until August 31, 2005, and from and after
August 31, 2005 the amount required to be paid in redemption of any such Note
shall be equal to the outstanding principal amount thereof, PLUS any accrued but
unpaid interest and Liquidated Damages thereon, to the applicable redemption
date, PLUS a premium equal to the product of (i) the principal amount of such
Note multiplied by (ii) the percentage calculated by multiplying (A) the fixed
interest rate applicable to such Note by (B) the percentage set forth in the
table below opposite the period in which such redemption occurs:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
From and including August 31, 2005 through August 30, 2006 50%
From and including August 31, 2006 through August 30, 2007 33.33%
From and including August 31, 2007 through August 30, 2008 16.66%
From and including August 31, 2008 through August 30, 2009 0%
</TABLE>
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Notes will
have the right to require the Company to make an offer (a "Change of Control
Offer") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the "Change of
Control Payment"). Within 15 Business Days following any Change of Control, the
Company will mail a notice to each Holder describing the
<PAGE> 205
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates any
Asset Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million
the Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed by
first class mail at least 10 days but not more than 30 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
<PAGE> 206
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note
may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes) and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation, or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) default in payment when due of principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (iii) failure by the Company or any of its Subsidiaries for
30 days after notice to comply with Section 4.07,
<PAGE> 207
4.09, 4.10 or 4.15 of the Indenture; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to comply with any of its other agreements
in the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now
exists, or is created after the date of the Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been so
accelerated, aggregates $5.0 million or more (other than Existing Indebtedness
to the extent it is secured by or paid by the drawing against a letter of credit
permitted to be issued under the Indenture); (vi) failure by the Company or any
of its Restricted Subsidiaries to pay final judgments aggregating in excess of
$5.0 million, which judgments are not paid, discharged or stayed for a period of
60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries as set forth in the Indenture;
and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid in any
material respect or shall cease for any reason to be in full force and effect or
any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least a
majority in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency as set forth in the Indenture, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries, that taken together would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver
<PAGE> 208
to the Trustee annually a statement regarding compliance with the Indenture, and
the Company is required, upon becoming aware of any Default or Event of Default,
to deliver to the Trustee a statement specifying such Default or Event of
Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees, the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of August 31, 1999, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience
<PAGE> 209
to Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07893
Attention: General Counsel
<PAGE> 210
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date: Your Signature:
------------- ---------------------------
(Sign exactly as your name
appears on the Note)
SIGNATURE GUARANTEE:
- ---------------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 211
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:
----------------------- ---------------------
(Sign exactly as your
name appears on the Note)
Tax Identification No.:
-------------
SIGNATURE GUARANTEE:
- --------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 212
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE(1)
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Signature of
Principal Principal Global Note authorized
Amount of Amount of following such decrease officer of
Date of this Global this Global decrease(or Trustee or
Exchange Note Note increase) Custodian
-------- ---- ---- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------------------------
(1) This should be included only if the Note is issued in global form.
<PAGE> 213
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
===============================================================================
CUSIP: _________
[Series A] [Series B] Senior Subordinated Notes due 2009
No. ______ $__________
TransTechnology Corporation
promises to pay to_____________________________________________________________
or registered assigns,
the principal sum of ________________________________________________________
Dollars on ________________, 2009.
Interest Payment Dates: August 31, November 30, February 28 and May 31
Record Dates: August 15, November 15, February 14 and May 15
DATED:__________________, 1999
TRANSTECHNOLOGY CORPORATION
By:
---------------------------
Name:
Title:
[(SEAL)]
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:__________________________
Name:
Title:
===============================================================================
<PAGE> 214
A2-2
(Back of Regulation S Temporary Global Note)
[Series A] [Series B] Senior Subordinated Notes due 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL
ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.
<PAGE> 215
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. TransTechnology Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at [if
Fixed Rate insert applicable Fixed Rate][the Variable Rate, as such term is
defined in the Indenture to which this Note is subject] per annum from
________________________ until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages quarterly on August
31, November 31, February 28 and May 31 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand to the extent lawful at a rate that is 2% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the August 15, November
15, February 14, or May 15 next preceding the Interest Payment Date, even if
such Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. Principal, premium, if any, and interest and Liquidated
Damages on the Notes will be payable at the office or
<PAGE> 216
agency of the Company maintained for such purpose or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check mailed
to the Holders of the Notes at their respective addresses set forth in the
register of Holders of Notes; provided that all payments of principal, premium,
interest and Liquidated Damages with respect to Notes the Holders of which have
given wire transfer instructions to the Company prior to the Record Date will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The Notes will be issued in denominations
of $1,000 and integral multiples thereof. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE AND SUBORDINATION. The Company issued the Notes under an
Indenture dated as of August 31, 2000 ("Indenture") between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement
of such terms. To the extent any provision of this Note conflicts with the
express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are general unsecured obligations of the
Company limited to $75.0 million in aggregate principal amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. OPTIONAL REDEMPTION.
(a) The Notes will be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 10 nor more than 30
days' notice, at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon and Liquidated Damages under
and as defined in the Registration Rights Agreement referred to below with
respect thereto, to the applicable redemption date.
<PAGE> 217
A2-5
(b) Notwithstanding the provisions of clause (a), any Notes held by a
Fixed Rate Holder (as defined in the Indenture) shall not be subject to
redemption at the Company's option until August 31, 2005, and from and after
August 31, 2005 the amount required to be paid in redemption of any such Note
shall be equal to the outstanding principal amount thereof, PLUS any accrued but
unpaid interest and Liquidated Damages thereon, to the applicable redemption
date, PLUS a premium equal to the product of (i) the principal amount of such
Note multiplied by (ii) the percentage calculated by multiplying (A) the fixed
interest rate applicable to such Note by (B) the percentage set forth in the
table below opposite the period in which such redemption occurs:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
From and including August 31, 2005 through August 30, 2006 50%
From and including August 31, 2006 through August 30, 2007 33.33%
From and including August 31, 2007 through August 30, 2008 16.66%
From and including August 31, 2008 through August 30, 2009 0%
</TABLE>
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Notes will have the
right to require the Company to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 15 Business Days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Notes on the date specified in
such notice, which date shall be
<PAGE> 218
A2-6
no earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first
class mail at least 10 days but not more than 30 days before the redemption date
to each Holder of Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. Notes in denominations larger than $1,000 may
be redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date interest
ceases to accrue on Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may
<PAGE> 219
A2-7
be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company or the Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Company or the Registrar is not required to transfer or exchange any Notes
for a period of 15 days before a selection of Notes to be redeemed.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes) and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or Liquidated Damages
<PAGE> 220
A2-8
with respect to the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of principal of
or premium, if any, on the Notes (whether or not permitted by the subordination
provisions of the Indenture); (iii) failure by the Company or any of its
Subsidiaries for 30 days after notice to comply with Section 4.07, 4.09, 4.10 or
4.15 of the Indenture; (iv) failure by the Company or any of its Subsidiaries
for 60 days after notice to comply with any of its other agreements in the
Indenture or the Notes or (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now
exists, or is created after the date of the Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been so
accelerated, aggregates $5.0 million or more (other than Existing Indebtedness
to the extent it is secured by or paid by the drawing against a letter of credit
permitted to be issued under the Indenture); (vi) failure by the Company or any
of its Restricted Subsidiaries to pay final judgments aggregating in excess of
$5.0 million, which judgments are not paid, discharged or stayed for a period of
60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries as set forth in the Indenture;
and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid in any
material respect or shall cease for any reason to be in full force and effect or
any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least a
majority in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency as set forth in the Indenture, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries, that taken together would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a
<PAGE> 221
A2-9
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees, the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of August 31, 1999, between the Company and the parties named
on the signature pages thereof (the "Registration Rights Agreement").
<PAGE> 222
A2-10
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07893
Attention: General Counsel
<PAGE> 223
A2-11
(Assignment Form)
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date: _____________________ Your Signature: _______________________________
(Sign exactly as your name
appears on the Note)
SIGNATURE GUARANTEE:
- -------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 224
A2-12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
- -------------------------------------------------------------------------------
Date: Your Signature:
------------------------ -------------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No.:
-----------------
SIGNATURE GUARANTEE:
- --------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 225
A2-13
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE(2)
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Signature of
Principal Principal Global Note authorized
Amount of Amount of following such decrease officer of
Date of this Global this Global decrease(or Trustee or
Exchange Note Note increase) Custodian
-------- ---- ---- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------------------------
(2) This should be included only if the Note is issued in global form.
<PAGE> 226
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07893
Attention: General Counsel
[Registrar address block]
Re: Series Senior Subordinated Notes due 2009
---------------------------------------------
Reference is hereby made to the Indenture, dated as of _____________
(the "INDENTURE"), between TransTechnology Corporation, as issuer (the
"COMPANY"), and State Street Bank and Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "TRANSFEREE"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement
<PAGE> 227
B-2
Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed in,
on or through the facilities of a designated offshore securities market and
neither such transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an initial purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF
THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
<PAGE> 228
B-3
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Global Note and/or the Definitive Notes and in
the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend
<PAGE> 229
printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated: ______________________,
<PAGE> 230
B-5
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] Regulation S Global Note (CUSIP__________), or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note
(CUSIP ________), or
(iii) [ ] Unrestricted Global Note
(CUSIP ________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE> 231
EXHIBIT C
---------
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07938
Attention: General Counsel
Ladies and Gentlemen:
In connection with our proposed purchase of $_________
aggregate principal amount of the Series ____ Senior Subordinated Notes due 2009
(the "Notes") of TransTechnology Corporation (the "Company"), we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Notes to offer, sell or otherwise transfer such Notes prior to (x)
the date which is two years (or such shorter period of time as permitted by Rule
144 under the Securities Act) after the later of the date of original issue of
the Notes being acquired or any predecessor to such Notes or the last date on
which the Company or any affiliate of the Company was the owner of the Notes
being acquired or any predecessor of such Notes or (y) such later date, if any,
as may be required by any subsequent change in applicable law (the "Resale
Restriction Termination Date") only (a) to the Company or a subsidiary thereof,
(b) pursuant to a registration statement which has been declared effective under
the Securities Act, (c) so long as the Notes are eligible for resale pursuant to
Rule 144A under the Securities Act, to a person we reasonably believe is a
"qualified institutional buyer" under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States to "foreign purchasers" (as defined
below) in offshore transactions meeting the requirements of Rule 904 of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act (an "Accredited Investor") that is purchasing for its
own account or for the account of such an institutional "accredited investor" in
each case in a minimum principal amount of the Notes of $250,000, for investment
purposes and not with a
<PAGE> 232
C-2
view to or for offer or sale in connection with any distribution in violation of
the Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, in each case in accordance with
applicable securities laws of any state of the United States or any other
applicable jurisdiction, subject, in each of the foregoing cases, to any
requirement of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control and to
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Trustee, which shall provide, among other things, that the
transferee is an Accredited Investor within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act and that it is acquiring
such Notes for investment purposes and not for distribution in violation of the
Securities Act. Each purchaser acknowledges that the Company, the Trustee and
the Transfer Agent and Registrar reserve the right prior to any offer, sale or
other transfer prior to the Resale Restriction Termination Date of the Notes
pursuant to clause (d), (e) or (f) above to require the delivery of an opinion
of counsel, certification and/or other information satisfactory to the Company
and the Trustee.
2. We are an Accredited Investor purchasing Notes for our own account
or for the account of one or more QIBs or Accredited Investors, and we are
acquiring the Notes for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act
or the securities laws of any state of the United States and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment in the Notes for an indefinite period.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion and we and any such account are (a) a QIB, aware that the sale is
being made in reliance on Rule 144A under the Securities Act, (b) an Accredited
Investor, or (c) a person other than a U.S. person ("foreign purchasers"), which
term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust) in offshore transactions meeting the requirements of Rules
903 and 904 of Regulation S under the Securities Act.
<PAGE> 233
C-3
4. We have received a copy of the Offering Memorandum and acknowledge
that we have had access to such financial and other information, and have been
afforded the opportunity to ask such questions of representatives of the Company
and receive answers thereto, as we deem necessary in order to verify the
information contained in the Offering Memorandum.
5. We are not purchasing the Notes for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of ERISA, except as may be permitted under ERISA and as described under "Notice
to Investors" in the Offering Memorandum.
6. In the event that we purchase any Notes, we will acquire Notes
having an outstanding principal amount of at least $250,000 for our own account
and $250,000 for each account for which we are acting.
We understand that the Trustee and the Transfer Agent will not
be required to accept for registration of transfer any Notes acquired by us,
except upon presentation of evidence satisfactory to the Company and the Trustee
that the foregoing restrictions on transfer have been complied with. We further
understand that the Notes purchased by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of the first paragraph of this letter. We further agree to provide
to any person acquiring any of the Notes from us a notice advising such person
that transfers of such Notes are restricted as stated herein and that
certificates representing such Notes will bear a legend to that effect.
We represent that you, the Company, the Trustee and others are
entitled to rely upon the truth and accuracy of our acknowledgements,
representations and agreements set forth herein, and we agree to notify you
promptly in writing if any of our acknowledgements, representations or
agreements herein cease to be accurate and complete. You are also irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
We represent to you that we have full power to make the
foregoing acknowledgements, representations and agreements on our own behalf and
on behalf of any investor account for which we are acting as fiduciary agent.
As used herein, the terms "offshore transaction," "United
States" and "U.S. person" have the respective meanings given to them in
Regulation S under the Securities Act.
<PAGE> 234
C-4
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By:____________________
Date:__________________
Upon transfer, the Securities would be registered in the name of the new
beneficial owner.
<PAGE> 235
EXHIBIT D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
------------------------
State Street Bank and Trust Company
Corporate Trust Department
2 Avenue de Lafayette, 6th Floor
Boston, MA 02111
Re: TransTechnology Corporation (the "Company")
Series ___ Senior Subordinated Notes
due 2009 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $______ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes;
<PAGE> 236
D-2
(6) if the circumstances set forth in Rule 904(c) under the Securities
Act are applicable, we have complied with the additional conditions therein,
including (if applicable) sending a confirmation or other notice stating that
the Notes may be offered and sold during the restricted period specified in Rule
903(c)(2) or (3), as applicable, in accordance with the provisions of Regulation
S; pursuant to registration of the Notes under the Securities Act; or pursuant
to an available exemption from the registration requirements under the
Securities Act; and
(7) if the sale is made during a restricted period and the provisions
of Rule 903(c)(3) are applicable thereto, we confirm that such sale has been
made in accordance with such provisions.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:________________________
Authorized Signature
<PAGE> 237
EXHIBIT E
FORM OF SUBORDINATED SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture dated as of August 31, 2000
(the "Indenture") among TransTechnology Corporation, the Guarantors listed on
the signature page thereto, and State Street Bank and Trust Company, as trustee
(the "Trustee"), and subject to the provisions in the Indenture, (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to this Subsidiary Guarantee and
the Indenture are expressly set forth in Article 11 of the Indenture and
reference is hereby made to the Indenture for the precise terms of this
Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.
The terms of Articles 10 and 11 of the Indenture are incorporated
herein by reference.
[Name of Guarantor]
By:________________________
Name:
Title:
<PAGE> 238
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of TransTechnology Corporation (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and State Street Bank and Trust
Company, as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of _______________ providing
for the issuance of an aggregate principal amount of up to $75.0 million of
Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all Guarantors named in the Indenture, to jointly
and severally Guarantee to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its
<PAGE> 239
F-2
successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the obligations
of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity,
by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on
the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid
in full or performed, all in accordance with the
terms hereof and thereof; and
(ii) in case of any extension of time of payment or
renewal of any Notes or any of such other
obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity,
by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall
be jointly and severally obligated to pay the same
immediately.
(b) The obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or
the Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same
or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and
all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes
and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official
acting in
<PAGE> 240
relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right
of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided
in Article 6 of the Indenture for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution from
any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.
(i) The obligations hereunder shall be subject to the
subordination provisions set forth in Article 10 of the
Indenture.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the
Subsidiary Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc., on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or
merge with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not affiliated
with such Guarantor unless:
(i) subject to Section 11.05 and 11.06 of the Indenture,
the Person formed by or surviving any such
consolidation or merger (if other than a Guarantor or
the Company)
<PAGE> 241
F-4
unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the
Subsidiary Guarantee on the terms set forth herein or
therein;
(ii) immediately after giving effect to such transaction,
no Default or Event of Default exists; and
(iii) except in the case of a merger of a Guarantor with or
into another Guarantor or a merger of a Guarantor
with or into the Company, the Company would be
permitted by virtue of the Company's pro forma Fixed
Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least $1.00
of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in Section 4.09
of the Indenture.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Subsidiary
Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the
Indenture to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein
as a Guarantor. Such successor corporation thereupon may cause
to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and
benefit under the Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms
of the Indenture as though all of such Subsidiary Guarantees
had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained
in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or
<PAGE> 242
F-5
substantially as an entirety to the Company or another
Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all to the
Capital Stock of any Guarantor (other than to the Company or
another Guarantor), then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or
otherwise, of all of the Capital Stock of such Guarantor
(other than to the Company or another Guarantor)) or the
corporation acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of
such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee and any such
acquiring corporation will not be required to assume any
obligations of such Guarantor under the applicable Subsidiary
Guarantee; provided that such sale or other disposition
complies with all applicable provisions of the Indenture
including, without limitation, Section 4.10 hereof. Upon
delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including
without limitation Section 4.10 of the Indenture, the Trustee
shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations
under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount
of principal of and interest on the Notes and for the other
obligations of any Guarantor under the Indenture as provided
in Article 11 of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities
<PAGE> 243
under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.
7. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____ [Guaranteeing Subsidiary]
By:___________________________
Name:
Title:
<PAGE> 244
EXHIBIT E
------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of August 31, 1999
by and among
TransTechnology Corporation,
the Guarantors named herein,
and
BankBoston, N.A., as Administrative Agent
------------------------------------------------------------------------
<PAGE> 245
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of August 31, 1999, by and among TransTechnology Corporation, a
Delaware corporation (the "Company"), the Guarantors listed on the signature
pages hereto as such (together with any future subsidiary of the Company that
executes a guarantee in accordance with the provisions of the Purchase Agreement
referred to below, the "Guarantors"), and BankBoston, N.A., in its capacity as
administrative agent for the initial purchasers (the "Initial Purchasers"), of
the Company's Bridge Notes in the original principal amount of $75,000,000 (the
"Bridge Notes") under and pursuant to that certain Senior Subordinated Note
Purchase Agreement, dated as of August 31, 1999 (the "Purchase Agreement"), by
and among the Company, the Administrative Agent, BancBoston Robertson Stephens
Inc., as the arranger (in such capacity, the "Arranger") and the Initial
Purchasers.
This Agreement is made pursuant to the Purchase Agreement. In order to
induce the Initial Purchasers to purchase the Bridge Notes, the Company and the
Guarantors (collectively, the "Issuers") have agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
ADMINISTRATIVE AGENT: As defined in the preamble hereto.
AFFILIATE: With respect to any specified Person, any Person directly or
indirectly controlling or controlled by such specified Person, or any Person
under direct or common control with such specified Person.
BRIDGE NOTES: As defined in the preamble hereto.
BUSINESS DAY: Any day other than a Saturday, a Sunday or a day on which
banking institutions in Boston, Massachusetts, or at any other place of payment
hereunder are authorized by law, regulation or executive order to remain closed.
BROKER-DEALER: Any broker or dealer registered as such under the
Exchange Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
<PAGE> 246
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CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuers
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Notes, each Interest Payment
Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5 hereof.
EXCHANGE ESCROW AGREEMENT: As defined in the Purchase Agreement.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the issuers under the Act of the
Series B Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
GUARANTORS: As defined in the preamble hereto.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of the date hereof, among the
Issuers and State Street Bank and Trust Company, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
INITIAL MATURITY DATE: August 31, 2000.
INITIAL PURCHASERS: As defined in the preamble hereto.
INTEREST PAYMENT DATE: As defined in the Notes.
LIQUIDATED DAMAGES: As defined in Section 5 hereof.
<PAGE> 247
-3-
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, limited liability
company, limited liability partnership, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
PURCHASE AGREEMENT: As defined in the preamble hereto.
RECORD HOLDER: With respect to any Damages Payment Date relating to the
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
SERIES A NOTES: The Company's Series A Senior Subordinated Notes due
2009 to be issued under the Indenture in exchange for Term Notes pursuant to
Section 5 of the Purchase Agreement, together with the guarantee thereof by any
Guarantor.
SERIES B NOTES: The Company's Series B Senior Subordinated Notes due
2009 to be issued pursuant to the Indenture in the Exchange Offer, together with
the guarantee thereof by any Guarantor.
SHELF FILING DEADLINE: As defined in Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TERM NOTE: As defined in the Purchase Agreement.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
<PAGE> 248
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TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and the
Note for which it is exchanged is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Note has been effectively registered under
the Act and disposed of in accordance with a Shelf Registration Statement or (c)
the date on which such Note is permitted to be distributed to the public
pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
WARRANT HOLDERS' AGREEMENT: As defined in the Purchase Agreement.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities. A Holder is deemed a "selling
Holder" whenever such Holder notifies the Company of such Holder's intent to
sell Transfer Restricted Securities pursuant to a Shelf Registration Statement.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission as soon as practicable after the Initial Maturity Date, but in no
event later than 60 days after the Initial Maturity Date, an Exchange Offer
Registration Statement, (ii) use commercially reasonable efforts to cause such
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Initial Maturity Date, (iii) in
connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act, and (C) cause
all necessary filings in connection with the registration and qualification of
the Series B Notes to be made under the Blue Sky laws of such jurisdictions as
are necessary to permit the Exchange Offer to be Consummated, and (iv) upon the
effectiveness of such Registration Statement, commence the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Series B Notes to be offered in exchange for the Transfer Restricted
<PAGE> 249
-5-
Securities and to permit resales of Notes held by Broker-Dealers as contemplated
by Section 3(c) below.
(b) The Company shall use commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use commercially reasonable efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
Subject to Section 4(c), the Issuers shall use commercially reasonable
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Notes acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities, and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 180 days from the date on which the Exchange Offer Registration
Statement is declared effective.
The Issuers shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
180 day period in order to facilitate such resales.
<PAGE> 250
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SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Issuers are not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Days after the Exchange Offer shall have been Consummated (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its Affiliates, then the Issuers
shall:
(x) use commercially reasonable efforts to file a
shelf registration statement pursuant to Rule 415 under the Act, which
may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement") on or prior to the
earliest to occur of (1) the 60th day after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement or (2) the 60th day after the date on which the
Company receives notice from a Holder of Transfer Restricted Securities
as contemplated by clause (ii) above (such earliest date being the
"Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to
Section 4(b) hereof; and
(y) use commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective by the Commission
on or before the 120th day after the obligation to file the Shelf
Registration Statement arises.
Subject to Section 4(c), the Issuers shall use commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years following the
Closing Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 15 Business Days after receipt of a request
therefor, such information as the Company may
<PAGE> 251
-7-
reasonably request for use in connection with any Shelf Registration Statement
or Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages (as defined)
pursuant to Section 5 hereof unless and until such Holder shall have used its
best efforts to provide all such reasonably requested information. Each Holder
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(c) The Company shall be entitled to suspend the effectiveness of any
Shelf Registration Statement and the duration of such suspension shall be
excluded from the calculation of the two-year period referred to in Section
4(a). Such suspension shall be effected only if the Board of Directors of the
Company determines reasonably and in good faith that the effectiveness of the
Shelf Registration Statement would materially impede, delay or interfere with
any financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Affiliates or require disclosure of material information which the Company
has a lawful and bona fide business purpose for preserving as confidential,
which financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction is under active consideration by
the Company at the time of such suspension described above; PROVIDED, HOWEVER,
that the Company shall not be entitled to more than one suspension, which
suspension shall be no longer than six weeks in duration. If the Company shall
so suspend the effectiveness of a Shelf Registration Statement it shall, as
promptly as possible, deliver a certificate signed by the President, Chief
Executive Officer or Chief Financial Officer of the Company to the Initial
Purchasers and Holders of Transfer Restricted Securities as to such
determination, and such Initial Purchasers and Holders shall receive an
extension of the applicable registration period equal to the number of days of
the suspension.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose (except pursuant to Section 4(c)) prior to the
expiration of the time period specified by this Agreement without being
succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such event referred to in clauses (i) through (iv), a
"Registration Default", and each period during which a Registration Default has
occurred and is continuing, a "Registration Default Period"), the Issuers hereby
jointly and severally agree that liquidated damages ("Liquidated Damages"), in
<PAGE> 252
-8-
addition to the base interest that would otherwise accrue on the Transfer
Restricted Securities, shall accrue at a per annum rate of 0.25% of the
aggregate principal amount of such Transfer Restricted Securities outstanding
for the first 90 days of the Registration Default Period, at a per annum rate of
0.50% of the aggregate principal amount of such Transfer Restricted Securities
for the second 90 days of the Registration Default Period, at a per annum rate
of 0.75% of the aggregate principal amount of such Transfer Restricted
Securities for the third 90 days of the Registration Default Period and at a per
annum rate of 1.0% of the aggregate principal amount of such Transfer Restricted
Securities outstanding thereafter for the remaining portion of the Registration
Default Period. All accrued liquidated damages shall be paid to Record Holders
by the Company by wire transfer of immediately available funds or by federal
funds check on each Damages Payment Date. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of Liquidated Damages with respect to such Transfer Restricted Securities will
cease immediately.
All obligations of the Issuers set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use commercially reasonable efforts to effect such exchange
and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Issuers hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the Issuers to
Consummate an Exchange Offer for such Series A Notes. The Issuers
hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Issuers hereby agree, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted, and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the time that it is Consummated, a written representation to
the Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration
<PAGE> 253
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Statement) to the effect that (A) it is not an affiliate of the
Issuers, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate
in, a distribution of the Series B Notes to be issued in the Exchange
Offer, (C) it is acquiring the Series B Notes in its ordinary course of
business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers' preparations for
the Exchange Offer and (D) such other customary representations as the
Issuers may reasonably request. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange
Offer to participate in a distribution of the securities to be acquired
in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the
Commission enunciated in MORGAN STANLEY AND CO., INC. (available June
5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and similar no-action letters (including any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of
the Act in connection with a secondary resale transaction and that such
a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the
Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuers shall provide a supplemental letter
to the Commission (A) stating that the Issuers are registering the
Exchange Offer in reliance on the position of the Commission enunciated
in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, and (B)
including a representation that neither the Company nor any Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in
its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Series B
Notes received in the Exchange Offer.
(b) SHELF REGISTRATION STATEMENT. In connection with any Shelf
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto the Issuers will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended and
lawful method or methods of distribution thereof.
<PAGE> 254
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(c) GENERAL PROVISIONS. Subject to Section 4(c), in connection with any
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Issuers shall:
(i) use commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements (including, if required by the Act or any
regulation thereunder, financial statements of the Guarantors) for the
period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers shall file promptly an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use its commercially reasonable efforts to
cause such amendment to be declared effective and such Registration
Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been exchanged
or cease to be Transfer Restricted Securities; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under
the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state
<PAGE> 255
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securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Upon receipt
of written notice of any stop order described in the preceding clause
(C), selling Holders shall refrain from delivering any Prospectus or
Prospectus Supplement in the jurisdiction issuing such stop order until
notification by the Issuers that such stop order has been lifted or
withdrawn. Upon the receipt of written notice of any fact or event
described in the preceding clause (D), selling Holders shall refrain
from delivering any Prospectus or Prospectus Supplement requiring
amendment or supplement as described therein. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Issuers shall use
commercially reasonable efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least three Business Days, and the Issuers will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which a selling Holder
of Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably object within
three Business Days after the receipt thereof;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers representatives available for
discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably
may request, provided that the Company may require any such Person to
enter into a customary confidentiality agreement;
(vi) subject to the receipt of confidentiality agreements as
provided above, make available at reasonable times for inspection by
the selling Holders,
<PAGE> 256
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any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers
and cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Issuers are notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s), if
any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers
hereby consent to the use of the Prospectus and any amendment or
supplement thereto in accordance with this Agreement by each of the
selling Holders and each of the underwriter(s), if any, in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such reasonable and customary representations and
warranties, and take all such other actions in connection therewith as
reasonably necessary in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any Registration
Statement contemplated by this Agreement, all to
<PAGE> 257
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such extent as may be reasonably requested by any Initial Purchaser or
by any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration
Statement contemplated by this Agreement; and whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to the selling Holders and each
underwriter, if any, in the event of a Shelf Registration
Statement, and furnish to any Holder tendering Notes in an
Exchange Offer, if any, in the event of an Exchange Offer, in
each case, in such substance and scope as they may reasonably
request and as are customarily made by issuers to underwriters
in primary underwritten offerings, upon the date of the
Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date the
Exchange Offer is Consummated or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, signed by (y) the President or any
Vice President and (z) a principal financial or
accounting officer of the Company confirming, as of
the date thereof, the matters set forth in Sections
8.1 - 8.5 of the Purchase Agreement and such other
matters as such parties may reasonably request;
(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Issuers, covering
the matters customarily opined to in connection with
the registration of securities as contemplated by
Sections 3 and 4 of this Agreement and such other
matter as such parties may reasonably request, and in
any event including a statement to the effect that
such counsel has participated in conferences with
officers and other representatives of the Company and
the Guarantors, representatives of the independent
public accountants for the Company and the
Guarantors, representatives of the Holders and their
counsel in connection with the preparation of the
Registration Statement and related Prospectus and
have considered the matters required to be stated
therein and the statements contained therein and,
although they have not independently verified and are
not passing upon and assume no responsibility for the
accuracy, completeness or fairness of such
statements, on the basis of the foregoing, they
hereby confirm that no facts came to their attention
that caused them to believe that the Registration
Statement and related Prospectus, as of their date,
contained or contains an untrue statement of a
material fact or omitted or omits to state a material
fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which
<PAGE> 258
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they were made, not misleading. Without limiting the
foregoing, such counsel may state further that such
counsel expresses no belief or opinion with respect
to, assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of exhibits, the financial statements, notes
and schedules and other financial data included in
any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of
the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Issuers'
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters by underwriters in connection with
primary underwritten offerings;
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Issuers pursuant to this clause
(xi), if any.
If at any time during which a Registration Statement is required to be
effective under this Agreement the Issuers become aware that the representations
and warranties of the Issuers contemplated in clause (A)(1) above cease to be
true and correct, the Issuers shall so advise the Initial Purchaser and the
underwriter(s), if any, and each selling Holder promptly and, if requested by
such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions (within the United
States, Canada or, with respect to sales to institutions, the United
Kingdom) as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the
Transfer Restricted Securities covered by the Shelf Registration
Statement; provided, however, that neither the Company nor any
Guarantor shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
<PAGE> 259
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(xiii) to the extent lawful, issue, upon the request of any
Holder of Series A Notes covered by the Shelf Registration Statement,
Series B Notes, having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes surrendered to the Company
by such Holder in exchange therefor or being sold by such Holder; such
Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such Notes, as the case may be; in return,
the Series A Notes held by such Holder shall be surrendered to the
Company for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two Business Days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use commercially reasonable efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities within the United States, as may be reasonably necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) subject to Section 6(c)(i), if any fact or event
contemplated by clause (c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material- fact or
omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed
certificates for the Transfer Restricted Securities that are in a form
eligible for deposit with The Depository Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use commercially reasonable
efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities (within the
United States, Canada or the United Kingdom) as may be necessary to
enable the
<PAGE> 260
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Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xix) otherwise commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) if so required under the TIA, cause the Indenture to be
qualified under the TIA not later than the effective date of the first
Registration Statement required by this Agreement, and, in connection
therewith, cooperate with the Trustee and the Holders of Notes to
effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely
manner;
(xxi) provide promptly to each Holder upon request each
document filed by the Company with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Issuers' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
<PAGE> 261
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or compliance
with this Agreement will be borne by the Company or the respective Guarantor,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone
incurred by the Company the Guarantors and their agents; (iv) all fees and
disbursements of counsel for the Company and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities, (v) all application and filing fees
in connection with listing Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuers will bear their internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by any issuer.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors will, jointly and severally,
indemnify and hold harmless each Holder against any losses, claims, damages or
liabilities, joint or several, to which such Holder may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will
<PAGE> 262
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reimburse each Holder for any legal or other expenses reasonably incurred by
such Holder in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Registration Statement or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Holder expressly for use therein.
(b) Each Holder will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Registration Statement
or Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use therein; and will reimburse the Company and the Guarantors for
any legal or other expenses reasonably incurred by the Company and the
Guarantors in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or
<PAGE> 263
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claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors on the one hand and
the Holders on the other from the sale by the Company of the Series A Notes. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantors on the one hand and the
Holders on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Holders on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Notes (before deducting expenses) received
by the Company and the Guarantors bear to the total proceeds received by such
holder upon the sale of the Notes giving rise to such indemnification
obligations. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors on the one hand or the Holders on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Guarantors agree, and the Holders shall be deemed to have agreed, that it
would not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Holder shall be required to contribute any
amount in excess of the amount by which the total net proceeds received by such
Holder with respect to the Notes exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
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misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 8 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Holder within the meaning
of the Act; and the obligations of the Holders under this Section 8 shall be in
addition to any liability which the respective Holders may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company and the Guarantors and to each person, if any, who controls the
Company within the meaning of the Act the amount by which the total net proceeds
received by such Holder with respect to the Notes exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of misrepresentation within the meaning of Section 11(a) of the Act shall
be entitled to contribution from any person who was not guilty of such
misrepresentation.
(f) Notwithstanding anything to the contrary in this Section 8, the
Company and the Guarantors shall not be required to indemnify and hold harmless
any party with respect to any loss, liability, claim, damage or expense to the
extent arising out of (x) the use of a Prospectus relating to a Shelf
Registration Statement during any period when its use has been suspended
pursuant to Section 4(c) after the Issuers have provided (and such party has
actually received) written notice of such suspension pursuant to Section 12(e);
PROVIDED that the Company shall have established beyond a reasonable doubt in a
court of competent jurisdiction that such Holder actually received such written
notice on a timely basis and that such loss, liability, claim, damage or expense
would have been completely avoided had such notice been complied with or (y) the
use of an outdated Prospectus relating to a Shelf Registration Statement
following the delivery of an updated Prospectus correcting the untrue statement
or omission giving rise to the loss, liability, claim, damage or expense to any
Holder; provided, that the Company shall have established beyond a reasonable
doubt in a court of competent jurisdiction that (i) any such untrue statement or
omission was fully corrected in such updated Prospectus, (ii) that the delivery
of such updated Prospectus by such Holder would not have given rise to such
loss, liability, claim, damage or expense and (iii) such Holder was provided
with sufficient quantities of such updated Prospectus and written notice of
suspension of the prior Prospectus, each on a timely basis. Any amounts paid by
the Issuers to a Holder pursuant to this Agreement as a result of such losses,
liabilities, claims, damages or expenses shall be returned to the Issuer, if it
shall be finally determined by a court of competent jurisdiction that such
Holder was not entitled to indemnification by the Issuers by virtue of this
Section 8(f).
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of
<PAGE> 265
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Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration with respect
to any Notes hereunder unless such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements, and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) REMEDIES. The Issuers agree that monetary damages (including the
Liquidated Damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuers will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company nor any of
the Guarantors have previously entered into any agreement granting any
registration rights with respect to its securities to any Person, other than the
Warrant Holders' Agreement. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to any
of the holders of the Issuers' securities under any agreement in effect on the
date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. The Issuers will not take any
action, or permit any change to occur, with respect to the terms of the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
<PAGE> 266
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(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Issuers have obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Issuers:
TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07938
Telecopier No.: (908) 903-1616
Attention: Chief Financial Officer
with a copy to
F. Ronald O'Keefe, Esq.
Hahn Loeser & Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Telecopier No.: (216) 241-2824
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
<PAGE> 267
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Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that anyone or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, the Indenture, the Notes and the Exchange Escrow Agreement, is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuers with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[Signature page follows]
<PAGE> 268
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first set forth above.
THE COMPANY:
TRANSTECHNOLOGY CORPORATION
By:
---------------------------
Name: Joseph F. Spanier
Title: Vice President & CFO
THE GUARANTORS:
TRANSTECHNOLOGY ACQUISITION CORPORATION
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
PALNUT FASTENERS, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
INDUSTRIAL RETAINING RING COMPANY
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
RETAINERS, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 269
RANCHO TRANSTECHNOLOGY CORPORATION
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SYSTEMS & SERVICES, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELECTRONIC CONNECTIONS AND ASSEMBLIES, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INDUSTRIES
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INTERNATIONAL SALES, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SEEGER, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 270
SEEGER INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TCR CORPORATION
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
NORCO, INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
AEROSPACE RIVET MANUFACTURERS CORPORATION
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELLISON RING & WASHER INC.
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY ENGINEERED COMPONENTS, LLC
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 271
TRANSTECHNOLOGY CANADA CORPORATION
By:
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
THE ADMINISTRATIVE AGENT:
BANKBOSTON, N.A., as Administrative Agent on
behalf of the Initial Purchasers and Holders
By:
---------------------------
Name: Robert W. MacElhiney
Title: Vice President
<PAGE> 272
EXHIBIT F
FORM OF
COMPLIANCE CERTIFICATE
----------- --, ---
To each of the Lenders party to the
Purchase Agreement referred to below
c/o BankBoston, N.A., as Administrative Agent
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is made to the Senior Subordinated Note Purchase Agreement
dated as of August 31, 1999 (as amended, restated, modified, varied and in
effect from time to time, the "Purchase Agreement"), by and among
TransTechnology, the lending institutions party thereto (the "Lenders"), and
BankBoston, N.A., as administrative agent for the Lenders (the "Administrative
Agent"). Capitalized terms which are used herein without definition and which
are defined in the Purchase Agreement shall have the respective meanings
assigned to such terms in the Purchase Agreement.
Pursuant to Section 9.4(c) of the Purchase Agreement, the principal
financial or accounting officer of TransTechnology hereby certifies to each of
you as follows: (a) the information furnished in the calculations attached
hereto was true and correct as of the last day of the fiscal [year] [quarter]
next preceding the date of this certificate; (b) as of the date of this
certificate, there exists no Default or Event of Default or condition which
would, with either or both the giving of notice or the lapse of time, result in
a Default or an Event of Default; and (c) the financial statements delivered
herewith were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (except, in the case
of quarterly statements, for year-end adjustments and provisions for footnotes
and, in all cases, except as disclosed therein).
IN WITNESS WHEREOF, the undersigned officer has executed this Compliance
Certificate as of the date first written above.
TRANSTECHNOLOGY CORPORATION
By:_______________________________
Title:
[Worksheet to be attached]
<PAGE> 273
EXHIBIT G
SUBORDINATED GUARANTY
SUBORDINATED GUARANTY (this "Guaranty"), dated as of August 31, 1999,
by TRANSTECHNOLOGY ACQUISITION CORPORATION, a Delaware corporation, PALNUT
FASTENERS, INC., a Delaware corporation, INDUSTRIAL RETAINING RING COMPANY, a
New Jersey corporation, RETAINERS, INC., a New Jersey corporation, RANCHO
TRANSTECHNOLOGY CORPORATION, a California corporation, TRANSTECHNOLOGY SYSTEMS &
SERVICES, INC., a Michigan corporation, ELECTRONIC CONNECTIONS AND ASSEMBLIES,
INC., a Delaware corporation, SSP INDUSTRIES, a California corporation, SSP
INTERNATIONAL SALES, INC., a California corporation, TRANSTECHNOLOGY SEEGER,
INC., a Delaware corporation, SEEGER, INC., a Delaware corporation, TCR
CORPORATION, a Minnesota corporation, NORCO, INC., a Connecticut corporation,
AEROSPACE RIVET MANUFACTURERS CORPORATION, a California corporation, ELLISON
RING & WASHER, INC., a Virginia corporation, TRANSTECHNOLOGY ENGINEERED
COMPONENTS, LLC, a Delaware limited liability company, TRANSTECHNOLOGY CANADA
CORPORATION, an Ontario corporation and TRANSTECHNOLOGY INTERNATIONAL
CORPORATION, a U.S. Virgin Islands corporation (each a "Guarantor" and
collectively, the "Guarantors"), in favor of (i) BankBoston, N.A., a national
banking association, as Administrative Agent (hereinafter, in such capacity, the
"Administrative Agent") for itself and the other lending institutions
(hereinafter, collectively, the "Lenders") which are or may become parties to a
Senior Subordinated Note Purchase Agreement dated as of August 31, 1999 (as
amended, restated, modified, varied and in effect from time to time, the
"Purchase Agreement"), by and among TransTechnology Corporation, a Delaware
corporation (the "Company"), the Lenders, and the Administrative Agent, (ii)
each of the Holders of the Notes (as such terms are defined in the Purchase
Agreement).
WHEREAS, the Guarantors are members of a group of related corporations,
the success of any one of which is dependent in part on the success of the other
members of such group;
WHEREAS, each of the Guarantors expects to receive substantial direct
and indirect benefits from the extensions of credit to the Company by the
Holders pursuant to the Purchase Agreement (which benefits are hereby
acknowledged);
WHEREAS, it is a condition precedent to the Lenders' purchasing the
Notes under the Purchase Agreement that each Guarantor execute and deliver to
the Administrative Agent, for the benefit of each of the Holders of the Notes, a
guarantee substantially in the form hereof; and
WHEREAS, each Guarantor wishes to guarantee the Company's Obligations
to the Holders under or in respect of the Purchase Agreement as provided herein.
<PAGE> 274
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NOW, THEREFORE, each Guarantor hereby agrees for the benefit of the
Holders as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
that are defined in the Purchase Agreement shall have the respective meanings
provided therefor in the Purchase Agreement. References herein to the
Administrative Agent shall, if and for so long as any Exchange Notes are
outstanding under the Indenture, be deemed to include the Trustee under and as
defined in the Indenture.
2. GUARANTEE OF PAYMENT AND PERFORMANCE; SUBORDINATION.
(a) IN GENERAL. Each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note and to the Administrative
Agent, irrespective of the validity or enforceability of the Purchase Agreement,
the Indenture, the Notes or the obligations of the Company thereunder, that: (i)
the principal of and interest on the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Notes, if any, if lawful, and
all other obligations of the Company to the Holders or the Administrative Agent
under the Notes, the Purchase Agreement, the Indenture or any of the other Loan
Documents will be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; (ii) without limiting the foregoing, the Liquidated
Damages payable under the Registration Rights Agreement will be promptly paid in
full when due; and (iii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, each Guarantor shall be jointly and severally obligated to
pay the same immediately. Each Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection. The obligations of the Guarantors
under this Section 2(a) are referred to herein as the "Obligations".
(b) SUBORDINATION. Notwithstanding any other provision of this
Guaranty, payment under this Guaranty shall be, in the manner and to the extent
set forth in Section 11 of the Purchase Agreement, junior and subordinated in
right of payment to the prior payment in full of all amounts due and owing upon
all Senior Debt (as defined in the Purchase Agreement) at any time outstanding
as if a payment under this Guaranty were a payment under the Notes (or any of
them); and in furtherance thereof, the Administrative Agent and the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or retain payments in respect of the
Notes pursuant to the Purchase Agreement.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each Guarantor
further agrees, as the principal obligor and not as a guarantor only, to pay to
the Holders and to the Administrative Agent, on demand, all reasonable costs
<PAGE> 275
-3-
and expenses (including court costs and legal expenses) incurred or expended by
any Holder or the Administrative Agent in connection with the Obligations, this
Guaranty and the enforcement thereof, together with interest on amounts
recoverable under this Section 3 from the time when such amounts become due
until payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in the Purchase Agreement, PROVIDED that if such
interest exceeds the maximum amount permitted to be paid under applicable law,
then such interest shall be reduced to such maximum permitted amount.
4. FOREIGN CURRENCY OBLIGATIONS.
The Guarantors shall make payment relative to each Obligation in the
currency (the "Original Currency") in which TransTechnology is required to pay
such Obligation. If any Guarantor makes payment relative to any Obligation to
the Lenders of the Administrative Agent in a currency (the "Other Currency")
other than the Original Currency (whether voluntary or pursuant to an order or
judgement of a court of tribunal of any jurisdiction), such payment shall
constitute a discharge of the liability of such Guarantor hereunder in respect
of such Obligation only to the extent of the amount of the Original Currency
which the Administrative Agent is able to purchase at Boston, Massachusetts with
the amount it receives on the date of receipt in accordance with its normal
practice. If the amount of the Original Currency which the Administrative Agent
is able to purchase is less than the amount of such currency originally due in
respect of the relevant Obligation, such Guarantor shall indemnify and save the
Administrative Agent harmless from and against any loss or damage arising as a
result of such deficiency. This indemnity shall constitute an obligation
separate and independent from the other obligations contained in this Guarantee,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by any Lender or the Administrative Agent
and shall continue in full force and effect notwithstanding any judgment or
order in respect of any amount due hereunder or under any judgement or order.
5. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
The Guarantors may not consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person), another corporation, Person or
other entity whether or not affiliated with such Guarantor unless (i) subject to
the provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to an assumption agreement, in form and
substance reasonably satisfactory to the Administrative Agent, under the Notes
and the Purchase Agreement; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) except in the case
of a merger of a Guarantor with or into another Guarantor or a merger of a
Guarantor with or into the Company, the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least $1.00 of additional
<PAGE> 276
-4-
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 10.1 of the Purchase Agreement.
6. RELEASES FOLLOWING SALE OF ASSETS OR CAPITAL STOCK.
In the event of a sale or other disposition of all or substantially all
of the assets of a Guarantor (other than to the Company or another Guarantor),
by way of merger, consolidation or otherwise, or a sale or other disposition of
all of the Capital Stock of any Guarantor (other than to the Company or another
Guarantor), then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under this Guaranty
and any such acquiring corporation will not be required to assume any
obligations of such Guarantor under this Guaranty; provided that such sale or
other disposition complies with all applicable provisions of the Purchase
Agreement.
7. WAIVERS BY GUARANTORS; HOLDERS' FREEDOM TO ACT. Each Guarantor
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Holder with respect thereto. The Guarantors hereby agree that
their Obligations hereunder shall be unconditional, irrespective of the absence
of any action to enforce the same, any waiver or consent by any Holder of the
Notes with respect to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenant that this
Guaranty shall not be discharged except by complete performance of the
Obligations. Without limiting the generality of the foregoing, each Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Obligation and agrees that the Obligations of
such Guarantor hereunder shall not be released or discharged, in whole or in
part, or otherwise affected by (a) the failure of any Holder to assert any claim
or demand or to enforce any right or remedy against the Company or any other
entity or other person primarily or secondarily liable with respect to any of
the Obligations; (b) any extensions, compromise, refinancing, consolidation or
renewals of any Obligation; (c) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation or other amendments or modifications of any of the
terms or provisions of the Purchase Agreement, the Indenture, the Notes, the
other Loan Documents or any other agreement evidencing, securing or otherwise
executed in connection with any of the Obligations, (d) the addition,
substitution or release of any entity or other person primarily or secondarily
liable for any Obligations; (e) the adequacy of any rights which any Holder may
have against any
<PAGE> 277
-5-
collateral security or other means of obtaining repayment of any of the
Obligations; (f) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which any Holder might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (g) any other act or omission which might in any manner
or to any extent vary the risk of the Guarantors or otherwise operate as a
release or discharge of any Guarantor, all of which may be done without notice
to such Guarantor. To the fullest extent permitted by law, each Guarantor hereby
expressly waives any and all rights or defenses arising by reason of (i) any
"one action" or "anti-deficiency" law which would otherwise prevent any Holder
from bringing any action, including any claim for a deficiency, or exercising
any other right or remedy (including any right of set-off), against such
Guarantor before or after such Holder's commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by any Holder.
8. UNENFORCEABILITY OF OBLIGATIONS AGAINST COMPANY. If for any reason
the Company has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Company by reason of the Company's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on the Guarantors to the same extent as
if the Guarantors at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Purchase Agreement, the Indenture, the
Notes, the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by the Guarantor.
9. SUBROGATION.
9.1. WAIVER OF RIGHTS. Each Guarantor agrees that it shall not
be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby. Each Guarantor further agrees that,
as between the Guarantors, on the one hand, and the Holders and the
Administrative Agent, on the other hand, (x) the maturity of the
obligations under the Notes guaranteed hereby may be accelerated as
provided in the Purchase Agreement for the purposes of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and
(y) in the event of any declaration of acceleration of such obligations
as provided in the Purchase Agreement, such obligations (whether or not
due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Guaranty. The Guarantors shall have
the right to seek contribution from any non-paying
<PAGE> 278
-6-
Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Guaranty.
9.2. PROVISIONS SUPPLEMENTAL. The provisions of this ss.8
shall be supplemental to and not in derogation of any rights and
remedies of the Holders or the Administrative Agent under any separate
subordination agreement which a Holder or the Administrative Agent may
at any time and from time to time enter into with the Guarantor.
10. TAXES AND SETOFF BY GUARANTOR.
All payments to be made by the Guarantors hereunder shall be made
without set-off or counterclaim and without deduction for any taxes, levies,
duties, fees, deductions, withholdings, restrictions or conditions of any nature
whatsoever. If at any time any applicable law, regulation or international
agreement requires any Guarantor to make any such deduction or withholding from
any such payment, the sum due from such Guarantor in respect to such payment
shall be increased to the extent necessary to ensure that, after the making of
such deduction or withholding, the Administrative Agent, for and on behalf of
the Lenders, receives a net sum equal tot he sum which it would have received
had no deduction or withholding been required.
11. FURTHER ASSURANCES. Each Guarantor agrees that it will from time to
time, at the request of the Majority Holders, do all such things and execute all
such documents as the Majority Holders may consider necessary or desirable to
give full effect to this Guaranty and to perfect and preserve the rights and
powers of the Holders and the Administrative Agent hereunder, including
endorsing a notation of this Guaranty substantially in the form included in
Exhibit E to the Indenture on each Exchange Note authenticated and delivered by
the Trustee pursuant to Section 5 of the Purchase Agreement and the provisions
of the Exchange Escrow Agreement. Each Guarantor hereby agrees that this
Guaranty shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of this Guaranty.
If an Officer whose signature is on this Guaranty no longer holds that
office at the time the Trustee authenticates any Exchange Note on which this
Guaranty is endorsed, this Guaranty shall be valid nevertheless. The delivery of
any Exchange Note by the Trustee, pursuant to and after the authentication
thereof under the Indenture, shall constitute due delivery of this Guaranty on
behalf of the Guarantors.
Each Guarantor acknowledges and confirms that it has established its
own adequate means of obtaining from the Company on a continuing basis all
information desired by such Guarantor concerning the financial condition of the
Company and that such Guarantor will look to the Company and not to any Holder
in order for such Guarantor to keep adequately informed of changes in the
Company's financial condition.
<PAGE> 279
-7-
12. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full
force and effect until the indefeasible repayment in full, in cash, of all of
the Obligations. If any Holder or the Administrative Agent is required by any
court or otherwise to return to the Company, the Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Company or the Guarantors, any amount paid by either to the Administrative Agent
or such Holder, this Guaranty, to the extent theretofore discharged, shall be
reinstated in full force and effect.
13. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each
Guarantor, such Guarantor's successors and assigns, and shall inure to the
benefit of the Holders and their successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, each Holder may assign or
otherwise transfer the Notes, the other Loan Documents or any other agreement or
note held by it evidencing, securing or otherwise executed in connection with
the Obligations, or sell participations in any interest therein, to any other
entity or other person, and such other entity or other person shall thereupon
become vested, to the extent set forth in the agreement evidencing such
assignment, transfer or participation, with all the rights in respect thereof
granted to such Holder herein, all in accordance with the Purchase Agreement.
The Guarantors may not assign any of their obligations hereunder.
14. LIMITATION ON GUARANTORS' LIABILITY. Each Guarantor hereby confirms
that it is the intention of such party that this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of the United States Bankruptcy
Code or another insolvency code, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to this Guaranty. To effectuate the foregoing intention, the
Guarantors hereby irrevocably agree that the obligations of such Guarantor under
this Guaranty shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Guaranty, result in the obligations of such Guarantor under
this Guaranty not constituting a fraudulent transfer or conveyance.
15. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantors therefrom shall be
effective unless the same shall be in writing and signed by the Majority
Holders. No failure on the part of any Holder to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
16. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be
<PAGE> 280
-8-
deemed to have been duly made or given when delivered by hand or mailed first
class, postage prepaid, or, in the case of telegraphic or telexed notice, when
transmitted, answer back received, addressed as follows: if to a Guarantor, c/o
the Company at its address set forth in Section 21 of the Purchase Agreement, if
to the Administrative Agent, at its address set forth in Section 21 of the
Purchase Agreement, if to the Trustee, at its address set forth in the
Indenture, and if to a Holder, at the address for notices for such Holder set
forth in the register referred to in Section 20.3 of the Purchase Agreement, or
at such address as either party may designate in writing to the other.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTEE IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). Each Guarantor agrees that any
suit for the enforcement of this Guaranty may be brought in the courts of the
Commonwealth of Massachusetts or any federal court sitting therein and consents
to the nonexclusive jurisdiction of such court and to service of process in any
such suit being made upon the Guarantors by mail at the address specified by
reference in Section 14. Each Guarantor hereby waives any objection that it may
now or hereafter have to the venue of any such suit or any such court or that
such suit was brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT ON BEHALF OF THE
LENDERS AND EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
GUARANTEE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH
RIGHTS OR OBLIGATIONS. Except as prohibited by law, each Guarantor hereby waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. Each Guarantor (a)
certifies that no Holder nor any representative, agent or attorney of any Holder
has represented, expressly or otherwise, that any Holder would not, in the event
of litigation, seek to enforce the foregoing waivers and (b) acknowledges that,
in entering into the Purchase Agreement and the other Loan Documents to which
any Holder is a party, the Holders are relying upon, among other things, the
waivers and certifications contained in this Section 16.
19. MISCELLANEOUS. This Guaranty constitutes the entire agreement of
the Guarantors with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guarantee of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all
<PAGE> 281
-9-
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
<PAGE> 282
IN WITNESS WHEREOF, each of the Guarantors has caused this Subordinated
Guaranty to be executed and delivered as of the date first above written.
TRANSTECHNOLOGY ACQUISITION CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
PALNUT FASTENERS, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
INDUSTRIAL RETAINING RING COMPANY
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
RETAINERS, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
RANCHO TRANSTECHNOLOGY CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 283
TRANSTECHNOLOGY SYSTEMS & SERVICES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELECTRONIC CONNECTIONS AND ASSEMBLIES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INDUSTRIES
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INTERNATIONAL SALES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SEEGER, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SEEGER INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 284
TCR CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
NORCO, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
AEROSPACE RIVET MANUFACTURERS CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELLISON RING & WASHER INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY ENGINEERED COMPONENTS, LLC
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY CANADA CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 285
TRANSTECHNOLOGY INTERNATIONAL CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
The Administrative Agent hereby executes this Guaranty on behalf of
itself and the other Lenders solely for the purpose of Section 18 hereof:
BANKBOSTON, N.A.
By: /s/Robert W. MacElhiney
---------------------------
Name: Robert W. MacElhiney
Title: Vice President
<PAGE> 286
EXHIBIT H
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of _____ __, ____
Reference is made to the Senior Subordinated Note Purchase Agreement
dated as of August 31, 1999 (as amended, restated, modified, varied and in
effect from time to time, the "Purchase Agreement"), by and among
TransTechnology Corporation, a Delaware corporation ("TransTechnology"), the
lending institutions party thereto (the "Lenders"), and BankBoston, N.A., as
administrative agent for the Lenders (the "Administrative Agent"). Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Purchase Agreement.
_______________ (the "ASSIGNOR") and _______________ (the "ASSIGNEE")
hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$_______ interest in and to the rights, benefits, indemnities and obligations of
the Assignor under the Purchase Agreement equal to _______% in respect of the
Loans immediately prior to the Effective Date (as hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the Effective Date (as hereinafter defined), immediately after giving
effect to this Assignment and Acceptance, its Commitment is $_______, its
Commitment Percentage is _______%, and the aggregate outstanding principal
balance of its Loans equals $_______________, and (C) immediately after giving
effect to all assignments which have not yet become effective, the Assignor's
interest in the Loans will be sufficient to give effect to this Assignment and
Acceptance, (ii) makes no representation or warranty, express or implied, and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Purchase Agreement or any of
the other Loan Documents or any other instrument or document furnished pursuant
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Purchase Agreement, the other Loan Documents or any
other instrument or document furnished pursuant thereto or the attachment,
perfection or priority of any security interest or mortgage, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
free and clear of any claim or encumbrance; (iii) makes no representation or
warranty and assumes no
<PAGE> 287
-2-
responsibility with respect to the financial condition of TransTechnology or any
of its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by
TransTechnology or any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations of any of its
obligations under the Purchase Agreement or any of the other Loan Documents or
any other instrument or document delivered or executed pursuant thereto; and
(iv) attaches hereto the Bridge Note [, Term Note and Exchange Note] delivered
to it under the Purchase Agreement.
The Assignor requests that TransTechnology exchange the Assignor's
Bridge Note [and/or Term Note and/or Exchange Note] for new Bridge Notes [and/or
Term Notes and/or Exchange Notes] payable to the Assignor and Assignee as
follows:
Notes payable to Amount of Bridge Note: Amount of Amount of
- ---------------- --------------------- --------- ---------
the order of: Term Note: Exchange Note:
- ---------------- ----------- --------------
Assignor $__________ $__________ $__________
Assignee $__________ $__________ $__________
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants that
(A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all
acts, conditions and things required to be done and performed and to have
occurred prior to the execution, delivery and performance of this Assignment
and Acceptance, and to render the same the legal, valid and binding obligation
of the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Purchase
Agreement, together with copies of the most recent financial statements
delivered pursuant to Sections 8.4 and 9.4 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Assignor, the Administrative
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Purchase Agreement; (iv) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Purchase Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and (v) agrees
that it will perform in accordance with their terms all the obligations which
by
<PAGE> 288
-3-
the terms of the Purchase Agreement are required to be performed by it as a
Lender.
4. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____ __, ____ (the "EFFECTIVE DATE"). Following the
execution of this Assignment and Acceptance, each party hereto shall deliver its
duly executed counterpart hereof to the Administrative Agent for acceptance by
the Administrative Agent and recording in the Register by the Administrative
Agent. SCHEDULE 1 to the Purchase Agreement shall thereupon be replaced as of
the Effective Date by SCHEDULE 1 annexed hereto.
5. RIGHTS UNDER PURCHASE AGREEMENT. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Purchase Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder, and (ii) the
Assignor shall, with respect to that portion of its interest under the Purchase
Agreement assigned hereunder, relinquish its rights and be released from its
obligations under the Purchase Agreement; PROVIDED, HOWEVER, that the Assignor
shall retain its rights to be indemnified pursuant to Section 18 of the Purchase
Agreement with respect to any claims or actions arising prior to the Effective
Date.
6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance by
the Administrative Agent and such recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the rights and
interests assigned hereby (including payments of principal, interest, fees and
other amounts) to the Assignee. The Assignor and the Assignee shall make any
appropriate adjustments in payments for periods prior to the Effective Date by
the Administrative Agent or with respect to the making of this assignment
directly between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
<PAGE> 289
-4-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer or officers thereunto duly authorized, as of the date
first above written.
ASSIGNOR:
By: ________________________________________
Name:
Title:
ASSIGNEE:
By: ________________________________________
Name:
Title:
<PAGE> 290
-5-
SCHEDULE 1
<PAGE> 1
------------------------------------------------------------------------
WARRANT AGREEMENT
Dated as of August 31, 1999
By and Between
TRANSTECHNOLOGY CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
as Warrant Agent
Warrants to Purchase Common Stock
Par Value $.01 Per Share
- ------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants ................................... 1
SECTION 1.02. Form of Warrant Certificates ........................... 2
SECTION 1.03. Execution of Warrant Certificates ...................... 2
SECTION 1.04. Authentication and Delivery ............................ 3
SECTION 1.05. Temporary Warrant Certificates ......................... 3
SECTION 1.06. Registration ........................................... 4
SECTION 1.07. Registration of Transfers or Exchanges ................. 4
SECTION 1.08. Lost, Stolen, Destroyed, Defaced or Mutilated
Warrant Certificates ...........................12
SECTION 1.09. Offices for Exercise, etc ..............................12
SECTION 1.10. Legend on Shares .......................................13
ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE
PRICE AND REPURCHASE OF WARRANTS
SECTION 2.01. Release and Duration of Warrants .......................14
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery ......14
SECTION 2.03. Cancellation of Warrant Certificates ...................17
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights ..................................17
SECTION 3.02. Obtaining Stock Exchange Listings.......................17
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes........................................18
SECTION 4.02. Rules 144 and 144A......................................18
-i
<PAGE> 3
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Rate; Notices....................18
SECTION 5.02. Fractional Shares.......................................25
SECTION 5.03. Certain Distributions...................................25
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.0 1. Warrant Agent..........................................26
SECTION 6.02. Conditions of Warrant Agent's Obligations...............26
SECTION 6.03. Resignation and Appointment of Successor................30
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment...............................................31
SECTION 7.02. Notices and Demands to the Company and
Warrant Agent...................................32
SECTION 7.03. Addresses for Notices to Parties and for
Transmission of Documents.......................32
SECTION 7.04. Notices to Holders......................................33
SECTION 7.05. APPLICABLE LAW; SUBMISSION TO
JURISDICTION....................................33
SECTION 7.06. Persons Having Rights Under Agreement...................33
SECTION 7.07. Headings................................................33
SECTION 7.08. Counterparts............................................33
SECTION 7.09. Inspection of Agreement.................................33
SECTION 7.10. Availability of Equitable Remedies......................34
SECTION 7.11. Obtaining of Governmental Approvals.....................34
-ii-
<PAGE> 4
EXHIBIT A - Form of Warrant Certificate ............................A-1
EXHIBIT B - Certificate To Be Delivered upon Exchange or
Registration of Transfer of Warrants ...................B-1
EXHIBIT C - Form of Transferee Certificate for Institutional
Accredited Investors ...................................C-1
EXHIBIT D - Form of Transferee Certificate for Regulation S
Transfers...............................................D-1
INDEX OF DEFINED TERMS
----------------------
Defined Term Section
- ------------
Affiliate..........................................................5.01(d)
Agreement..........................................................Recitals
Business Day ......................................................2.01
Capital Stock......................................................5.01(l)
Cashless Exercise..................................................2.02(c)
Cashless Exercise Ratio............................................2.02(c)
Closing Date.......................................................1.01
Common Stock.......................................................Recitals
Company............................................................Recitals
Current Market Value...............................................5.01(1)
Definitive Warrants................................................1.02
Depository.........................................................1.02
Distribution.......................................................5.03
Distribution Rights................................................5.03
Election To Exercise...............................................2.02(b)
Exercise Date......................................................2.02(d)
Exercise Price.....................................................2.02(a)
Exercise Rate......................................................2.02(a)
Expiration Date ...................................................2.01
Fundamental Transaction............................................5.01(d)
Global Shares......................................................2.02(f)
Global Warrants....................................................1.02
Holders............................................................1.06
Independent Financial Expert.......................................5.01(1)
Institutional Accredited Investor..................................1.07(a)(y)(C)
Lenders............................................................Recitals
Loans..............................................................Recitals
Non-Restricted Warrants............................................1.07(y)
Non-U.S. Person....................................................1.07(a)(y)(F)
Officers' Certificate..............................................1.07(d)
Person.............................................................2.02(a)
Private Placement Legend...........................................1.07(g)
Prospectus.........................................................4.02
QIB................................................................1.07(a)(y)(B)
Registrar..........................................................1.06
Registration Rights Agreement......................................Recitals
-iii-
<PAGE> 5
Related Parties....................................................6.02(e)
Requisite Warrant Holders..........................................7.01
Resale Restriction Termination Date................................1.07(a)(y)
Responsible Officer................................................6.02(q)
Securities Act.....................................................1.07(a)(y)
Shares.............................................................1.01
Subject Class......................................................4.04
Surviving Person...................................................5.01(d)
Time of Determination..............................................5.01(1)
Trustee............................................................Recitals
Warrant Agent......................................................Recitals
Warrant Agent Office...............................................1.09
Warrant Certificates...............................................Recitals
Warrant Exercise Office............................................2.02(b)
Warrant Register...................................................1.06
Warrants...........................................................Recitals
-iv-
<PAGE> 6
WARRANT AGREEMENT
WARRANT AGREEMENT ("AGREEMENT"), dated as of August 31, 1999 by and
between TRANSTECHNOLOGY CORPORATION, a Delaware corporation (together with any
successor thereto, the "COMPANY"), and STATE STREET BANK AND TRUST COMPANY, as
warrant agent (with any successor Warrant Agent, the "WARRANT AGENT").
WHEREAS, the Company has entered into a Senior Subordinated Note
Purchase Agreement (the "LOAN AGREEMENT") dated August 31, 1999, with
BankBoston, N.A. ("BANKBOSTON"), the other lenders party thereto (including
BankBoston in its capacity as such, the "Lenders") and BankBoston as
Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT") in which the
Lenders have agreed to purchase Notes of the Company in an aggregate principal
amount of $75,000,000 (the "NOTES"); and
WHEREAS, it is a condition precedent to the Lenders' obligation to
purchase the Notes from the Company that the Company agree to enter into this
Agreement providing for the issuance of 731,197 Warrants (each, a "WARRANT")
which shall be held in escrow and released therefrom in accordance with the
terms and conditions hereof and of the Warrant Escrow Agreement dated of even
date herewith among the Company, the Administrative Agent, the Warrant Agent and
State Street Bank and Trust Company, in its capacity as escrow agent (the
"WARRANT ESCROW AGREEMENT"), representing the right to purchase 10.0% of the
fully diluted common stock of the Company as of the Closing Date (as defined
below), each Warrant initially entitling the holder thereof to purchase one
share of common stock, par value $.01 per share (the "COMMON STOCK"), of the
Company (subject to adjustment as set forth herein and in the Warrants). The
certificates evidencing the Warrants are herein referred to collectively as the
"WARRANT CERTIFICATES"; and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, canceled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
------------------------------------
SECTION 1.01. ISSUANCE OF WARRANTS. The Warrants shall be originally
issued on the Closing Date under and as defined in the Loan Agreement (the
"CLOSING DATE") and shall be held in escrow until released to the Holders (as
defined in Section 1.06) pursuant to and in accordance with the terms and
conditions of the Warrant Escrow Agreement.
<PAGE> 7
-2-
Each Warrant Certificate shall evidence the number of Warrants
specified therein, and each Warrant evidenced thereby shall, when exercisable as
provided herein and therein, represent the right, subject to the provisions
contained herein and therein, to purchase from the Company (and the Company
shall issue and sell to the holder of such Warrant) one fully paid, registered
and non-assessable share of Common Stock at an exercise price of $0.01 per
share. The number of shares of Common Stock issuable upon exercise of a Warrant
is subject to adjustment after the Closing Date as provided herein and in the
Warrant Certificate. The shares purchasable upon exercise of a Warrant are
hereinafter referred to as the "Shares" and, unless the context otherwise
requires, such term shall also include any other securities or property
purchasable and deliverable upon exercise of a Warrant as provided in Article V,
subject to adjustment as provided herein and in the Warrant Certificate.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant Certificates
will initially be issued in global form (the "GLOBAL WARRANTS"), substantially
in the form of EXHIBIT A hereto, and may subsequently be issued in registered
form as definitive Warrant Certificates (the "DEFINITIVE WARRANTS"), also
substantially in the form of EXHIBIT A attached hereto, as set forth in Section
1.08 (except that Warrants may be issued upon transfer, exchange or replacement
without the Private Placement Legend as and to the extent provided in Section
1.07(g)). Any Global Warrants to be delivered pursuant to this Agreement shall
bear the legend set forth in EXHIBIT B attached hereto. Such Global Warrants
shall represent such of the outstanding Warrants as shall be specified therein
and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and the
Depository (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the Depository with
respect to the Global Warrants upon their release from escrow under the Warrant
Escrow Agreement until a successor shall be appointed by the Company and the
Warrant Agent.
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by the chairman of its
Board of Directors, its president or any vice president and attested by its
secretary or assistant secretary. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. Typographical and other
minor errors or defects in any such reproduction of any such signature shall not
affect the validity or enforceability of any Warrant Certificate that has been
duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be countersigned and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
countersigned and
<PAGE> 8
-3-
delivered or disposed of as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution and delivery of
this Agreement any such person was not such an officer.
SECTION 1.04. AUTHENTICATION AND DELIVER. Subject to the immediately
following paragraph, Warrant Certificates shall be authenticated by manual
signature and dated the date of authentication by the Warrant Agent and shall
not be valid for any purpose unless so authenticated and dated. The Warrant
Certificates shall be numbered and shall be registered in the Warrant Register
(as defined in Section 1.06 hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by the chairman of its Board of Directors,
its president or any vice president and attested by its secretary or assistant
secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant Certificates and deliver them as provided in and pursuant to such
order of the Company. Such authentication shall be by a duly authorized
signatory of the Warrant Agent (although it shall not be necessary for the same
signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company or
the Warrant Agent, such Warrant Certificate nevertheless may be delivered or
disposed of as though the person who authenticated such Warrant Certificate had
not ceased to be such authorized signatory of the Warrant Agent; and any Warrant
Certificate may be authenticated on behalf of the Warrant Agent by such persons
as, at the actual time of authentication of such Warrant Certificates, shall be
the duly authorized signatories of the Warrant Agent, although at the time of
the execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be
in substantially the form set forth in EXHIBIT A hereto.
SECTION 1.05. TEMPORARY WARRANT CERTIFICATES. Pending the preparation
of definitive Warrant Certificates, the Company may execute, and the Warrant
Agent shall authenticate and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers
<PAGE> 9
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executing such Warrant Certificates may determine, as evidenced by their
execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.09 hereof.
Subject to the provisions of Section 4.01 hereof, such exchange shall be without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of Warrants.
Until so exchanged, the holder of a temporary Warrant Certificate shall in all
respects be entitled to the same benefits under this Agreement as a holder of a
definitive Warrant Certificate.
SECTION 1.06. REGISTRATION. The Company will keep, at the office or
agency maintained by the Company for such purpose, a register or registers in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of, and registration of transfer and exchange
of, Warrants as provided in this Article. Each person designated by the Company
from time to time as a person authorized to register the transfer and exchange
of the Warrants is hereinafter called, individually and collectively, the
"Registrar." The Company hereby initially appoints the Warrant Agent as
Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
(the "WARRANT REGISTER") of names and addresses of the registered holders of
Warrants ("HOLDERS"). The Warrant Agent will act as such repository unless and
until some other person is, by written notice from the Company to the Warrant
Agent and the Registrar, designated by the Company to act as such. The Company
shall cause each Registrar to furnish to such repository, on a current basis,
such information as to all registrations of transfer and exchanges effected by
such Registrar, as may be necessary to enable such repository to maintain the
Warrant Register on as current a basis as is practicable.
SECTION 1.07. REGISTRATION OF TRANSFERS OR EXCHANGES.
(a) TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When Definitive
Warrants are presented to the Warrant Agent with a request from the Holder
thereof:
(i) to register the transfer of the Definitive Warrants; or
<PAGE> 10
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(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.07 hereof for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Warrants presented or surrendered by Holder for registration of
transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction
of transfer or exchange in form satisfactory to the Company
and the Warrant Agent, duly executed by such Holder or by its
attorney, duly authorized in writing;
(y) in the case of Warrants the offer and sale of which have not
been registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and that are presented for transfer or
exchange by an owner who is not and for the preceding three
months has not been an Affiliate of the Company prior to (X)
the date which is two years (or such shorter period as may be
prescribed by Rule 144(k) (or any successor provision
thereto)) after the later of the date of release from escrow
under the Warrant Escrow Agreement of such Warrants and the
last date on which the Company or any Affiliate of the Company
was the owner of such Warrants, or any predecessor thereto,
and (Y) such later date, if any, as may be required by any
subsequent change in applicable law (the "RESALE RESTRICTION
TERMINATION DATE"), such Warrants shall be accompanied by the
following additional information and documents, as applicable
(PROVIDED, however, that the requirements of paragraphs (B)
through (F) shall not apply to any Non-Restricted Warrants (as
defined in Section 1.07(g)):
(A) if such Warrants are being delivered to the Warrant
Agent by a Holder for registration in the name of
such a beneficial holder, without transfer, a
certification from such Holder to that effect (in
substantially the form of EXHIBIT C hereto); or
(B) if such Warrants are being transferred to a qualified
institutional buyer (as defined in Rule 144A under
the Securities Act) (a "QIB") in reliance on and
accordance with Rule 144A under the Securities Act, a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such Warrants are being transferred to an
institutional "accredited investor" within the
meaning of subparagraph (a)(1), (a)(2), (a)(3) or
(a)(7) of Rule 501 under the Securities Act (an
"INSTITUTIONAL ACCREDITED INVESTOR") in reliance on
and in accordance with Regulation D under the
Securities Act or a
<PAGE> 11
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statutory private placement exemption, delivery by
the transferor of a certification to that effect (in
substantially the form of EXHIBIT C hereto), and
delivery by the proposed transferee of a Transferee
Certificate for Institutional Accredited Investors
(in substantially the form of EXHIBIT D hereto); or
(D) if such Warrants are being transferred in reliance on
and accordance with Regulation S under the Securities
Act, delivery by the transferor of a certification to
that effect (in substantially the form of EXHIBIT C
hereto), and a Certificate for Regulation S Transfers
in the form of EXHIBIT E hereto, PROVIDED that the
Company may, based upon the views of its own counsel,
instruct the Warrant Agent not to register such
transfer; or
(E) if such Warrants are being transferred in reliance on
and accordance with Rule 144 under the Securities
Act, delivery by the transferor of (i) a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto), and (ii)
an opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; or
(F) if such Warrants are being transferred in reliance on
and accordance with another exemption from the
registration requirements of the Securities Act, a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto) and an
opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; provided that
the Company may, based upon the views of its own
counsel, instruct the Warrant Agent not to register
such transfer in any case where the proposed
transferee is not a QIB, NON-U.S. PERSON or
Institutional Accredited Investor. A "NON-U.S.
PERSON" shall mean a Person who is not a "U.S.
person" as defined in Rule 902(o) under the
Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be transferred by a
holder for a beneficial interest in a Global Warrant except upon satisfaction of
the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent and the Company, together
with:
(A) certification from such holder (in substantially the
form of EXHIBIT C hereto) that such Definitive
Warrant is being
<PAGE> 12
-7-
transferred to a QIB in accordance with Rule 144A
under the Securities Act; and
(B) written instructions directing the Warrant Agent to
make, or to direct the Depository to make, an
endorsement on the Global Warrant to reflect an
increase in the aggregate amount of the Warrants
represented by the Global Warrant (together with
sufficient information concerning the participant
account at the Depository to which the interest is to
be transferred);
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Warrant Agent, the number of
Shares represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate and deliver
to the Depository a new Global Warrant in the appropriate amount.
(c) TRANSFER OR EXCHANGE OF GLOBAL WARRANTS. The transfer or exchange
of Global Warrants or beneficial interests therein shall be effected through the
Depository, in accordance with this Section 1.07 (including the restrictions on
transfer set forth herein), the Private Placement Legend (if such Global Warrant
bears the Private Placement Legend), and the procedures of the Depository
therefor.
(d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT
FOR A DEFINITIVE WARRANT.
(i) Any Holder having a beneficial interest in a Global Warrant may
transfer or exchange such beneficial interest for a Definitive
Warrant upon receipt by the Warrant Agent of written instructions
or such other form of instructions as is customary for the
Depository and in form satisfactory to the Warrant Agent and the
Company from the Depository or its nominee on behalf of any person
having a beneficial interest in a Global Warrant, including a
written order containing registration and delivery instructions
and, in the case of any such transfer or exchange prior to the
Resale Restriction Termination Date of an interest in a Global
Warrant bearing the Private Placement Legend, the following
additional information and documents:
(A) if such beneficial interest is being transferred to
the person designated by the Depository as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of EXHIBIT C
hereto); or
(B) if such beneficial interest is being transferred to a
QIB in reliance on and accordance with Rule 144A
under the Securities Act, a certification from the
transferor to that effect (in substantially the form
of EXHIBIT C hereto); or
<PAGE> 13
-8-
(C) if such beneficial interest is being transferred to
an Institutional Accredited Investor, delivery by the
transferor of certification to that effect in
reliance on and in accordance with Regulation D under
the Securities Act or a statutory private placement
exemption (in substantially the form of EXHIBIT C
hereto), and delivery by the proposed transferee of a
Transferee Certificate for Institutional Accredited
Investors (in substantially the form of EXHIBIT D
hereto); or
(D) if such beneficial interest is being transferred in
reliance on and accordance with Regulation S under
the Securities Act, delivery by the transferor of (i)
a certification to that effect (in substantially in
the form of EXHIBIT C hereto), and (ii) a Certificate
for Regulation S Transfers in the form of EXHIBIT E
hereto; provide that the Company may, based upon the
views of its own counsel, instruct the Warrant Agent
not to register such transfer; or
(E) if such beneficial interest is being transferred in
reliance on and accordance with Rule 144 under the
Securities Act, delivery by the transferor of (i) a
certification to that effect (in substantially the
form of EXHIBIT C hereto) and (ii) an opinion of
counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the
Securities Act; or
(F) if such beneficial interest is being transferred in
reliance on and accordance with another exemption
from the registration requirements of the Securities
Act, a certification from the transferor to that
effect (in substantially the form of EXHIBIT C
hereto) and an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act;
PROVIDED that the Company may instruct the Warrant
Agent not to register such transfer in any case where
the proposed transferee is not a QIB, Non-U.S. Person
or Institutional Accredited Investor;
then the Warrant Agent will cause, in accordance with
the standing instructions and procedures existing
between the Depository and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced
and, following such reduction, the Company will
execute and, upon receipt of an authentication order
in the form of an officers' certificate (a
certificate signed by two officers of the Company,
one of whom must be its principal executive officer,
principal financial officer or principal accounting
officer, in form satisfactory to the Warrant Agent
and the Company) (an "OFFICERS' CERTIFICATE"), the
Warrant Agent will authenticate and deliver to the
transferee a Definitive Warrant.
<PAGE> 14
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(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 1.07(d)
shall be registered in such names and in such authorized
denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing. The Warrant Agent shall
deliver such Definitive Warrants to the persons in whose names
such Warrants are so registered (or as such registered owner
or the Depository may otherwise direct) and adjust the Global
Warrant pursuant to Section 1.07(h).
(e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in Section 1.07(f), a Global Warrant may not be transferred
or exchanged as a whole except by the Depository to a nominee of the Depository
acceptable to the Company or by a nominee of the Depository to the Depository or
another nominee of the Depository acceptable to the Company or by the Depository
or any such nominee to a successor Depository acceptable to the Company or a
nominee of such successor Depository acceptable to the Company.
(f) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITORY. If
at any time:
(i) the Depository for the Global Warrants notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Warrant and a successor Depository
for the Global Warrant is not appointed by the Company within
90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants for all Global Warrants under this
Agreement;
then the Company will execute, and the Warrant Agent will, upon receipt
of an Officers' Certificate requesting the authentication and delivery
of Definitive Warrants, authenticate and deliver Definitive Warrants,
in an aggregate number equal to the aggregate number of Warrants
represented by the Global Warrant, in exchange for such Global Warrant.
(g) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer,
exchange or replacement of Warrant Certificates not bearing the legend set forth
in the first paragraph of EXHIBIT A attached hereto (the "PRIVATE PLACEMENT
LEGEND"), the Warrant Agent shall deliver Warrant Certificates that do not bear
the Private Placement Legend (the Warrants represented thereby being referred to
herein as the "NON-RESTRICTED WARRANTS") and any such transfer, exchange or
replacement or any subsequent transfer, exchange or replacement of any
Non-Restricted Warrants shall not be subject to the requirements of Section
1.07(a)(y), paragraphs (B) through (F), or Section 1.07(d)(i), paragraphs (A)
through (F), as the case may be). Upon the registration of transfer, exchange or
replacement of Warrant Certificates
<PAGE> 15
-10-
bearing the Private Placement Legend, the Warrant Agent shall deliver Warrant
Certificates that bear the Private Placement Legend unless, and the Warrant
Agent is hereby authorized to deliver Warrant Certificates without the Private
Placement Legend if, (i) the transferor certifies to the Warrant Agent and the
Company that the requested transfer is by an owner who is not and for the
preceding three months has not been an affiliate of the Company, and such
transfer is being made after the date which is two years (or such shorter period
as may be prescribed by Rule 144(k) (or any successor provision thereto) under
the Securities Act or any successor provision thereunder) after the later of the
date of release from escrow of such Warrant under the Warrant Escrow Agreement
or the last day on which the Company or any of its Affiliates was the owner of
such Warrant or any predecessor security, or (ii) there is delivered to the
Warrant Agent an opinion of counsel reasonably satisfactory to the Company to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act, or (iii) the Warrants to be transferred or exchanged represented by such
Warrant Certificates are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act.
(h) CANCELLATION OR ADJUSTMENT OF A GLOBAL WARRANT. At such time as all
beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to the Company or, upon written order to the Warrant Agent in
the form of an Officers' Certificate from the Company, retained and canceled by
the Warrant Agent. At any time prior to such cancellation, if any beneficial
interest in a Global Warrant is exchanged for Definitive Warrants, redeemed,
repurchased or canceled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent or by the Depository on the Warrant Agent's direction to
reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF
DEFINITIVE WARRANTS.
(i) To permit registrations of transfers or exchanges in
accordance with the terms hereof, the Company shall execute,
at the Warrant Agent's request, and the Warrant Agent shall
authenticate Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or
Global Warrants in accordance with the terms hereof shall be
the valid obligations of the Company, entitled to the same
benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration
of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent
nor the Company shall
<PAGE> 16
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be liable therefor or affected by notice to the contrary.
The foregoing shall not preclude the Warrant agent from
relying upon any certification or proxy from the Depository
with respect to beneficial owners of interests in the
Warrants.
(j) TRANSFERS BY AFFILIATES. Notwithstanding any other provision of
this Agreement, no transfer of a Warrant by a person who is an Affiliate of the
Company shall be made unless in compliance with applicable law. The Warrant
Agent shall not register the transfer of any Warrant by a person with respect to
whom the Warrant Agent has received prior written notice from the Company that
such person (or with respect to whom a Responsible Officer of the Warrant Agent
otherwise has actual knowledge, without hereby imposing or implying any duty of
inquiry or investigation on the part of the Warrant Agent, that such person) is
at the time of such transfer, or was at any time during the three months
proceeding such transfer, an Affiliate of the Company unless such transfer is
consented to by the Company. In connection with any such transfer, the Company
shall be entitled to require that such person provide to the Company an opinion
of counsel reasonably satisfactory to the Company that such transfer is in
compliance with applicable law.
(k) Unless and until expressly notified in writing to the contrary by
the Company (prior to the related transfer), the Warrant Agent may conclusively
presume (absent actual knowledge to the contrary by a Responsible Officer of the
Warrant Agent) that any Warrant being presented for transfer or exchange is
presented by an owner who is not, and for the preceding three months has not
been, an Affiliate of the Company. If, in any instance, the Warrant Agent shall
have been notified by the Company (or a Responsible Officer of the Warrant Agent
otherwise shall have actual knowledge) that a Warrant is being presented by an
owner which is, or during the preceding three months at any time was, an
Affiliate of the Company, registration of such transfer shall be subject to the
terms of Section 1.07(j).
(l) Unless and until notified in writing to the contrary by the Company
(in advance of the related transfer or exchange), which notice specifically
identifies a different Resale Restriction Termination Date, the Warrant Agent
shall be entitled to presume conclusively, in good faith, that the Resale
Restriction Termination Date with respect to any Warrant is the date which is
two (2) years after the date of release of such Warrant from escrow under the
Warrant Escrow Agreement.
(m) The Warrant Agent shall be under no obligation to register the
Warrants under the Securities Act. In the event of the registration of the
Warrants under the Securities Act, the Company shall give prompt written notice
thereof (including specification of the effective date thereto) to the Warrant
Agent, on which the Warrant agent may rely conclusively.
(n) Notwithstanding anything contained in this Agreement to the
contrary, neither the Warrant Agent nor the Registrar shall be responsible or
liable for determining compliance with applicable federal or state securities
laws (including, without limitation, the Securities Act or any particular rule
or regulation
<PAGE> 17
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promulgated thereunder); PROVIDED, HOWEVER, that if a specified transfer
certificate or opinion of counsel is required by the express terms of this
Section 1.07 to be delivered to the Warrant Agent or the Registrar prior to the
registration of a proposed transfer, the Warrant Agent and/or Registrar, as
applicable, shall be under a duty to receive such certificate or opinion of
counsel and to examine the same to determine whether it conforms on its face to
the requirements hereof (and the Warrant Agent or Registrar, as the case may be,
shall promptly notify the party delivering the same if it determines that such
certificate or opinion does not conform to such requirements).
SECTION 1.08. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED WARRANT
CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of an indemnity bond satisfactory to them and, in
the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this Section
in a name other than the prior registered holder of the lost, stolen, destroyed,
defaced or mutilated Warrant Certificate, the Company may require the payment
from the holder of such Warrant Certificate of a sum sufficient to cover any
tax, stamp tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the Registrar) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Warrant Certificate shall constitute a contractual
obligation of the Company, and shall be entitled to the benefits of (but shall
be subject to all the limitations of rights set forth in) this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section 1.08 are exclusive with
respect to the replacement of lost, stolen, destroyed, defaced or mutilated
Warrant Certificates and shall preclude (to the extent lawful) any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance
with the provisions of this Agreement, and deliver, the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.09. OFFICES FOR EXERCISE, ETC. So long as any of the Warrants
remain outstanding, the Company will designate and maintain in the City of
Boston, Commonwealth of Massachusetts: (a) an office or agency where the Warrant
<PAGE> 18
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Certificates may be presented for exercise, (b) an office or agency where the
Warrant Certificates may be presented for registration of transfer and for
exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.05 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
PROVIDED, HOWEVER, that an office or agency shall at all times be maintained in
the City of Boston, Commonwealth of Massachusetts, as provided in the first
sentence of this Section. In addition to such office or offices or agency or
agencies, the Company may from time to time designate and maintain one or more
additional offices or agencies within or outside the City of Boston, where
Warrant Certificates may be presented for exercise or for registration of
transfer or for exchange, and the Company may from time to time change or
rescind such designation, as it may deem desirable or expedient. The Company
will give to the Warrant Agent written notice of the location of any such office
or agency and of any change of location thereof. The Company hereby designates
the Warrant Agent at its principal corporate trust office identified in Section
7.03 in the City of Boston, Commonwealth of Massachusetts (the "WARRANT AGENT
OFFICE"), as the initial agency maintained for each such purpose. In case the
Company shall fail to maintain any such office or agency or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notice may be served at the Warrant
Agent Office and the Company appoints the Warrant Agent as its agent to receive
all such presentations, surrenders, notices and demands.
SECTION 1.10. LEGEND ON SHARES. The Shares issued upon exercise of
Warrants shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT ONLY, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY MERGER
OR OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS SUCH TRANSFER IS EXEMPT FROM
REGISTRATION, AND AN ACCEPTABLE OPINION OF COUNSEL IS DELIVERED TO THE
COMPANY WITH REGARD TO SUCH EXEMPTION, OR IS OTHERWISE IN COMPLIANCE
WITH THE ACT AND SUCH STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A WARRANT
HOLDERS' AGREEMENT DATED AS OF AUGUST 31, 1999 AMONG THE COMPANY, THE
HOLDERS OF THE WARRANTS AND BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
A COPY OF WHICH IS ON FILE WITH THE WARRANT AGENT."
<PAGE> 19
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ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE
PRICE AND REPURCHASE OF WARRANTS
--------------------------------
SECTION 2.01. RELEASE AND DURATION OF WARRANTS. Subject to the terms
and conditions established herein, the Warrants shall expire at 5:00 p.m.,
Boston time, on August 31, 2010. The applicable date of expiration of a
particular Warrant is referred to herein as the "EXPIRATION DATE" of such
Warrant. Each Warrant shall be held in escrow by the escrow agent under the
Warrant Escrow Agreement until it has been released in accordance with the terms
and conditions of the Warrant Escrow Agreement. Each Warrant that has been so
released may be exercised (in whole or in part) on any Business Day (as defined
below) on or after the date of its release and on or prior to the close of
business on the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date shall become void, and all rights of the holder under the
Warrant Certificate evidencing such Warrant and under this Agreement shall
cease.
"BUSINESS DAY" shall mean any day on which (i) banks in Boston,
Massachusetts, (ii) the principal U.S. securities exchange or market, if any, on
which any Common Stock is listed or admitted to trading and (iii) the principal
U.S. securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY. (a)
Subject to the provisions of this Agreement, after a Warrant is released from
escrow in accordance with the terms and conditions of the Warrant Escrow
Agreement a holder of a Warrant shall have the right to purchase from the
Company on or after the date of its release and on or prior to the close of
business on the Expiration Date one fully paid, registered and non-assessable
share of Common Stock (and any other securities or property purchasable or
deliverable upon exercise of such Warrant as provided in Article V), subject to
adjustment in accordance with Article V hereof, at the purchase price of $0.01
for each share purchased (the "EXERCISE PRICE"). The number of Shares for which
a particular Warrant may be exercised (the "EXERCISE RATE") shall be subject to
adjustment from time to time as set forth in Article V hereof.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity, including any predecessor of any such entity.
(b) Warrants may be exercised by (i) surrendering at any office or
agency maintained for that purpose by the Company pursuant to Section 1.09 (each
a "WARRANT EXERCISE OFFICE") the Warrant Certificate evidencing such Warrants
with the form of election to exercise Shares set forth on the reverse side of
the Warrant Certificate (the "ELECTION TO EXERCISE") duly completed and signed
by the registered
<PAGE> 20
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Holder or Holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney, and in the case of a transfer, such signature
shall be guaranteed by an eligible guarantor institution, and (ii) paying in
full the Exercise Price for each such Warrant exercised. Each Warrant may be
exercised in whole or in part, in which case a new Warrant Certificate shall be
issued for the unexercised portion.
(c) Simultaneously with the exercise of each Warrant, payment in full of the
aggregate Exercise Price may be made, at the option of the Holder, (i) by United
States dollars or by certified or official bank check, (ii) by the surrender
(which surrender shall be evidenced by cancellation of the number of Warrants
represented by any Warrant Certificate presented in connection with such
Cashless Exercise) of a Warrant or Warrants (represented by one or more Warrant
Certificates), and without payment of the Exercise Price in cash, for such
number of Shares equal to the product of (1) the number of Shares for which such
Warrant (or part thereof) is exercisable with payment in cash of the aggregate
Exercise Price as of the date of exercise and (2) the Cashless Exercise Ratio or
(iii) with any combination of (i) and (ii). For purposes of this Agreement, the
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of which is the
excess of the Current Market Value per share of the Common Stock on the date of
exercise over the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise. An exercise of a Warrant in accordance with the
immediately preceding sentences is herein called a "CASHLESS EXERCISE." Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the Holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to the Cashless
Exercise Ratio multiplied by the product of (a) the number of Warrants (or part
thereof) that the Holder specifies is to be exercised pursuant to a Cashless
Exercise and (b) the number of Shares for which such Warrant (or part thereof)
is then exercisable (without giving effect to the Cashless Exercise option). All
provisions of this Agreement shall be applicable with respect to an exercise of
a Warrant Certificate pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby. No payment or adjustment shall be made
on account of any dividends on the Shares issued upon exercise of a Warrant. If
the Company has not effected the registration under the Securities Act of the
offer and sale of the Shares by the Company to the holders of the Warrants upon
the exercise thereof, the Company may elect to require that holders of the
Warrants effect the exercise of the Warrants solely pursuant to the Cashless
Exercise option and may also amend the Warrants to eliminate the requirement for
payment of the Exercise Price with respect such. Cashless Exercise option. The
Warrant Agent shall have no obligation under this section to calculate the
Cashless Exercise Ratio.
(d) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "EXERCISE DATE" for a Warrant shall be the date when all of the items
referred to in the first sentence of paragraphs (b) and (c) of this Section 2.02
are received by the
<PAGE> 21
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Warrant Agent at or prior to 11:00 a.m., New York City time, on a Business Day
and the exercise of the Warrants will be effective as of such Exercise Date. If
any items referred to in the first sentence of paragraphs (b) and (c) are
received after 11:00 a.m., New York City time, on a Business Day, the exercise
of the Warrants to which such item relates will be effective on the next
succeeding Business Day. Notwithstanding the foregoing, in the case of an
exercise of Warrants on the Expiration Date, if all of the items referred to in
the first sentence of paragraphs (b) and (c) are received by the Warrant Agent
at or prior to 5:00 p.m., New York City time, on the Expiration Date, the
exercise of the Warrants to which such items relate will be effective on the
Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms hereof,
the receipt of a Warrant Certificate and payment of the Exercise Price (or
election of the Cashless Exercise option), the Warrant Agent shall: (i) except
to the extent exercise of the Warrant has been effected through Cashless
Exercise, cause an amount equal to the aggregate Exercise Price to be paid to
the Company by crediting the same to the account designated by the Company in
writing to the Warrant Agent for that purpose; (ii) advise the Company
immediately by telephone of the amount so deposited to the Company's account and
promptly confirm such telephonic advice in writing; and (iii) promptly advise
the Company in writing of the number of Warrants (or part thereof) exercised in
accordance with the terms and conditions of this Agreement and the Warrant
Certificates, the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Shares to which such holder is
entitled upon such exercise, and such other information as the Company shall
reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Shares to which such
holder is entitled (and, in the case of any Warrant exercised only in part, a
new Warrant Certificate representing the unexercised portion thereof),
registered in such name or names as may be directed by such holder pursuant to
the Election to Exercise, as set forth on the reverse of the Warrant
Certificate. Such certificate or certificates evidencing the Shares shall be
deemed to have been issued and any persons who are designated to be named
therein shall be deemed to have become the holder of record of such Shares as of
the close of business on the Exercise Date; the Shares may, if a Depository has
been appointed, initially be issued in global form (the "GLOBAL SHARES"). The
Global Shares and any individual certificates evidencing Shares will be subject
to substantially identical transfer restrictions and legends as required on the
Warrant Certificates pursuant to Article I. Such Global Shares shall represent
such of the outstanding Shares as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Shares from
time to time endorsed thereon and that the aggregate amount of outstanding
Shares represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Share to reflect the amount of any
increase or decrease in the amount of outstanding Shares represented thereby
shall be made by the registrar for the Shares and the
<PAGE> 22
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Depository (referred to below) in accordance with instructions given by the
holder thereof. [The Depository Trust Company] shall (if possible) act as the
Depository with respect to the Global Shares until a successor shall be
appointed by the Company and the registrar for the Shares. After such exercise
of any Warrant or Shares, the Company shall also issue or cause to be issued to
or upon the written order of the registered holder of such Warrant Certificate,
a new Warrant Certificate, countersigned by the Warrant Agent pursuant to
written instruction, evidencing the number of Warrants, if any, remaining
unexercised unless such Warrants shall have expired.
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. Upon the Company's
written request, the Warrant Agent shall deliver such canceled Warrant
Certificates to the Company.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
-----------------------------
SECTION 3.01. ENFORCEMENT OF RIGHTS. (a) Notwithstanding any of the
provisions of this Agreement, any Holder of any Warrant Certificate, without the
consent of the Warrant Agent, the Holder may, in and for its own behalf,
enforce, and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, his right to exercise the Warrant or Warrants
evidenced by his Warrant Certificate in the manner provided in such Warrant
Certificate and in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle the
holders thereof to any of the rights of a holder of Shares, including, without
limitation, the right to vote or to receive any dividends or other payments or
to consent or to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or any other
matter, or any rights whatsoever as stockholders of the Company, except as
expressly provided herein.
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from
time to time take all commercially reasonable action so that the Shares,
promptly upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States
(including the Nasdaq National Market), if any, on which other shares of Common
Stock are then listed.
<PAGE> 23
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ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
--------------------------------
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrants and of the Shares
upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant Certificates or any
certificates for Shares in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant. In any such case, no
transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of such
tax or other governmental charge or shall have established to the satisfaction
of the Company that such tax or other governmental charge has been paid or an
exemption is available therefrom.
SECTION 4.02. RULES 144 AND 144A. The Company covenants that, following
the release of Warrants pursuant to the Warrant Escrow Agreement, it will file
any reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder in a timely manner in accordance with the requirements of
the Securities Act and the Exchange Act and, if at any time the Company is not
required to file such reports, it will, upon the request of any holder or
beneficial owner of Warrants, make available such information necessary to
permit sales pursuant to Rule 144A under the Securities Act.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES. The Exercise Rate
is subject to adjustment from time to time as provided in this Section 5.01.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the Closing Date,
the Company:
(i) pays a dividend or makes a distribution on any of its
Common Stock in shares of any of its Common Stock (other than any such
dividend to the extent covered by Section 5.03);
(ii) subdivides any of its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines any of its outstanding shares of Common Stock
into a smaller number of shares;
(iv) pays a dividend or makes a distribution on any of its
Common Stock in shares of any of its Capital Stock (other than any such
dividend of
<PAGE> 24
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Common Stock or rights, warrants, or options for its Common
Stock to the extent covered by Section 5.03); or
(v) issues by reclassification of any of its Common Stock any
shares of any of its Capital Stock;
then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted so that the Holder of a Warrant
thereafter exercised may receive the number of shares of Capital Stock of the
Company which such Holder would have owned immediately following such action if
such Holder had exercised the Warrant immediately prior to such action or
immediately prior to the record date applicable thereto, if any (regardless of
whether the Warrants then outstanding are then exercisable and without giving
effect to the Cashless Exercise option).
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification. In the event
that such dividend or distribution is not so paid or made or such subdivision,
combination or reclassification is not effected, the Exercise Rate shall again
be adjusted to be the Exercise Rate which would then be in effect if such record
date or effective date had not been so fixed.
If after an adjustment a Holder of a Warrant upon exercise of such
Warrant may receive shares of two or more classes of Capital Stock of the
Company, the Exercise Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
(b) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT MARKET VALUE. If,
after the Closing Date, the Company grants or sells to any Person any Common
Stock or any securities convertible into or exchangeable or exercisable for any
Common Stock at a price below the then Current Market Value (other than (1)
pursuant to the exercise of the Warrants, (2) pursuant to any security
convertible into, or exchangeable or exercisable for shares of Common Stock
outstanding as of the date of this Agreement, (3) upon the conversion, exchange
or exercise of any convertible, exchangeable or exercisable security as to which
upon the issuance thereof an adjustment pursuant to this Article V has been made
(or as to which no such adjustment was required under this Article V), or (4)
upon the conversion, exchange or exercise of convertible, exchangeable or
exercisable securities of the Company outstanding on the date of this Agreement
(to the extent in accordance with the terms of such securities as in effect on
the date of this Agreement), the Exercise Rate for each Warrant then outstanding
shall be adjusted in accordance with the formula:
<PAGE> 25
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E' = E x (O + N)
----------------------
(O + [N x P/M])
where:
E' = the adjusted Exercise Rate for each Warrant then outstanding;
E = the then current Exercise Rate for each Warrant then
outstanding;
O = the number of shares of Common Stock outstanding immediately
prior to the sale of Common Stock or issuance of securities
convertible, exchangeable or exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the maximum
stated number of shares of Common Stock issuable upon the
conversion, exchange or exercise of any such convertible,
exchangeable or exercisable securities, as the case may be;
P = the proceeds per share of Common Stock received by the
Company, which (i) in the case of shares of Common Stock is
the amount payable to the Company in consideration for the
sale and issuance of such shares; and (ii) in the case of
securities convertible into or exchangeable or exercisable for
shares of Common Stock is the amount payable to the Company in
consideration for the sale and issuance of such convertible or
exchangeable or exercisable securities, plus the minimum
aggregate amount of additional consideration, other than the
surrender of such convertible or exchangeable securities,
payable to the Company upon exercise, conversion or exchange
thereof in each case before deduction of any discounts,
commissions, fees and other expenses of issuance and
marketing; and
M = the Current Market Value as of the Time of Determination or at
the time of sale, as the case may be.
The adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights, warrants
or options to which this paragraph (b) applies or upon consummation of the sale
of Common Stock, as the case may be. To the extent that shares of Common Stock
are not delivered prior to the expiration of any such rights or warrants, the
Exercise Rate for each Warrant then outstanding shall be readjusted to the
Exercise Rate which would otherwise be in effect had the adjustment made upon
the issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered pursuant to the
exercise of such rights or Warrants. In the event that such rights or warrants
are not so issued, the Exercise Rate for each Warrant then outstanding shall
again be adjusted to be the Exercise Rate which would then be in effect if such
date fixed for determination of stockholders entitled to receive such rights or
warrants had not been so fixed.
<PAGE> 26
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No adjustment shall be made under this paragraph (b) if the application
of the formula stated above in this paragraph (b) would result in a value of E'
that is lower than the value of E.
No adjustment in the Exercise Rate shall be made under this paragraph
(b) upon the issuance, conversion, exchange or exercise of options to acquire
shares of Common Stock to or by officers, directors or employees of the Company;
provide that the exercise price of such options, at the time of issuance
thereof, is at least equal to the then Current Market Value of the Common Stock
underlying such options.
(c) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is adjusted, the
Company shall promptly mail to Holders of Warrants then outstanding at the
addresses appearing on the Warrant Register a notice of the adjustment. The
Company shall file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's chief financial officer briefly stating the
facts requiring the adjustment and the manner of computing it. The certificate
shall be conclusive evidence that the adjustment is correct. Neither the Warrant
Agent nor any such Registrar shall be under any duty or responsibility with
respect to any such certificate except to exhibit the same during normal
business hours to any holder desiring inspection thereof.
(d) REORGANIZATION OF COMPANY; Special Distributions. (i) If (A) the
Company, in a single transaction or through a series of related transactions,
merges, consolidates or amalgamates with or into any other person or sells,
assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another person or group of
affiliated persons, (B) the Company is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock or (C) all
holders of Common Stock engage in an exchange of such Common Stock for shares of
Capital Stock or other equity securities in any other entity (a "FUNDAMENTAL
TRANSACTION"), as a condition to consummating any such transaction the person
issuing the consideration in any such consolidation, merger or share exchange if
other than the Company (the "SURVIVING PERSON"), shall enter into a supplemental
warrant agreement. The supplemental warrant agreement shall provide (a) that
each Warrant then outstanding shall thereafter be exercisable for the kind and
amount of securities, cash or other assets which a holder thereof would have
received upon consummation of the Fundamental Transaction if such holder had
exercised the Warrant immediately before the effective date of the transaction
(regardless of whether the Warrants are then exercisable and without giving
effect to the Cashless Exercise option, provided that such exerciseability shall
not be accelerated by such Fundamental Transaction), assuming (to the extent
applicable) that such holder (i) was not a constituent person or an affiliate of
a constituent person to such transaction, (ii) made no election with respect
thereto, and (iii) was treated alike with the plurality of non-electing holders,
and (b) that the Surviving Person shall succeed to and be substituted to every
right and obligation of the Company in respect of this Agreement and the
Warrants and thereafter TransTechnology Corporation shall no longer be
considered the Company for purposes of this Agreement. The supplemental warrant
agreement shall provide for adjustments
<PAGE> 27
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which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article V. The Surviving Person shall mail to Holders of
Warrants at the addresses appearing on the Warrant Register a notice briefly
describing the supplemental warrant agreement. If the issuer of securities
deliverable upon exercise of Warrants is an affiliate of the Surviving Person,
that issuer shall join in the supplemental warrant agreement.
(ii) Notwithstanding the foregoing, if the Company enters into a
Fundamental Transaction with another Person and consideration is payable to
holders of shares of Capital Stock (or other securities or property) of a class
issuable or deliverable upon exercise of any Warrants that have been released
from escrow and are then exercisable in exchange for their shares of Capital
Stock in connection with such Fundamental Transaction, which consideration
consists solely of cash, then the holders of such then exercisable Warrants
shall be entitled to receive distributions on the date of such event on an equal
basis with holders of such shares (or other securities issuable upon exercise of
the Warrants) as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price therefor. Upon receipt of such payment, if any,
the rights of a holder of such a Warrant shall terminate and cease and such
holder's Warrants shall expire.
(iii) If this paragraph (d) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(iv) "AFFILIATE" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such specified Person. For purposes of this
definition, "CONTROL," (including, with correlative meanings, the terms
"CONTROLLING" "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
(e) COMPANY DETERMINATION FINAL. Any determination that the Company or
the Board of Directors of the Company must make pursuant to this Article V is
conclusive.
(f) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent has no
duty to determine when an adjustment under this Article V should be made, how it
should be made or what it should be. The Warrant Agent has no duty to determine
whether a supplemental warrant agreement under paragraph (d) need be entered
into or whether any provisions of any supplemental warrant agreement are
correct. The Warrant Agent shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon exercise of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with any provision of this Article V. Among other
things, the Company shall certify to the Warrant Agent the Current Market Value,
in accordance with the definition thereof, and the current Exercise Rate, in
either case upon request by the Warrant Agent from time to time, as may be
reasonably required to enable the Warrant
<PAGE> 28
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Agent to perform its duties hereunder, and on which the Warrant Agent may rely
conclusively.
(g) ADJUSTMENT FOR TAX PURPOSES. The Company may in its sole discretion
make such increases in the Exercise Rate, in addition to those otherwise
required by this Section, as it considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients.
(h) UNDERLYING SHARES. The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock or Common Stock held in the treasury of the Company, for the
purpose of effecting the exercise of Warrants, the full number of Shares then
deliverable upon the exercise of all Warrants then outstanding and payment of
the exercise price, and the shares so deliverable shall be fully paid and
nonassessable and free from all liens and security interests created by the
Company.
(i) SPECIFICITY OF ADJUSTMENT. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number and kind of Shares per Warrant as are stated on the Warrant Certificates
initially issuable pursuant to this Agreement.
(j) VOLUNTARY ADJUSTMENT. The Company from time to time may in its sole
discretion increase the Exercise Rate by any number and for any period of time
(provided that such period is not less than 20 Business Days). Whenever the
Exercise Rate is so increased, the Company shall mail to holders at the
addresses appearing on the Warrant Register and file with the Warrant Agent a
notice of the increase. The Company shall give the notice at least 15 days
before the date the increased Exercise Rate takes effect. The notice shall state
the increased Exercise Rate and the period it will be in effect. A voluntary
increase in the Exercise Rate does not change or adjust the Exercise Rate
otherwise in effect as determined by this Section 5.01.
(k) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise Rate for
outstanding Warrants under this Article V, any subsequent event requiring an
adjustment under this Article V shall cause an adjustment to the Exercise Rate
for outstanding Warrants as so adjusted.
(l) DEFINITIONS.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such person's capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person, whether outstanding on the date of issuance
of the Warrants or issued after such issue date, and any and all option, Warrant
or other security convertible into or exercisable or exchangeable for any of the
foregoing.
<PAGE> 29
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"CURRENT MARKET VALUE" per share of Common Stock of the Company or any
other security at any date means (i) if the security is not listed and traded on
any national securities exchange or NASDAQ national market system, the fair
market value of the security, determined in good faith by the Board of Directors
of the Company and certified in a board resolution, (a) taking into account the
most recently completed arm's-length transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such
date, or (b) if no transaction shall have occurred during such six-month period,
taking into account the fair market value of the security as determined by an
Independent Financial Expert (PROVIDED that, in the case of the calculation of
Current Market Value for determining the cash value of fractional shares, any
such determination within six months that is, in the good faith judgment of the
Board of Directors of the Company, a reasonable determination of value, may be
utilized and PROVIDED, further that for purposes of determining the Cashless
Exercise Ratio or the cash value of fractional shares, the Current Market Value
may be determined in good faith by the Board of Directors), a copy of which
board resolution is certified to the Warrant Agent by the president, any vice
president or the chief financial officer of the Company, or (ii) (a) if the
security is listed and traded on any national securities exchange or NASDAQ
national market system, the average of the daily closing sales prices of the
securities for the 20 consecutive days immediately preceding such date, or (b)
if the security has so traded for less than 20 consecutive days immediately
preceding such date, then the average of the closing sales prices for all of the
trading days before such date for which closing sales prices are available, in
the case of each of (ii)(a) and (ii)(b), as certified to the Warrant Agent by
the president, any vice president or the chief financial officer of the Company.
The closing sales price for each such trading day shall be in the case of a
security listed or admitted to trading on any United States national securities
exchange or quotation system, the closing sales price, regular way, on such day,
or if no sale takes place on such day, the average of the closing bid and asked
prices on such day.
"INDEPENDENT FINANCIAL EXPERT" means a United States investment banking
or valuation firm of national or regional standing in the United States (i)
which does not, and whose directors, officers and employees or Affiliates do not
have a direct or indirect material financial interest for its proprietary
account in the Company or any of its Affiliates and (ii) which, in the judgment
of the Board of Directors of the Company, is otherwise independent with respect
to the Company and its Affiliates and qualified to perform the task for which it
is to be engaged.
"TIME OF DETERMINATION" means, (i) in the case of any distribution of
securities or other property to existing stockholders to which paragraph (b)
applies, the time and date of the determination of stockholders entitled to
receive such securities or property or (ii) in the case of any other issuance
and sale to which paragraph (b) applies, the time and date of such issuance or
sale.
(m) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No Adjustment in the
Exercise Rate need be made unless the adjustment would require an increase of at
least 1% in the Exercise Rate. Any adjustments that are not made shall be
carried
<PAGE> 30
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forward and taken into account in any subsequent adjustments. All calculations
under this Section 5.01 shall be made to the nearest 1/1000th of a Share.
SECTION 5.02. FRACTIONAL SHARES. The Company will not be required to
issue fractional Shares upon exercise of the Warrants or distribute Share
certificates that evidence fractional Shares. In the event a Holder is required
by Section 2.02(c) to make a Cashless Exercise, the number of Shares issuable
shall be rounded up to the nearest whole number. In addition, in no event shall
any holder of Warrants be required to make any payment of a fractional cent. In
lieu of fractional Shares, there shall be paid to the registered Holders of
Warrant Certificates at the time Warrants evidenced thereby are exercised as
herein provided an amount in cash equal to the same fraction of the Current
Market Value per Share on the Business Day preceding the date the Warrant
Certificates evidencing such Warrants are surrendered for exercise. Such
payments will be made by check or by transfer to a bank account maintained by
such registered Holder. If any Holder surrenders for exercise more than one
Warrant Certificate, the number of Shares deliverable to such Holder may, at the
option of the Company, be computed on the basis of the aggregate amount of all
the Warrants exercised by such Holder.
SECTION 5.03. CERTAIN DISTRIBUTIONS. Subject to the proviso set forth
below, if at any time the Company grants, issues or sells options, convertible
securities, or rights to purchase Capital Stock, warrants or other securities
pro rata to the record holders of any Common Stock (the "DISTRIBUTION RIGHTS")
or, without duplication, makes any dividend or otherwise makes any distribution,
including, subject to applicable law, pursuant to any plan of liquidation
("DISTRIBUTION") on Common Stock (whether in cash, property, evidences of
indebtedness or otherwise), then the Company shall grant, issue, sell or make to
each registered holder of Warrants then outstanding, the aggregate Distribution
Rights or Distribution, as the case may be, which such holder would have
acquired if such holder had held the maximum number of Shares acquirable upon
complete exercise of such holder's Warrants (without giving effect to the
Cashless Exercise option) immediately before the record date for the grant,
issuance or sale of such Distribution Rights or Distribution, as the case may
be, or, if there is no such record date, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Distribution Rights or Distribution, as the case may be; PROVIDED that the
Company shall not have to grant, issue, sell or make any Distribution Rights or
Distribution in respect of any Warrants until such time as the applicable
Warrant is released pursuant to the Warrant Escrow Agreement. The Company
covenants not to (x) cause or suffer to exist any restriction or become
effective any agreement that would not allow the Company to grant, issue, sell
or make Distribution Rights or Distributions with respect to the Warrants or the
Shares from and after the release of the Warrants pursuant to the Warrant Escrow
Agreement, other than any such restriction or agreement affecting all shares of
the Common Stock equally, or (y) do anything that would frustrate the Company's
ability to grant, issue, sell or make Distribution Rights or Distributions with
respect to the Warrants or the Shares equally with other shares of the Common
Stock from and after the release of the Warrants pursuant to the Warrant Escrow
Agreement.
<PAGE> 31
-26-
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT. The Company hereby appoints State Street
Bank and Trust Company as Warrant Agent of the Company in respect of the
Warrants and the Warrant Certificates upon the terms and subject to the
conditions herein and in the Warrant Certificates set forth; and State Street
Bank and Trust Company hereby accepts such appointment. The Warrant Agent shall
have the powers and authority specifically granted to and conferred upon it in
the Warrant Certificates and hereby and such further powers and authority to act
on behalf of the Company as the Company may hereafter grant to or confer upon it
and it shall accept in writing (PROVIDED, HOWEVER that the Warrant Agent shall
have only such duties and responsibilities with respect to the exercise thereof
as are expressly set forth herein and as may be expressly set forth in any such
acceptance). All of the terms and provisions with respect to such powers and
authority contained in the Warrant Certificates are subject to and governed by
the terms and provisions hereof.
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of the holders from
time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be
agreed upon with the Company in writing for all services rendered by it
and the Company agrees promptly to pay such compensation and to
reimburse the Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel) incurred without
gross negligence, bad faith or willful misconduct on its part in
connection with the services rendered by it hereunder. The Company also
agrees to indemnify the Warrant Agent and any predecessor Warrant
Agent, their directors, officers, affiliates, agents and employees for,
and to hold them and their directors, officers, affiliates, agents and
employees harmless against, any loss, liability or expense of any
nature whatsoever (including, without limitation, reasonable fees and
expenses of counsel) incurred without gross negligence, bad faith or
willful misconduct on the part of the Warrant Agent or any such other
person, arising out of or in connection with its acting as such Warrant
Agent hereunder and its exercise of its rights and performance of its
obligations hereunder. The obligations of the Company under this
Section 6.02 shall survive the exercise and the expiration of the
Warrant Certificates and the resignation and removal of the Warrant
Agent.
(b) In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship of
agency or trust for or with any of the owners or holders of the Warrant
Certificates.
<PAGE> 32
-27-
(c) The Warrant Agent may consult with counsel of its
selection and any written opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such opinion.
(d) The Warrant Agent shall be fully protected and shall incur
no liability for or in respect of any action taken or omitted to be
taken or thing suffered by it in reliance upon any Warrant Certificate,
notice, direction, consent, certificate, affidavit, opinion of counsel,
instruction, statement or other paper or document reasonably believed
by it in good faith to be genuine and to have been presented or signed
by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates
and employees ("RELATED PARTIES"), may become the owners of, or acquire
any interest in, Warrant Certificates, Shares or other obligations of
the Company with the same rights that it or they would have if it were
not the Warrant Agent hereunder and, to the extent permitted by
applicable law, it or they may engage or be interested in any financial
or other transaction with the Company and may act on, or as Depository,
trustee or agent for, any committee or body of holders of shares or
other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall be deemed to
prevent the Warrant Agent or such Related Parties from acting in any
other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for
interest on, and shall not be required to invest, any monies at any
time received by it pursuant to any of the provisions of this Agreement
or of the Warrant Certificates. In no instance shall the Warrant Agent
have any liability under or pursuant to this Agreement for special or
consequential damages (including without limitation loss of profits),
whether or not advised of the likelihood thereof.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision
hereof) or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the validity
or execution of any Warrant Certificate (except its authentication
thereof).
(h) The recitals and other statements contained herein and in
the Warrant Certificates (except as to the Warrant Agent's
authentication thereon) shall be taken as the statements of the Company
and the Warrant Agent assumes no responsibility for the correctness of
the same. The Warrant Agent does not make any representation as to the
validity or sufficiency of this Agreement or the Warrant Certificates,
except for the due execution and delivery of this Agreement by the
Warrant Agent, as to which it hereby so represents and warrants;
PROVIDED, HOWEVER, that the Warrant Agent shall not be relieved of its
duty to authenticate the Warrant Certificates as authorized by this
Agreement. The Warrant Agent shall not be accountable
<PAGE> 33
-28-
for the use or application by the Company of the proceeds of the
exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may
require:
(1) an Officers' Certificate stating on behalf of the
Company that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Warrant Agreement
relating to the proposed action have been complied with; and
(2) if reasonably necessary in the judgment of the
Warrant Agent, an opinion of counsel for the Company (who may
be the Company's general counsel) stating that, in the opinion
of such counsel, all such conditions precedent have been
complied with, provide that such matter is one customarily
opined on by counsel.
Each Officers' Certificate or, if requested, an opinion of
counsel with respect to compliance with a condition or covenant
provided for in this Warrant Agreement shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person,
he or she has made such examination or investigation as is
necessary to enable him or her to express his or her opinion
as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion
of such person, such condition or covenant has been complied
with.
(j) The Warrant Agent shall be obligated to perform only such
duties as are herein, and in the Warrant Certificates specifically set
forth and no implied duties or obligations shall be read into this
Agreement or the Warrant Certificates against the Warrant Agent. The
Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any of the Warrant
Certificates authenticated by the Warrant Agent and delivered by it to
the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained in the Warrant
Certificates or in the case of the receipt of any written demand from a
holder of a Warrant Certificate with respect to such default,
including, without limiting the generality of the foregoing, any duty
or responsibility to
<PAGE> 34
-29-
initiate or attempt to initiate any proceedings at law or otherwise or,
except as provided in Section 7.02 hereof, to make any demand upon the
Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the
Company made or given under any provision of this Agreement shall be
sufficient if signed by its chairman of the Board of Directors, its
president, its treasurer, its controller or any vice president or its
secretary or any assistant secretary.
(l) The Warrant Agent shall have no responsibility in respect
of any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed,
acknowledged and delivered, all such further and other acts,
instruments and assurances as may reasonably be required by the Warrant
Agent for the carrying out or performing by the Warrant Agent of the
provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to
accept written instructions with respect to the performance of its
duties hereunder from any one of the chairman of the Board of
Directors, the president, the treasurer, the controller, any vice
president or the secretary or assistant secretary of the Company or any
other officer or official of the Company reasonably believed to be
authorized to give such instructions and to apply to such officers or
officials for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with such instructions with respect to
any matter arising in connection with the Warrant Agent's duties and
obligations arising under this Agreement.
(o) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed on behalf of the Company by any one of the chairman
of the Board of Directors, the president, the treasurer, the
controller, any vice president or the secretary or assistant secretary
of the Company or any other officer or official of the Company
reasonably believed to be authorized to give such instructions and
delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend
its own funds in the performance of its obligations and duties
hereunder.
<PAGE> 35
-30-
(q) As used herein, a "RESPONSIBLE OFFICER" of the Warrant
Agent shall mean any officer working in its Corporate Trust Department
and having responsibility for the administration of this Agreement, or
to whom as specific matters concerning this Agreement is referred
because of his or her familiarity with or knowledge of the subject
matter.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR.
(a) The Company agrees to use commercially reasonable efforts to
provide that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by giving
written notice to the Company of such intention on its part, specifying the date
on which its desired resignation shall become effective; PROVIDED, HOWEVER, that
such date shall be at least 30 days after the date on which such notice is given
unless the Company agrees to accept less notice. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Warrant Agent,
qualified as provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be delivered
to the resigning Warrant Agent and one copy to the successor Warrant Agent. As
provided in Section 6.03(d) hereof, such resignation shall become effective upon
the earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 60 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event set
forth in the next succeeding sentence, remove the Warrant Agent and appoint a
successor Warrant Agent by written instrument in duplicate, specifying such
removal and the date on which it is intended to become effective, signed on
behalf of the Company, one copy of which shall be delivered to the Warrant Agent
being removed and one copy to the successor Warrant Agent. The Warrant Agent
shall be removed as aforesaid if it shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of it or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. Any removal of the Warrant Agent and any
appointment of a successor Warrant Agent shall become effective upon acceptance
of appointment by the successor Warrant Agent as provided in Section 6.03(d). As
soon as practicable after appointment of the successor Warrant Agent, the
Company shall cause written notice of the change in the Warrant Agent to be
given to each of the registered Holders of the Warrants in the manner provided
for in Section 7.04 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company
shall fail to appoint a successor Warrant Agent within a period of 30 days after
receipt of such notice of resignation or removal, then the holder of any Warrant
Certificate or the retiring Warrant Agent may apply to a court of competent
jurisdiction for the appointment of a successor to the Warrant Agent reasonably
acceptable to the Company. Pending appointment of a successor to the Warrant
Agent, either by the Company or by such a court, the duties of the Warrant Agent
shall be carried out by the Company.
<PAGE> 36
-31-
(d) Any successor Warrant Agent, whether appointed by the Company or by
a court, shall be a bank or trust company in good standing, incorporated under
the laws of the United States of America or any State thereof and having, at the
time of its appointment, a combined capital surplus of at least $50 million.
Such successor Warrant Agent shall execute and deliver to its predecessor and to
the Company an instrument accepting such appointment hereunder and all the
provisions of this Agreement, and thereupon such successor Warrant Agent,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Warrant Agent hereunder, and such predecessor
shall thereupon become obligated to (i) transfer and deliver, and such successor
Warrant Agent shall be entitled to receive, all securities, records or other
property on deposit with or held by such predecessor as Warrant Agent hereunder
and (ii) upon payment of the amounts then due it pursuant to Section 6.02(a)
hereof, pay over, and such successor Warrant Agent shall be entitled to receive,
all monies deposited with or held by any predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder may
be merged or converted, or any corporation or bank with which the Warrant Agent
may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the Warrants
may be amended by the Company and the Warrant Agent, without the consent of the
Holder of any Warrant Certificate, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent provision
contained herein or therein, or to effect any assumptions of the Company's
obligations hereunder and thereunder by a successor corporation under the
circumstances described in Section 5.01(d) hereof, or in any other manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the Holders of the Warrant Certificates.
The Company and the Warrant Agent may amend, modify or supplement this
Agreement and the terms of the Warrants, and waivers or departures from the
terms hereof and thereof may be given, with the consent of the Requisite Warrant
Holders (as defined below), for the purpose of adding any provision to or
changing in
<PAGE> 37
-32-
any manner or eliminating any of the provisions of this Agreement or modifying
in any manner the rights of the Holders of the outstanding Warrants; PROVIDED,
HOWEVER, that no such modification that increases the Exercise Price or
decreases the Exercise Rate, makes any change to Section 5.01(d), reduces the
period of time during which the Warrants are exercisable hereunder, or effects
any change to this Section 7.01 may be made with respect to any Warrant without
the consent of the Holder of such Warrant. "REQUISITE WARRANT HOLDERS" means,
with respect to any amendment, modification, supplement or waiver, the Holders
of a majority in number of Shares represented by the Warrants that would be
issuable assuming exercise thereof at the time such amendment, modification,
supplement or waiver is voted upon. Notwithstanding any other provision of this
Agreement, the Warrant Agent's consent must be obtained regarding any supplement
or amendment which alters the Warrant Agent's rights or duties (it being
expressly understood that the foregoing shall not be in derogation of the right
of the Company to remove the Warrant Agent in accordance with Section 6.03
hereof). For purposes of any amendment, modification or waiver hereunder,
Warrants held by the Company or any of its Affiliates shall be disregarded.
Any modification or amendment made in accordance with this Agreement
will be conclusive and binding on all present and future Holders of Warrant
Certificates whether or not they have received written notice of or consented to
such modification or amendment or waiver and whether or not notation of such
modification or amendment is made upon such Warrant Certificates. Any instrument
given by or on behalf of any Holder of a Warrant Certificate in connection with
any consent to any modification or amendment will be conclusive and binding on
all subsequent Holders of such Warrant Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If
the Warrant Agent shall receive any notice or demand addressed to the Company by
the Holder of a Warrant Certificate pursuant to the provisions hereof or of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR TRANSMISSION OF
DOCUMENTS. All notices hereunder to the parties hereto shall be deemed to have
been given when sent by certified or registered mail, postage prepaid, or by
facsimile transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
To the Company:
TransTechnology Corporation
150 Allen Road
Liberty Corner, NJ 07938
Facsimile No.: (908) 903-1616
Attention: General Counsel
<PAGE> 38
-33-
To the Warrant Agent:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111-1724
Facsimile No.: (617) 662
Attention: Corporate Trust Department
Attention: TransTechnology Corporation
Warrant Agreement
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to Holders of Warrants shall
be mailed to such Holders at the addresses of such Holders as they appear in the
Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.05. APPLICABLE LAW; SUBMISSION TO JURISDICTION. THE
VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER AND OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF
SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
SECTION 7.06 PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in this
Agreement expressed or implied nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent, the
Holders of the Warrant Certificates and, with respect to Section 4.03 and 4.04,
the Holders of Shares issued pursuant to Warrants, any right, remedy or claim
under or by reason of this Agreement or of any covenant, condition, stipulation,
promise or agreement hereof; and all covenants (except for Section 4.03 which
shall be for the benefit of all holders of Shares issued pursuant to Warrants),
conditions, stipulations, promises and agreements in this Agreement contained
shall be for the sole and exclusive benefit of the Company and the Warrant Agent
and their successors and of the Holders of the Warrant Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this Agreement shall
be available during regular business hours at the principal corporate trust
office of the Warrant Agent, for inspection by the Holder of any Warrant
Certificate. The
<PAGE> 39
-34-
Warrant Agent may require such Holder to submit its Warrant Certificate for
inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, Holders of Warrants shall be entitled, in addition to any other right
or remedy available to them, to an injunction restraining such breach or a
threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to such injunction and to
the ordering of specific performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will
from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all material permits, consents
and approvals of governmental agencies and authorities and securities acts
filings under United States Federal and state laws, and the rules and
regulations of all stock exchanges on which the Warrants are listed which may be
or become requisite in connection with the issuance, sale, transfer, and
delivery of the Warrant Certificates, the exercise of the Warrants or the
issuance, sale, transfer and delivery of the Shares issued upon exercise of the
Warrants.
[Signature Page Follows]
<PAGE> 40
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the parties hereto as of the day and year first above written.
TRANSTECHNOLOGY CORPORATION
By:/s/ Joseph F. Spanier
--------------------------------------
Name: JOSEPH F. SPANIER
Title: VICE PRESIDENT & CFO
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By:/s/ Jill Olson
--------------------------------------
Name: JILL OLSON
Title: VICE PRESIDENT
<PAGE> 41
A-1
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A")) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) AGREES THAT IT WILL
NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS
PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE RELEASE FROM ESCROW OF THIS SECURITY OR ANY
PREDECESSOR OF THIS SECURITY OR THE LAST DAY ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF
THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S,
PURSUANT TO RULE 903 OR 904 OF REGULATION S, (E) TO AN ACCREDITED INVESTOR THAT
IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
<PAGE> 42
A-2
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, TRANSFERS OF INTERESTS IN THIS
WARRANT SHALL BE SUBJECT TO COMPLIANCE WITH THE FOREGOING (AND SHALL REQUIRE
DELIVERY OF CERTAIN CERTIFICATES AND/OR OPINIONS TO EVIDENCE COMPLIANCE
THEREWITH, PURSUANT TO AND AS SPECIFIED IN THE WARRANT AGREEMENT DESCRIBED ON
THE REVERSE HEREOF). SUBJECT TO THE TERMS OF THE WARRANT AGREEMENT, THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE, PROVIDED THAT SUCH HOLDER IS NOT AN AFFILIATE OF THE COMPANY.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM IN REGULATION S.
[TO APPLY SO LONG AS PUT RIGHT IS IN EFFECT:] THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A WARRANT HOLDERS' AGREEMENT DATED AS OF AUGUST 31,
1999, AMONG THE COMPANY, THE HOLDERS OF THE WARRANTS AND BANKBOSTON N.A., AS
ADMINISTRATIVE AGENT, A COPY OF WHICH IS ON FILE WITH THE WARRANT AGENT.
<PAGE> 43
A-3
[Subject to appropriate modification at the time of execution and delivery.]
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
TRANSTECHNOLOGY CORPORATION
This Warrant Certificate certifies that [ ], or its registered assigns,
is the registered holder of [ ] Warrants (the "Warrants") to purchase shares of
Common Stock, par value $0.01 per share (the "Common Stock"), subject to the
conditions contained herein and in the Warrant Agreement, of TRANSTECHNOLOGY
CORPORATION, a Delaware corporation (the "Company," which term includes its
successors and assigns). Each Warrant entitles the holder to purchase from the
Company at any time from 9:00 a.m. Boston time on or after the date of issuance
until 5:00 p.m., Boston time, on August 31, 2010 (the "Expiration Date"), [ ]
fully paid, registered and non-assessable shares of Common Stock, subject to
adjustment as provided in Article V of the Warrant Agreement, at the exercise
price of $0.01 for each share purchased (the "Exercise Price") (the shares of
Common Stock purchasable upon exercise of a Warrant being herein referred to as
the "Shares" and, unless the context otherwise requires, such term shall also
mean the other securities or property purchasable and deliverable upon exercise
of a Warrant as provided in the Warrant Agreement dated as of August 31, 1999
(the "Warrant Agreement")), upon surrender of this Warrant Certificate and
payment of the Exercise Price (i) in United States dollars or certified official
or bank check, (ii) pursuant to the next sentence or (iii) in any combination of
(i) and (ii), at any office or agency maintained for that purpose by the Company
(the "Warrant Agent Office"), subject to the conditions set forth herein and in
the Warrant Agreement. A Warrant may also be exercised solely by the surrender
of the Warrant, and without the payment of the Exercise Price in cash, for such
number of Shares equal to the product of (1) the number of Shares for which such
Warrant is exercisable with payment of the Exercise Price as of the date of
exercise and (2) the Cashless Exercise Ratio. For purposes of this Warrant, the
"Cashless Exercise Ratio" shall equal a fraction, the numerator of which is the
excess of the Current Market Value per share of the Common Stock on the date of
exercise over the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise. An exercise of a Warrant in accordance with the
immediately preceding sentences is herein called a "Cashless Exercise." Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the Holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to the Cashless
Exercise Ratio multiplied by the product of (a) the number of Warrants (or part
thereof) that the holder specifies is to be exercised pursuant to a Cashless
Exercise and (b) the number of Shares for which such Warrant (or part thereof)
is then exercisable (without giving effect to the Cashless Exercise option). If
the
<PAGE> 44
A-4
Company has not effected the registration under the Securities Act of the offer
and sale of the Shares by the Company to the holders of the Warrants upon the
exercise thereof, the Company may elect to require that holders of the Warrants
effect the exercise of the Warrants solely pursuant to the Cashless Exercise
option and may also amend the Warrants to eliminate the requirement for payment
of the Exercise Price with respect such Cashless Exercise option. All provisions
of the Warrant Agreement shall be applicable with respect to an exercise of a
Warrant Certificate pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby. Capitalized terms used herein without
being defined herein shall have the definitions ascribed to such terms in the
Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company or any
other security at any date means (i) if the security is not listed and traded on
any national securities exchange or NASDAQ national market system, the fair
market value of the security, determined in good faith by the Board of Directors
of the Company and certified in a board resolution, (a) taking into account the
most recently completed arm's-length transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such date
or (b) if no transaction shall have occurred during such six-month period,
taking into account the fair market value of the security as determined by an
Independent Financial Expert (PROVIDED THAT, in the case of the calculation of
Current Market Value for determining the cash value of fractional shares, any
such determination within six months that is, in the good faith judgment of the
Board of Directors of the Company, a reasonable determination of value, may be
utilized and PROVIDED, FURTHER that for purposes of determining the Cashless
Exercise Ratio or the cash value of fractional shares, the Current Market Value
may be determined in good faith by Board of Directors) or (ii) (a) if the
security is listed and traded on any national securities exchange or NASDAQ
national market system, the average of the daily closing sales prices of the
securities for the 20 consecutive trading days immediately preceding such date,,
a copy of which board resolutions shall be certified to the Warrant Agent by the
president, any vice president or the chief financial officer of the Company, or
(b) if the security has so traded for less than 20 consecutive trading days
before such date, then the average of the closing sales prices for all of the
trading days before such date for which closing sales prices are available, in
the case of each of (ii)(a) and (ii)(b), as certified to the Warrant Agent by
the president, any vice president or the chief financial officer of the Company.
The closing sales price for each such trading day shall in the case of a
security listed or admitted to trading on any United States national securities
exchange or quotation system, the closing sales price, regular way, on such day,
or if no sale takes place on such day, the average of the closing bid and asked
prices on such day.
"INDEPENDENT FINANCIAL EXPERT" means a United States investment banking
or valuation firm of national or regional standing, (i) which does not, and
whose directors, officers and employees or Affiliates do not have a direct or
indirect material financial interest for its proprietary account in the Company
or any of its Affiliates and (ii) which, in the judgment of the Board of
Directors of the Company,
<PAGE> 45
A-5
is otherwise independent with respect to the Company and its Affiliates and
qualified to perform the task for which it is to be engaged.
The Company has initially designated the principal corporate trust
office of the Warrant Agent in the City of Boston, Commonwealth of
Massachusetts, as the initial Warrant Agent Office. The number of Shares
issuable upon exercise of the Warrants ("Exercise Rate") is subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., Boston time, on
August 31, 2010 shall thereafter be void.
If the Company merges, amalgamates or consolidates with or into, or
sells all or substantially all of its property and assets to, another Person
solely for cash, the holders of Warrants shall be entitled to receive
distributions on the date of such event on an equal basis with holders of Shares
(or other securities issuable upon exercise of the Warrants) as if the Warrants
had been exercised immediately prior to such event (less the Exercise Price).
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Warrant Certificate shall not be valid unless authenticated by the
Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS.
WITNESS the seal of the Company and signatures of its duly authorized
officers.
Dated:
TRANSTECHNOLOGY CORPORATION
By:________________________
Name:
Title:
Attest:
By:__________________________
Name:
Title:
<PAGE> 46
A-6
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By:________________________________
Authorized Signatory
<PAGE> 47
A-7
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
TRANSTECHNOLOGY CORPORATION
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., Boston time, on August 31,
2010 (the "Expiration Date"), each of which represents the right to purchase at
any time on or after the date of issuance and on or prior to the Expiration Date
[ ] shares of Common Stock, subject to adjustment as set forth in the Warrant
Agreement. The Warrants are issued pursuant to a Warrant Agreement dated as of
August 31, 1999 (the "Warrant Agreement"), duly executed and delivered by the
Company to State Street Bank and Trust Company, as Warrant Agent (the "Warrant
Agent"), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants.
If all of the items referred to in the preceding paragraph are received
by the Warrant Agent at or prior to 11:00 a.m., Boston time, on a Business Day,
the exercise of the Warrant to which such items relate will be effective on such
Business Day. If any items referred to in the preceding paragraph are received
after 11:00 a.m., Boston time, on a Business Day, the exercise of the Warrants
to which such item relates will be deemed to be effective on the next succeeding
Business Day. Notwithstanding the foregoing, in the case of an exercise of
Warrants on the Expiration Date, if all of the items referred to in the
preceding paragraph are received by the Warrant Agent at or prior to 5:00 p.m.,
Boston time, on such Expiration Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.
As soon as practicable after the exercise of any Warrant or Warrants,
the Company shall issue or cause to be issued to or upon the written order of
the registered holder of this Warrant Certificate, a certificate or certificates
evidencing the Share or Shares to which such holder is entitled (and, in the
case of any Warrant exercised only in part, a new Warrant Certificate
representing the unexercised portion thereof), in fully registered form,
registered in such name or names as may be directed by such holder pursuant to
the Election to Exercise, as attached to this Warrant Certificate. Such
certificate or certificates evidencing the Share or Shares shall be deemed to
have been issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Share or Shares as of the
close of business on the date upon which the exercise of this Warrant was deemed
to be effective as provided in the preceding paragraph.
The Company will not be required to issue fractional shares of Common
Stock upon exercise of the Warrants or distribute Share certificates that
evidence
<PAGE> 48
A-8
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
there shall be paid to the registered Holder of this Warrant Certificate at the
time such Warrant Certificate is exercised an amount in cash equal to the same
fraction of the Current Market Value per share of Common Stock on the Business
Day preceding the date this Warrant Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by a legal representative or attorney duly authorized in writing, may
be exchanged for a new Warrant Certificate or new Warrant Certificates
evidencing in the aggregate a like number of Warrants, in the manner and subject
to the limitations provided in the Warrant Agreement, without charge except for
any tax or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement (including other
restrictions upon transfer, and applicable requirements to evidence compliance
therewith, set forth therein), without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
Holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
Boston, Massachusetts, (ii) the principal U.S. securities exchange or market, if
any, on which the Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the Warrants are
listed or admitted to trading are open for business.
The Warrants and the Shares are entitled to the benefits of a Warrant
Holders' Agreement relating to the Warrants and the shares of Common Stock
issuable upon exercise thereof (the "Warrant Holders' Agreement"), pursuant to
which the holders representing not less than one-quarter of the Registrable
Securities (as defined in the Warrant Holders' Agreement) have the right under
certain circumstances to require the Company to effect one demand registration
of the Registrable Securities. The Warrant Holders' Agreement also provides the
holders of Registrable Securities with the right, subject to the conditions and
limitations contained therein, to include the Registrable Securities in certain
registration statements filed by the Company for its account or for the account
of any of its securityholders.
<PAGE> 49
A-9
The Warrant Holders' Agreement also contains provisions providing that
under certain circumstances, the holders of Warrants or of the shares of Common
Stock issuable upon exercise thereof shall have the right to require the
purchase of such Warrants and/or shares of Common Stock from such holders by the
Company. Copies of the Warrant Holders' Agreement are available from the Company
upon request.
<PAGE> 50
A-10
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Shares issuable upon the exercise of such Warrants and herewith tenders
payment for such Shares as follows:
$[ ] in cash or by certified or official bank check; or by surrender of
Warrants pursuant to a Cashless Exercise (as defined in the Warrant Agreement)
for shares of Common Stock at the current Cashless Exercise Ratio.
The undersigned requests that a certificate representing such Shares be
registered in the name of _______________________________________ whose address
is _______________________________________ and that such shares be delivered to
___________________________________________ whose address is
______________________________________. If only a part of a Warrant is being
exercised, the undersigned re-quests that a new Warrant Certificate representing
the unexercised portion thereof be registered in the name of _________________
whose address is ______________________________________. and that such Warrant
Certificate be delivered to _______________________________ whose address is
_____________________________________. Any cash payments to be paid in lieu of a
fractional Share should be made to __________________________ whose address is
_____________________________________ and the check representing payment thereof
should be delivered to _______________________ whose address is
_______________________.
Dated _______________, ____
Name of holder of
Warrant Certificate: ___________________________
(Please Print)
<PAGE> 51
A-11
Tax Identification or
Social Security Number: __________________________
Address:__________________________________________
__________________________________________
Signature:_____________________________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change
whatever and if the certificate
representing the Shares or any
Warrant Certificate representing
Warrants not exercised is to be
registered in a name other than that
in which this Warrant Certificate is
registered, or if any cash payment
to be paid in lieu of a fractional
share is to be made to a person
other than the registered holder of
this Warrant Certificate, the
signature of the holder hereof must
be guaranteed as provided in the
Warrant Agreement.
Dated _______________, ____
Signature: ____________________________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change
whatever.
<PAGE> 52
A-12
[FORM OF ASSIGNMENT]
For value received _________________ hereby sells, assigns and
transfers unto ____________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _______________ attorney, to transfer said Warrant Certificate on the
books of the within-named Company, with full power of substitution in the
premises.
Dated _______________, ____
Signature: ____________________________________________________________
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change
whatever.
Signature Guaranteed: _________________________________________________
<PAGE> 53
<TABLE>
<CAPTION>
A-13
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS1/
The following exchanges of a part of this Global Warrant for Definitive Warrants
have been made:
- ---------------- ----------------- ----------------- ------------------ ----------------
Number of
Amount of Amount of Warrants of
decrease in increase in this Global
Number of Number of Warrant Signature of
Warrants of Warrants of following such authorized
Date of This Global this Global decrease (or officer of
Exchange Warrant Warrant increase) Warrant Agent
<S> <C> <C> <C> <C>
- ---------------- ----------------- ----------------- ------------------- ----------------
- ---------------- ----------------- ----------------- ------------------- ----------------
</TABLE>
_____________________________
1/This is to be included only if the Warrant is in global form
<PAGE> 54
B-1
EXHIBIT B
FORM OF LEGEND FOR GLOBAL WARRANT
Any Global Warrant authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
[THE DEPOSITORY TRUST COMPANY ("DTC")], TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF [INSERT NOMINEE NAME] OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, (AND ANY PAYMENT IS MADE TO
[INSERT NOMINEE NAME] OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, [INSERT NOMINEE NAME], HAS AN INTEREST HEREIN.
<PAGE> 55
C-1
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the
"Warrants") of TRANSTECHNOLOGY CORPORATION
This Certificate relates to _______ Warrants held in* ______ book-entry
or* _______________ certificated form by ______________ (the "Transferor").2/
has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depository a Warrant or Warrants in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Warrant (or the portion thereof indicated above); or
has requested the Warrant Agent by written order to exchange
or register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such
Warrant, the Transferor does hereby certify that Transferor is familiar with the
Warrant Agreement relating to the above captioned Warrants and the restrictions
on transfers thereof as provided in Section 1.07 of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because*:
Such Warrant is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 1.07(a)(y)(A) or Section
1.07(d)(i)(A) of the Warrant Agreement).
[ ] Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on and accordance
with Rule 144A.
Such Warrant is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or
(7) of Rule 501 under the Act) in reliance on and in accordance with Regulation
D under the Act or a statutory private placement exemption.
[ ] Such Warrant is being transferred in reliance on and
accordance with Regulation S under the Act.
_______________________
2/Check Applicable Box.
<PAGE> 56
C-2
Such Warrant is being transferred in reliance on and
accordance with Rule 144 under the Act (and this certificate is accompanied by
an opinion of counsel as required under the Warrant Agreement).
Such Warrant is being transferred in reliance on and in
compliance with the following exemption from the registration requirements of
the Act.
Exemption: _______________
In connection with any proposed transfer pursuant to Regulation S, or
any other transfer where the proposed transferee is not a QIB, Non-U.S. Person
or Institutional Accredited Investor, the undersigned understands that the
Company may, based on the views of its counsel, instruct the Warrant Agent not
to register such transfer.
___________________________
[INSERT NAME OF TRANSFEROR]
By: _______________________
Date: ___________________________
<PAGE> 57
D-1
EXHIBIT D
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
-----------------------------------------------
In connection with our proposed purchase of Warrants (the "Warrants")
to purchase Common Stock of TransTechnology Corporation (the "Company"), we
confirm that:
1. We have received such information as we deem necessary in order to
make our investment decision.
2. We understand that any subsequent transfer of the Warrants is
subject to certain restrictions and conditions set forth in the Warrant
Agreement dated as of August 31, 1999, by and between the Company and the
Warrant Agent referred to therein (the "Warrant Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Warrants except in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Warrants have not been
registered under the Securities Act, and that the Warrants may not be o States
or to, or for the account or benefit of, U.S. persons except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell any
Warrants prior to (x) the date which is two years after the later of the date of
original issuance of the Warrants (or such shorter period as may be prescribed
by Rule 144(k) under the Securities Act or any successor provision thereto) or
the last day on which the Company or any affiliate of the Company was owner of
such Warrants, or any predecessor thereto, and (y) such later date, or any, as
may be required by applicable laws, we will do so only (A) to the Company, (B)
inside the United States in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined therein), (C) inside the United
States to an institutional "accredited investor" (as defined below) that, prior
to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Warrant Agent a signed letter substantially in the form
hereof, (D) outside the United States in accordance with Regulation S under the
Securities Act, (E) pursuant to the exemption from registration provided by Rule
144 under the Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available) or (F) pursuant to
an effective registration statement under the Securities Act and (G) pursuant to
an other available exemption under the Securities Act, and we further agree to
provide to any person purchasing Warrants form us a notice advising such
purchaser that resales of the Warrants are restricted as stated herein.
4. We understand that, on any proposed resale of Warrants, we
will be required to furnish to the Warrant Agent and the Company, such
certification, legal opinions and other information as the Warrant Agent and the
<PAGE> 58
D-2
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Warrants purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined
in Rule 50 1 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the Warrants,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be.
6. We are acquiring the Warrants purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
The undersigned understands that in connection with any
proposed transfer of Warrants pursuant to Regulation S, or pursuant to another
exemption from registration under the Securities Act where the proposed
transferee is not a QIB, Non-U.S. Person or Institutional Accredited Investor,
the undersigned understands that the Company may, based upon the views of its
counsel, instruct the Warrant Agent not to register such transfer.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ____________________________________
[Authorized Signatory]
<PAGE> 59
D-3
Upon transfer the Warrants would be registered in the name of the new
beneficial owner as follows:
Name: _______________________________________________
Address: ____________________________________________
Taxpayer ID Number: _________________________________
<PAGE> 60
E-1
EXHIBIT E
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
---------------------------
___________________, ____
Attention: Corporate Trust Department
In connection with our proposed sale of Warrants of TransTechnology
Corporation (the "Company"), we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Warrants was not made to a person in
the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer
restrictions applicable to the Warrants; and
(6) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Warrants may be offered and sold during
the restricted period specified in Rule 903(c)(2) or (3), as
applicable, in accordance with the provisions of Regulation S; pursuant
to registration of the Warrants under the Securities Act; or pursuant
to an available exemption from the registration requirements under the
Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters
<PAGE> 61
E-2
covered hereby. Defined terms used herein without definition have the respective
meanings provided in Regulation S under the Securities Act.
Very truly yours,
[Name of Transferee]
By: ____________________________
[Authorized Signatory]
Upon transfer the Warrants would be registered in the name of the new
beneficial owner as follows:
Name: _______________________________________________
Address: ____________________________________________
Taxpayer ID Number:__________________________________
<PAGE> 1
- --------------------------------------------------------------------------------
WARRANT HOLDERS' AGREEMENT
By and Among
TRANSTECHNOLOGY CORPORATION
THE PURCHASERS NAMED HEREIN
and
BANKBOSTON, N.A.
as Administrative Agent
Dated as of August 31, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
WARRANT HOLDERS' AGREEMENT
This WARRANT HOLDERS' AGREEMENT (the "AGREEMENT") is made and
entered into as of August 31, 1999, by and among TRANSTECHNOLOGY CORPORATION, a
Delaware corporation (hereinafter, together with its successors in title and
assigns, the "COMPANY"), each of the Purchasers named on SCHEDULE 1 hereto (the
"PURCHASERS") and each other person who becomes a party to this Agreement by
executing an Instrument of Accession (an "INSTRUMENT OF ACCESSION") in the form
of EXHIBIT A hereto, and BANKBOSTON, N.A., as Administrative Agent under the
Subordinated Loan Agreement (as defined below) and as Agent for the Purchasers
hereunder (the "ADMINISTRATIVE AGENT").
WHEREAS, the Company has issued Warrants (as defined below) for the
purchase of 731,197 shares of its Common Stock (as defined below), pursuant to
the Subordinated Loan Agreement, and subject to each of (a) a Warrant Agreement,
dated as of the date hereof (the "WARRANT AGREEMENT"), by and among the Company
and each of the Purchasers and (b) a Warrant Escrow Agreement, dated as of the
date hereof (the "WARRANT ESCROW AGREEMENT"), by and among the Company, each of
the Purchasers and State Street Bank and Trust Company as the Escrow Agent;
WHEREAS, this Agreement sets forth certain rights of the holders of
such Warrants;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
---------
CERTAIN DEFINED TERMS
---------------------
As used herein, the following terms shall have the respective meanings
assigned to them in this Article I:
"ADJUSTED NET WORTH" shall mean, in connection with any liquidation or
sale of assets by the Company, the consolidated net worth of the Company,
determined in accordance with generally accepted accounting principles (as
defined below), taking into account (i) the total consideration received by the
Company for such transactions, (ii) the transaction costs and (iii) any
liabilities of the Company to be discharged in connection with such transaction.
"AFFILIATE" shall mean, with respect to any Stockholder, any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Stockholder and shall include (a) any Person who is a
director or beneficial holder of at least 10% of the then outstanding capital
stock (or partnership interests or other shares of beneficial interest) of such
Stockholder and Family Members of any such Person, (b) any Person of which such
Stockholder or an Affiliate (as defined
<PAGE> 3
in clause (a) above) of such Stockholder directly or indirectly, either
beneficially owns at least 10% of the then outstanding capital stock (or
partnership interests or other shares of beneficial interest) or constitutes at
least a 10% equity participant, (c) any Person of which an Affiliate (as defined
in clause (a) above) of such Stockholder is a partner, director, officer or
executive employee, and (d) in the case of a specified Person who is an
individual, Family Members of such Person.
"BUSINESS DAY" means any day (other than a Saturday or Sunday) on which
banking institutions in Boston, Massachusetts are open for the transaction of
banking business.
"CAPITAL TRANSACTION" means the occurrence of any of the following: any
merger, consolidation, liquidation, sale or other transfer of more than fifty
percent (50%) of the assets of the Company or other similar corporate actions
pursuant to which the Company or the holders of common stock or preferred stock
of the Company receive cash, securities, or other property.
"CERTIFICATE OF INCORPORATION" shall mean the Company's Certificate of
Incorporation, as amended and in effect on the date of this Agreement.
"CHANGE IN CONTROL" shall have the meaning ascribed to that term in the
Subordinated Loan Agreement.
"CLOSING DATE" shall have the meaning ascribed to that term in the
Subordinated Loan Agreement.
"CLOSING PRICE" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported sale
occurs on such day, the average of the closing bid and asked prices regular way
on such day, in each case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such class of security is listed or admitted to
trading, or (b) if such security is not listed or admitted to trading on any
national securities exchange, the last quoted sales price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market
on such day as reported by NASDAQ or any comparable system then in use or, if
not so reported, as reported by any New York Stock Exchange member firm
reasonably selected by the Company for such purpose.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" shall mean the Company's Common Stock, $0.01 par value
per share.
"COMPANY" shall have the meaning ascribed to that term in the preamble
hereto.
<PAGE> 4
"COMPANY APPRAISAL" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"COMPANY APPRAISER" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"CONSENSUS APPRAISER" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"CONSOLIDATED EBITDA" shall have the meaning ascribed to that term in
the Subordinated Loan Agreement as in effect on the date hereof.
"CREDIT AGREEMENT" shall mean the Second Amended and Restated Credit
Agreement, dated as of August 31, 1999, by and among the Company, BankBoston,
N.A., as Administrative Agent, and the other parties referred to therein.
"DEMAND REGISTRATION" has the meaning ascribed to such term in
Section 6.1(a) hereof.
"EVENT OF DEFAULT" shall have the meaning specified in the Subordinated
Loan Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any federal statute or code which is a successor thereto.
"FAIR MARKET VALUE" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"FAMILY MEMBERS" shall mean, with respect to any individual, any
Related Person or Family Trust of such individual.
"FAMILY TRUST" shall mean, with respect to any individual, any trust
created for the benefit of one or more of such individual's Related Persons and
controlled by such individual.
"FORM S-1", "FORM S-3" and "FORM S-8" means the forms so designated,
promulgated by the Commission for registration of securities under the
Securities Act, and any forms succeeding to the functions of such forms, whether
or not bearing the same designation.
"FORMULA VALUE" shall have the meaning ascribed to that term in
Section 10.4(c) hereof.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean principles that
are (A) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (B) consistently applied with past financial statements of the Company
adopting the same principles, provided that in each case referred to in this
definition of "generally
<PAGE> 5
accepted accounting principles" a certified public accountant would, insofar as
the use of such accounting principles is pertinent, be in a position to deliver
an unqualified opinion (other than a qualification regarding changes in
generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
"HOLDER APPRAISER" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"HOLDER CONSENT" means, at any particular date, the consent, approval
or vote of the Majority Holders.
"HOLDER SHARES" means, in relation to any Holder at any particular
date, (i) all shares of Common Stock held of record by such Holder on such date,
and (ii) all shares of Common Stock issuable by the Company to such Holder upon
conversion of or in exchange for or upon exercise of rights under all other
capital stock or other securities (including the Warrants and any other warrants
and options) of the Company held of record by such Holder on such date. In this
Agreement, in any calculation of the number of Holder Shares held by any Holder,
in addition to any shares of Common Stock held of record by such Holder, such
Holder shall be deemed to hold of record on any particular date the total number
of shares of Common Stock issuable by the Company upon conversion of or in
exchange for or upon exercise of rights under all capital stock or other
securities (including the Warrants and any other warrants or options) of the
Company then held of record by such Holder.
"HOLDERS" means, collectively, (i) the Purchasers so long as any of the
Purchasers shall continue to own and hold of record any of the Securities and
(ii) each Permitted Transferee of a Purchaser so long as such Permitted
Transferee shall continue to own and hold of record any of the Securities, and
provided such Permitted Transferee has executed an Instrument of Accession.
"INDEMNIFIED PARTY" shall have the meaning ascribed to that term in
Section 6.7(c) hereof.
"INDEMNIFYING PARTY" shall have the meaning ascribed to that term in
Section 6.7(c) hereof.
"INSTRUMENT OF ACCESSION" shall have the meaning ascribed thereto in
the preamble hereto.
"MAJORITY HOLDERS" means, in relation to the Holders at any particular
date, Holders holding of record or deemed to be holding of record, at such date,
at least fifty-one percent (51%) of the total number of all Holder Shares then
held or deemed held of record by all Holders on such date.
"MARKET PRICE" with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is
<PAGE> 6
available; provided, however, that in the event that, in the case of Common
Stock, the Market Price is determined during a period following the announcement
by the Company of (A) a dividend or distribution of Common Stock, or (B) any
subdivision, combination or reclassification of Common Stock and prior to the
expiration of 20 Business Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Market Price shall be
appropriately adjusted to reflect the current Market Price per share equivalent
of Common Stock.
"NASDAQ" means the National Association of Securities Dealers automated
quotation system.
"NEGOTIATION PERIOD" shall have the meaning ascribed to that term in
Section 10.4(b) hereof.
"PERMITTED TRANSFEREE" means, in relation to any particular Holder, a
transferee of such Holder's interest in any Warrants pursuant to the Warrant
Agreement, and any Person who shall acquire any other Securities from such
Holder or from any Permitted Transferee thereof in a transaction not in
violation or in contravention of any applicable law or regulation.
"PERSON" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"PERSONAL REPRESENTATIVE" shall mean the successor or legal
representative (including, without limitation, a guardian, executor,
administrator or conservator) of a dead or incompetent Stockholder.
"PIGGYBACK REGISTRATION" shall have the meaning ascribed to that term
in Section 6.2(a) hereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any Prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the prospectus, including post-effective amendments, and all material
incorporated by reference in such prospectus.
"PUBLIC SALE" shall mean any sale of Common Stock to the public
pursuant to a public offering registered under the Securities Act of 1933, as
amended, or to the public through a broker or market-maker pursuant to the
provisions of Rule 144 (or any successor rule) adopted under the Securities Act
of 1933, as amended.
"PURCHASERS" shall have the meaning ascribed to that term in the
preamble hereto.
<PAGE> 7
"PUT CLOSING DATE" shall have the meaning ascribed to that term in
Section 7.2 hereof.
"PUT NOTICE" shall have the meaning ascribed to that term in Section
7.1 hereof.
"REGISTER", "REGISTERED" and "REGISTRATION" refers to a registration
effected by preparing and filing a Registration Statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such Registration Statement.
"REGISTRABLE SECURITIES" shall mean (a) the Warrants and the shares of
Common Stock issued or issuable upon exercise of the Warrants in accordance with
their terms, (b) all shares of Common Stock issued or issuable upon conversion
of such shares of Common Stock, and (c) all shares of the Company's capital
stock issued with respect to such shares by way of stock dividend or stock split
or in connection with any merger, consolidation, recapitalization or other
reorganization affecting the Company's capital stock. Registrable Securities
will continue to be Registrable Securities in the hands of any holder and each
transferee thereof will succeed to the rights and obligations of a holder of
Registrable Securities hereunder, provided that shares of Purchaser Securities
will cease to be Registrable Securities when transferred (i) to the Company or
(ii) pursuant to a Public Sale.
"REGISTRATION EXPENSES" shall have the meaning ascribed to that term in
Section 6.6(a) hereof.
"REGISTRATION STATEMENT" means any Registration Statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
and all exhibits and all material incorporated by reference in such Registration
Statement.
"RELATED PERSONS" shall mean, with respect to any individual, such
individual's parents, spouse, children and grandchildren.
"REPURCHASE PRICE" shall have the meaning ascribed to that term in
Section 7.4(a) hereof.
"RULE 144" means Rule 144 issued by the Commission under the Securities
Act, or any subsequent rule pertaining to the disposition of securities without
registration.
"SECURITIES" means, collectively, the Warrants and the Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
federal statute or code which is a successor thereto.
"STOCK OPTION PLAN" means, collectively, the Company's Amended and
Restated 1992 Long Term Incentive Plan and 1998 Non-Employee Directors' Stock
<PAGE> 8
Option Plan or plans created after the date hereof pursuant to which capital
stock, options and warrants may be issued to employees and directors of the
Company.
"SUBORDINATED LOAN AGREEMENT" shall have the meaning ascribed to that
term in Section 2.4 hereof.
"SUBSIDIARY" shall mean any corporation, association, trust, or other
business entity, of which the designated parent shall at any time own or control
directly or indirectly through a Subsidiary or Subsidiaries at least a majority
(by number of votes) of the outstanding shares of capital stock (or other shares
of beneficial interest) entitled ordinarily to vote for the election of such
business entity's directors (or in the case of a business entity that is not a
corporation, for those Persons exercising functions similar to directors of a
corporation).
"TENDERING HOLDER" shall have the meaning ascribed to that term in
Section 7.1 hereof.
"THIRD APPRAISER" shall have the meaning ascribed to that term in
Section 7.4(b) hereof.
"UNDERWRITERS' MAXIMUM NUMBER" shall have the meaning ascribed to that
term in Section 6.1(e) hereof.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" refers to any
registration in which securities of the Company are sold or to be sold pursuant
to a firm commitment underwriting.
"UNREPURCHASED SECURITIES" shall have the meaning ascribed to that term
in Section 10.3 hereof.
"VOTING SECURITIES" shall mean the Common Stock.
"WARRANT AGREEMENT" shall have the meaning ascribed to that term in the
preamble hereof.
"WARRANT ESCROW AGREEMENT" shall have the meaning ascribed to that term
in the preamble hereof.
"WARRANT SHARES" means the shares of Common Stock issued pursuant to or
issuable upon exercise of the Warrants.
"WARRANTS" shall have the meaning ascribed to that term in the Warrant
Agreement.
<PAGE> 9
ARTICLE II
----------
REPRESENTATIONS
---------------
The Company represents and warrants to the Holders as follows:
Section 2.1. CAPITALIZATION OF COMPANY.
(a) SCHEDULE 2 lists and describes the authorized capital stock of the
Company on and as of the Closing Date, the issued and outstanding capital stock
of the Company on and as of the Closing Date, and all issued and outstanding
options, warrants, convertible securities or other rights to acquire any capital
stock of the Company on and as of the Closing Date.
(b) As of the Closing Date, the Company has not granted or issued any
options, warrants, convertible securities or other rights to acquire any shares
of capital stock of the Company, except as described on SCHEDULE 2.
(c) If the Warrants were exercisable as of the Closing Date, the
Warrants would be exercisable in full for 10.0% of the issued and outstanding
Common Stock of the Company on a fully-diluted basis, after giving effect to the
issuance of such Warrants and all other warrants, options, or other convertible
securities exercisable for or convertible into shares of Common Stock of the
Company outstanding as of the Closing Date.
Section 2.2. AUTHORIZATION OF WARRANTS.
(a) The Company has duly and properly authorized (i) the issuance to
the Purchasers of the Warrants and (ii) the issuance by the Company of shares of
Common Stock upon exercise of the Warrants in accordance with the terms thereof.
(b) The Warrants shall become exercisable as provided in the Warrants
and the Warrant Escrow Agreement.
Section 2.3. BINDING EFFECT OF DOCUMENTS, ETC. Each of this Agreement,
the Warrants, the Warrant Escrow Agreement and the Warrant Agreement
(collectively, the "WARRANT DOCUMENTS"), upon the execution and delivery thereof
by the Company, has been duly and validly executed and delivered by the Company.
The execution, delivery and performance by the Company of each Warrant Document
on the Closing Date has been duly authorized by proper corporate proceedings by
the Company, and each Warrant Document constitutes, on and as of the Closing
Date, the legal valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and (ii) general principles
of equity including without limitation concepts of materiality, reasonableness,
good faith and fair dealing, and the possible unavailability of specific
performance or injunctive relief (regardless of whether considered in a
proceeding in equity or at law); and the execution, delivery
<PAGE> 10
and performance of this Agreement by the Company does not and will not violate
any applicable law or regulation.
Section 2.4. SENIOR SUBORDINATED LOAN AGREEMENT. The Company hereby
further represents and warrants to the Purchasers that all of the
representations and warranties set forth in the Senior Subordinated Loan
Agreement, dated as of August 31, 1999, by and among the Company, the Purchasers
and the other parties thereto (as modified, amended or amended and restated from
time to time, the "SUBORDINATED LOAN AGREEMENT"), are true and correct on and as
of the Closing Date.
ARTICLE III
-----------
WARRANT DOCUMENTS
-----------------
By its acceptance of a Warrant, the Holder of such Warrant acknowledges
and agrees that (a) each of the Warrants is subject to the terms and provisions
of each of the Warrant Agreement and the Warrant Escrow Agreement, and (b) each
of the Warrants is entitled to all of the benefits set forth in this Agreement
on the terms and subject to the conditions hereof, of the Warrant Agreement, and
of the Warrant Escrow Agreement.
ARTICLE IV
----------
REPRESENTATIONS OF THE HOLDERS
------------------------------
Each of the Holders represents and warrants to the Company that:
(a) Such Holder is purchasing or acquiring its interest in the
Securities from the Company or another Holder, as the case may be, in accordance
with the terms hereof for such Holder's own account without a view to any
distribution thereof in violation of the Securities Act, but, SUBJECT,
NEVERTHELESS, to any requirement of law that the disposition of such Holder's
property shall at all times be within such Holder's control. Such Holder has
been informed and understands that the Securities have not been registered
pursuant to the provisions of Section 5 of the Securities Act and must be held
indefinitely unless such Securities are subsequently registered under the
provisions of the Securities Act or an exemption from such registration is
available.
(b) Such Holder represents that it is an "accredited investor" within
the meaning of Rule 501(a) promulgated under the Securities Act.
<PAGE> 11
ARTICLE V
---------
COVENANTS OF COMPANY
--------------------
The Company hereby covenants with each of the Holders that, except as
otherwise expressly permitted or provided, in any particular instance, by a
written Holder Consent:
Section 5.1. RECORDS AND ACCOUNTS. The Company will (i) keep, and cause
each of its Subsidiaries to keep, true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles and (ii) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.
Section 5.2. FINANCIAL INFORMATION. The Company will deliver to each of
the Holders contemporaneously with the filing or mailing thereof, copies of all
periodic or special reports filed with the Securities and Exchange Commission,
and copies of all materials sent to the stockholders of the Company. So long as
the Subordinated Loan Agreement remain in effect, the Company may satisfy its
obligations under this Section 5.2 by delivering to each Holder the information
which it is required to deliver to the Holders under the corresponding covenants
contained in the Subordinated Loan Agreement at the times required by the
Subordinated Loan Agreement.
ARTICLE VI
----------
REGISTRATION RIGHTS
-------------------
The Company hereby grants to the Holders certain rights to require the
Company to register Common Stock of the Company in compliance with the
Securities Act and certain rights to participate with the Company in any
registration by the Company of Common Stock under the Securities Act. The
provisions governing such registration rights are set out in this Article VI.
The Company and the Holders hereby absolutely and unconditionally agree to be
bound and governed by, and specifically make and adopt, all of the terms and
provisions contained in this Article VI. A Holder shall, for all purposes of
this Article VI, unless the context shall otherwise require, be deemed to hold,
at any particular time, all shares of Common Stock issuable upon conversion of
or in exchange for or upon exercise of rights under all capital stock or other
securities (including, without limitation, options and warrants) of the Company
held of record by such Holder at such time.
Section 6.1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR DEMAND REGISTRATION.
<PAGE> 12
(i) Subject to the limitations contained in the following
paragraphs of this Section 6.1, the Holders of not less than
twenty-five percent (25%) of the Registrable Securities may at any time
and from time to time after the first anniversary of the Closing Date
give to the Company, pursuant to this clause (i), a written request for
the registration by the Company under the Securities Act of all or any
part of the Registrable Securities of such Holders having an aggregate
offering price of at least $250,000 (such registration being herein
called a "DEMAND REGISTRATION") on Form S-3 or any successor form
adopted by the Commission, PROVIDED, HOWEVER, that if in accordance
with applicable law, including applicable rules and regulations
promulgated by the Commission, the Company is not eligible to register
securities on Form S-3 (or any comparable short-form registration
adopted by the Commission), then the Holders shall have the right to
require completion of one Demand Registration pursuant to this
subparagraph (i) on Form S-1 or any successor form adopted by the
Commission. Within ten (10) days after the receipt by the Company of
any such written request, the Company will give written notice of such
registration request to all Holders of Registrable Securities.
(ii) Subject to the limitations contained in the following
paragraphs of this Section 6.1, after the receipt of each such written
request for a Demand Registration, (A) the Company will be obligated
and required to include in such Demand Registration all Registrable
Securities with respect to which the Company shall receive from Holders
of Registrable Securities, within thirty (30) days after the date on
which the Company shall have given to all Holders a written notice of
registration request pursuant to Section 6.1(a)(i) hereof, the written
requests of such Holders for inclusion in such Demand Registration, and
(B) the Company will use its best efforts in good faith to effect
promptly the registration of all such Registrable Securities. The
Holders of Registrable Securities shall be permitted to withdraw all or
any part of the Registrable Securities of such Holders from any Demand
Registration at any time prior to the effective date of such Demand
Registration PROVIDED, that if such Demand Registration is on Form S-1
or any successor form adopted by the Commission and such withdrawal
would reduce the amount of Registrable Securities to be registered in
such Demand Registration to less than the amount required to initiate a
Demand Registration pursuant to clause (i) above, then the Company may
elect not to proceed with such Demand Registration. All written
requests made by Holders of Registrable Securities pursuant to this
clause (ii) will specify the number of shares of Registrable Securities
to be registered and will also specify the intended method of
disposition thereof. Such method of disposition shall, in any case, be
an underwritten offering if an underwritten offering is requested by
Holders of a majority of Registrable Securities to be included in such
Demand Registration.
<PAGE> 13
(b) LIMITATIONS ON DEMAND REGISTRATION.
(i) Except in the circumstances contemplated in paragraph
(a)(i) above, the Holders of Registrable Securities will not be
entitled to require the Company to effect any registrations on Form S-1
(or other comparable form adopted by the Commission). At such time as
all of any Holder's Registrable Securities shall be freely tradable
under paragraph (k) of Rule 144, such Holder shall not be entitled to
require the Company to effect, and shall not be entitled to participate
pursuant to this Section 6.1 in, any further Demand Registrations.
(ii) The Company shall not be obligated or required to effect
any Demand Registration of any Registrable Securities pursuant to
Section 6.1(a) hereof during the period commencing on the date falling
sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date ninety (90) days following the effective date of,
any Registration Statement pertaining to any underwritten registration
initiated by the Company, for the account of the Company. The foregoing
limitation on the Company's obligation to effect a Demand Registration
shall only be applicable if the written request of Holders for such
Demand Registration shall have been received by the Company both (A)
after the first anniversary of the Closing Date and (B) after the
Company shall have given to all Holders of Registrable Securities a
written notice stating that the Company is commencing an underwritten
registration initiated by the Company. Notwithstanding any limitation
on the Company's obligations described in this paragraph (b)(ii), the
Company will use its best efforts in good faith to cause any such
Registration Statement for a Demand Registration requested by the
Holders to be filed and to become effective as expeditiously as shall
be reasonably possible.
(c) EFFECTIVE REGISTRATION - EXPENSES. In any registration initiated by
the Holders as a Demand Registration pursuant to Section 6.1(a) hereof, the
Company will pay all Registration Expenses of each such registration regardless
of whether such registration constitutes a Demand Registration for purposes of
this Section 6.1.
(d) LIMITATION ON RIGHTS TO PIGGYBACK ON DEMAND REGISTRATIONS.
(i) Neither the Company nor any of its securityholders (other
than Holders of Registrable Securities in their capacity as Holders)
shall have the right or otherwise be entitled to include any of the
Company's securities in any registration initiated by Holders of
Registrable Securities as a Demand Registration pursuant to Section
6.1(a) hereof, unless (A) such securities are of the same class as the
Registrable Securities to be included in such Demand Registration, and
(B) if such Demand Registration is an underwritten offering, the
Company or (as the case may be) such securityholders shall have duly
and properly agreed in writing to sell their securities on the same
terms and conditions as shall apply to the Registrable Securities to be
included in such Demand Registration.
<PAGE> 14
(ii) The Company will not grant or agree to grant to any
Persons any registration rights which will conflict or be inconsistent
in any respect with any of the provisions of clause (i) of this
Section 6.1(d). In the event of any such conflict or inconsistency, the
provisions of such clause (i) shall in any case prevail and be
controlling.
(e) PRIORITY ON DEMAND REGISTRATIONS. If any Demand Registration is an
underwritten offering, and the managing underwriters shall give written advice
to the Company and the Holders of Registrable Securities to be included in such
registration that, in the reasonable opinion of such managing underwriters,
marketing factors require a limitation on the total number of securities to be
underwritten (the "UNDERWRITERS' MAXIMUM NUMBER"), then: (i) the Company will be
obligated and required to include in such registration that number of
Registrable Securities requested by the Holders thereof to be included in such
registration which does not exceed the Underwriters' Maximum Number, and such
number of Registrable Securities shall be allocated PRO RATA among the Holders
of such Registrable Securities on the basis of the number of Registrable
Securities requested to be included therein by each such Holder; (ii) if the
Underwriters' Maximum Number exceeds the number of Registrable Securities
requested by the Holders thereof to be included in such registration, then the
Company will be entitled to include in such registration that number of
securities which shall have been requested by the Company to be included in such
registration for the account of the Company and which shall not be greater than
such excess; and (iii) if the Underwriters' Maximum Number exceeds the sum of
the number of Registrable Securities which the Company shall be required to
include in such Demand Registration and the number of securities which the
Company proposes to offer and sell for its own account in such registration,
then the Company may include in such registration that number of other
securities which Persons (other than the Holders as such) shall have requested
be included in such registration and which shall not be greater than such
excess.
(f) SELECTION OF UNDERWRITERS. If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the investment
bankers and managing underwriters in such registration will be selected by the
Company subject to the approval of the Holders of a majority of Registrable
Securities to be included in such registration.
Section 6.2. PIGGYBACK REGISTRATIONS.
(a) RIGHTS TO PIGGYBACK.
(i) If (and on each occasion that) the Company proposes to
register any of its securities under the Securities Act (other than
pursuant to a Demand Registration), either for the Company's own
account or for the account of any of its securityholders (other than
the Holders of Registrable Securities in their capacity as Holders)
(each such registration being herein called a "PIGGYBACK
REGISTRATION"), the Company will give written notice to all Holders of
Registrable Securities of the Company's intention to effect such
<PAGE> 15
Piggyback Registration not later than the earlier to occur of (A) the
tenth day following the receipt by the Company of notice of exercise of
any registration rights by any Persons (other than the Holders of
Registrable Securities in their capacities as Holders), and (B) thirty
(30) days prior to the anticipated filing date of such Piggyback
Registration.
(ii) Subject to the provisions contained in paragraphs (c) and
(d) of this Section 6.2 and in the last sentence of this clause (ii),
(A) the Company will be obligated and required to include in each
Piggyback Registration all Registrable Securities with respect to which
the Company shall receive from Holders of Registrable Securities,
within thirty (30) days after the date on which the Company shall have
given written notice of such Piggyback Registration to all Holders of
Registrable Securities pursuant to Section 6.2(a)(i) hereof, the
written requests of such Holders for inclusion in such Piggyback
Registration, and (B) the Company will use its best efforts in good
faith to effect promptly the registration of all such Registrable
Securities. The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities of such Holders
from any Piggyback Registration at any time prior to the effective date
of such Piggyback Registration. Any registration of Registrable
Securities pursuant to this Section 6.2 shall not be counted as a
Demand Registration pursuant to Section 6.1 hereof. The Company will
not be obligated or required to include any Registrable Securities in
any registration effected solely to implement an employee benefit plan
or a transaction to which Rule 145 of the Commission is applicable.
(b) PIGGYBACK REGISTRATION EXPENSES. The Company will pay all
Registration Expenses of each Piggyback Registration attributable to Registrable
Securities or otherwise incurred or sustained in connection with or arising out
of the inclusion in each such Piggyback Registration of Registrable Securities.
(c) PRIORITY ON PIGGYBACK REGISTRATIONS. If a Piggyback Registration is
an underwritten registration, and the managing underwriters shall give written
advice to the Company of an Underwriters' Maximum Number, then: (i) the Company
shall be entitled to include in such registration that number of securities
which the Company proposes to offer and sell for its own account in such
registration and which does not exceed the Underwriters' Maximum Number; (ii) if
the Underwriters' Maximum Number exceeds the number of securities which the
Company proposes to offer and sell for its own account in such registration,
then the Company will be obligated and required to include in such registration
that number of Registrable Securities requested by the Holders thereof to be
included in such registration and which does not exceed such excess and such
Registrable Securities shall be allocated PRO RATA among the Holders thereof on
the basis of the number of Registrable Securities requested to be included
therein by each such Holder; and (iii) if the Underwriters' Maximum Number
exceeds the sum of the number of Registrable Securities which the Company shall
be required to include in such registration pursuant to clause (ii) and the
number of securities which the Company proposes to offer and sell for its own
account in such registration, then the Company
<PAGE> 16
may include in such registration that number of other securities which persons
shall have requested be included in such registration and which shall not be
greater than such excess.
(d) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, or a best-efforts underwritten offering, the investment
bankers and managing underwriters in such registration will be selected by the
Company subject to the approval of the Holders of a majority of the Registrable
Securities to be included in such registration, which approval will not be
unreasonably withheld or delayed.
Section 6.3. LOCKUP AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
Each Holder of Registrable Securities, any of whose Registrable Securities are
included in any underwritten registration of the Company's securities, if the
Company or the managing underwriters so request in connection with such
registration, will not, without the prior written consent of the Company or such
underwriters, effect any public sale or other distribution of any equity
securities of the Company, including any sale pursuant to Rule 144, during the
seven (7) days prior to, and during the one hundred twenty (120) day period
commencing on, the effective date of such underwritten registration, except in
connection with such underwritten registration, except, in each case, to the
extent such Holder is prohibited by applicable law or exercise of fiduciary
duties from agreeing to withhold Registrable Securities from sale or is acting
in its capacity as a fiduciary or investment adviser; provided that each officer
and director of the Company and each holder of more than two percent (2%) of the
issued and outstanding shares of Common Stock shall enter into similar
agreements of at least equal duration. Without limiting the scope of the term
"fiduciary", a Holder shall be deemed to be acting as a fiduciary or an
investment adviser if its actions or the Registrable Securities to be sold are
subject to the Employee Retirement Income Security Act of 1974, as amended, or
the Investment Company Act of 1940, as amended, or if such Registrable
Securities are held in a separate account under applicable insurance law or
regulation.
(b) RESTRICTIONS ON PUBLIC SALE BY COMPANY. If the managing
underwriters request, the Company agrees not to effect any public sale or other
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such equity securities, during the period
commencing on the seventh (7th) day prior to, and ending on the one hundred and
twentieth (120th) day following, the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration, except in connection
with any such underwritten registration and except for any offering or
distribution pursuant to an employee benefit plan and registered on Form S-8.
Section 6.4. REGISTRATION PROCEDURES. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of
<PAGE> 17
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective (PROVIDED, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company will furnish to counsel selected by the Holders of Registrable
Securities covered by such Registration Statement, copies of all such documents
proposed to be filed, which documents will be subject to the timely review of
such counsel and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto, including
documents incorporated by reference, to which the Holders of a majority of the
Registrable Securities covered by such Registration Statement shall reasonably
object);
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
not more than one (1) year and, comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during such effective period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
and cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act;
(c) upon request, furnish to each seller of Registrable Securities such
number of copies of such Registration Statement, each amendment and supplement
thereto, the Prospectus included in such Registration Statement (including each
preliminary Prospectus and each Prospectus filed under Rule 424 of the
Securities Act) and such other documents as each such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by each such seller (it being understood that the Company consents to the
use of the Prospectus and any amendment or supplement thereto by such seller in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto);
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or Blue Sky laws of such jurisdictions as
any seller reasonably requests, use its best efforts to keep each such
registration or qualification effective, including through new filings,
amendments or renewals, during the period such Registration Statement is
required to be kept effective, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller; PROVIDED that the Company will not be required (i) to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (d), (ii) to subject itself to taxation in any
such jurisdiction or (iii) to consent to general service of process in any such
jurisdiction;
<PAGE> 18
(e) notify each seller of such Registrable Securities, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will promptly prepare (and, when
completed, give notice to each seller of Registrable Securities) a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading; provided that upon such notification by the
Company, each seller of such Registrable Securities will not offer or sell such
Registrable Securities until the Company has notified such seller that it has
prepared a supplement or amendment to such Prospectus and delivered copies of
such supplement or amendment to such seller;
(f) cause all such Registrable Securities to be listed, prior to the
date of the first sale of such Registrable Securities pursuant to such
registration, on each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed, to be listed with NASDAQ;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;
(h) enter into all such customary agreements (including underwriting
agreements in customary form) as the Holders of a majority of Registrable
Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities;
(i) make available for inspection on a confidential basis by any
seller, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter (in each case after reasonable prior notice), all
reasonably requested financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply on a confidential basis all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such Registration Statement;
(j) permit any Holder of Registrable Securities which Holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company within the meaning of Section 15 of the
Securities Act, to participate in the preparation of such registration or
comparable statement and to permit the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such Holder and
its counsel should be included, provided that such material shall be furnished
under such circumstances as shall cause it to be subject to the indemnification
provisions provided pursuant to Section 6.7(b) hereof;
<PAGE> 19
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, the Company will use its best efforts promptly to obtain the
withdrawal of such order;
(l) if requested by the managing underwriter or underwriters or any
holder of Registrable Securities in connection with any sale pursuant to a
Registration Statement, promptly incorporate in a Prospectus supplement or
post-effective amendment such information relating to such underwriting as the
managing underwriter or underwriters or such Holder reasonably requests to be
included therein, and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such Prospectus supplement or post-effective amendment;
(m) cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold under such registration, and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or such Holders
may request;
(n) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over the Company as may
reasonably be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(o) use its best efforts to obtain, at the time of effectiveness of
each Piggyback Registration and at the time of any sale pursuant to each Demand
Registration, an opinion or opinions, favorable in form and scope to the Holders
of a Majority of Registrable Securities covered by such registration, from
counsel to the Company in customary form; and
(p) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than ninety (90) days
after the end of the twelve month period beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statement shall cover said twelve month period.
Section 6.5. COOPERATION BY PROSPECTIVE SELLERS, ETC.
(a) INFORMATION REQUESTS. Each prospective seller of Registrable
Securities will furnish to the Company in writing such information as the
Company
<PAGE> 20
may reasonably require from such seller in connection with any Registration
Statement with respect to such Registrable Securities.
(b) FAILURE TO COOPERATE. The failure of any prospective seller of
Registrable Securities to furnish any information or documents in accordance
with any provision contained in this Article VI shall not affect the obligations
of the Company under this Article VI to any remaining sellers who furnish such
information and documents unless, in the reasonable opinion of counsel to the
Company or the underwriters, such failure impairs or may impair the viability of
the offering or the legality of the Registration Statement or the underlying
offering.
(c) SUSPENSION OF SALES. The Holders of Registrable Securities included
in any Registration Statement will not (until further notice) effect sales
thereof after receipt of telegraphic or written notice from the Company to
suspend sales to permit the Company to correct or update such Registration
Statement or Prospectus; but the obligations of the Company with respect to
maintaining any Registration Statement current and effective shall be extended
by a period of days equal to the period such suspension is in effect.
(d) REMOVAL OF SHARES FROM REGISTRATION. At the end of any period
during which the Company is obligated to keep any Registration Statement current
and effective as provided by Section 6.4 hereof (and any extensions thereof
required by the preceding paragraph (c) of this Section 6.5), the Holders of
Registrable Securities included in such Registration Statement shall discontinue
sales of shares pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such Registration Statement which remain unsold, and such Holders shall
notify the Company of the number of shares registered which remain unsold
promptly after receipt of such notice from the Company.
(e) WARRANTS OR OPTIONS. Notwithstanding any other provision herein to
the contrary, no Holder of Registrable Securities which constitute warrants or
options shall be required to exercise such warrants or options in connection
with any registration until the actual sale of the shares of Common Stock
issuable upon exercise of such warrants or options. The Company shall enter into
such agreements and shall otherwise cooperate with the Holders of Registrable
Securities in order to ensure that such Holders are not required to exercise any
warrants or options prior to the date of the actual sale of the shares of Common
Stock issuable upon exercise of such warrants or options, but the Company shall
not be required to extend the exercise date thereof for such purposes.
Section 6.6. REGISTRATION EXPENSES.
(a) EXPENSES BORNE BY THE COMPANY. All costs and expenses incurred or
sustained in connection with or arising out of each registration pursuant to
Section 6.1 or Section 6.2 hereof, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
Blue Sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with the Blue Sky
<PAGE> 21
qualification of Registrable Securities), printing expenses, messenger,
telephone and delivery expenses, fees and disbursements of counsel for the
Company and of counsel for the sellers of Registrable Securities (subject to the
limitations contained in paragraph (b) of this Section 6.6), fees and
disbursements of all independent certified public accountants (including the
expenses relating to the preparation and delivery of any special audit or "cold
comfort" letters required by or incident to such registration), and fees and
disbursements of underwriters (excluding discounts and commissions), the
reasonable fees and expenses of any special experts retained by the Company of
its own initiative or at the reasonable request of the managing underwriters in
connection with such registration, and fees and expenses of all (if any) other
Persons retained by the Company (all such costs and expenses being herein
called, collectively, the "REGISTRATION EXPENSES"), will be borne and paid by
the Company. The Company will, in any case, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the expense of liability insurance referred to above, and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities of the
Company are then listed.
(b) ATTORNEYS' FEES; TAXES. In connection with each registration of
Registrable Securities pursuant to this Article VI, the Company will reimburse
the Holders of Registrable Securities being registered in such registration for
the reasonable fees and disbursements of one law firm which acts as counsel
chosen by the Holders of a majority of Registrable Securities being registered
in such registration. The Company will not bear the cost of nor pay for any
stock transfer taxes imposed in respect of the transfer of any Registrable
Securities to any purchaser thereof by any Holder of Registrable Securities in
connection with any registration of Registrable Securities pursuant to this
Article VI.
(c) PAYMENT BY HOLDER. To the extent that Registration Expenses
incident to any registration are, under the terms of this Article VI, not
required to be paid by the Company, each Holder of Registrable Securities
included in such registration will pay all Registration Expenses which are
clearly solely attributable to the registration of such Holder's Registrable
Securities so included in such registration, and all other Registration Expenses
not so attributable to one Holder will be borne and paid by all sellers of
securities included in such registration in proportion to the number of
securities so included by each such seller.
Section 6.7. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company will indemnify each Holder
requesting or joining in a registration and each underwriter of the securities
so registered, the officers, directors and partners of each such Person and each
Person who controls any thereof (within the meaning of the Securities Act),
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any Prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related
<PAGE> 22
Registration Statement, notification or the like) or any omission (or alleged
omission) to state therein any material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to any action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, officer, director, partner,
controlling Person, and underwriter for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; PROVIDED, HOWEVER, that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company in an
instrument duly executed by any Holder, officer, director, partner, controlling
Person, or underwriter and stated to be exclusively and specifically for use
therein.
(b) INDEMNIFICATION BY EACH HOLDER. Subject to the limitations set
forth below, each Holder requesting or joining in a registration will indemnify
each underwriter of the securities so registered, the Company and its officers
and directors and each Person, if any, who controls any thereof (within the
meaning of the Securities Act) and their respective successors in title and
assigns against any and all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any Prospectus, offering
circular or other document incident to any registration, qualification or
compliance, or any omission (or alleged omission) to state therein any material
fact required to be stated therein or necessary to make the statement therein
not misleading, and such Holder will reimburse each underwriter, the Company and
each other Person indemnified pursuant to this paragraph (b) for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; PROVIDED, HOWEVER,
that this paragraph (b) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon information furnished to the
Company in an instrument duly executed by such Holder and stated to be
specifically for use in such Prospectus, offering circular or other document or
any amendment or supplement thereto. The maximum liability under this paragraph
(b) of each Holder joining in any registration shall be limited to the aggregate
amount of all sales proceeds actually received by such Holder upon the sale of
such Holder's Registrable Securities in connection with such registration.
(c) INDEMNIFICATION PROCEEDINGS. Each party entitled to indemnification
pursuant to this Section 6.7 (the "INDEMNIFIED PARTY") shall give notice to the
party required to provide indemnification pursuant to this Section 6.7 (the
"INDEMNIFYING PARTY") promptly after such Indemnified Party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
acceptable to the Indemnified Party, and the Indemnified Party may participate
in such defense at such party's expense; and
<PAGE> 23
PROVIDED, FURTHER, that if any Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to and are inconsistent
with those available to the Indemnifying Party, or that such claim or litigation
involves or could have a material adverse effect upon matters beyond the scope
of the indemnity agreement provided in this Section 6.7, the Indemnifying Party
shall not have the right to assume the defense of such action on behalf such
Indemnified Party and such Indemnifying Party shall reimburse such Indemnified
Party and any Person controlling such Indemnified Party for that portion of the
fees and expenses of any counsel retained by the Indemnified Party which are
reasonably related to the matters covered by the indemnity agreement provided in
this Section 6.7; and PROVIDED, FURTHER, that the failure by any Indemnified
Party to give notice as provided in this paragraph (c) shall not relieve the
Indemnifying Party of its obligations under this Section 6.7 except to the
extent that the failure results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged (or the
indemnification liability of such Indemnifying Party hereunder would be
increased) solely as a result of the failure to give notice. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. The reimbursement required
by this Section 6.7 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
(d) CONTRIBUTION IN LIEU OF INDEMNIFICATION. If the indemnification
provided for in this Section 6.7 from the Indemnifying Party is unavailable to
an Indemnified Party hereunder in respect of any losses, claims, damages,
liabilities or expense (or actions in respect thereof) referred to therein, then
the Indemnifying Party in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault of such indemnifying and indemnified parties
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact,
has been made by, or relates to information supplied by, such Indemnifying Party
or indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action; PROVIDED,
HOWEVER, that in no event shall the liability of any Holder hereunder be greater
in amount than the difference between the dollar amount of the proceeds received
by such Holder upon the sale of the Registrable Securities giving rise to such
contribution obligation and all amounts previously contributed by such Holder
with respect to such losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
<PAGE> 24
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.7(d) were determined by PRO RATA
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
Section 6.8. RULE 144 REQUIREMENTS; FORM S-3. The Company will make
every effort in good faith to take all steps necessary to ensure that the
Company will be eligible to register securities on Form S-3 (or any comparable
form adopted by the Commission) at all times, and to make publicly available
and available to the Holders of Registrable Securities, pursuant to Rule 144 or
Rule 144A of the Commission under the Securities Act, such information
as shall be necessary to enable the Holders of Registrable Securities to make
sales of Registrable Securities pursuant to such Rules. The Company will
furnish to any Holder of Registrable Securities, upon request made by such
Holder at any time after the undertaking of the Company in the preceding
sentence shall have first become effective, a written statement signed by the
Company, addressed to such Holder, describing briefly the action the Company
has taken or proposes to take to comply with the current public information
requirements of Rule 144 or Rule 144A. The Company will, at the request of any
Holder of Registrable Securities, upon receipt from such Holder of a
certificate certifying (i) that such Holder has held such Registrable
Securities for a period of not less than two (2) consecutive years, and (ii)
that such Holder has not been an affiliate (as defined in Rule 144) of the
Company for more than the ninety (90) preceding days, remove from the stock
certificates representing such Registrable Securities that portion of any
restrictive legend which relates to the registration provisions of the
Securities Act.
Section 6.9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration pursuant to this Article VI unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled, under the
provisions contained in this Article VI, to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required by the terms of
such underwriting arrangements, PROVIDED, HOWEVER, that no such indemnities or
underwriting agreements shall provide for indemnification or contribution
obligations of any Holder to a greater extent than the obligations of such
Holder set forth in Section 6.7(b) hereof. Subject to the provisions of this
Agreement, any Holder of Registrable Securities to be included in any
underwritten registration shall be entitled at any time to withdraw such
Registrable Securities from such registration in the event that such Holder
shall disapprove of any of the terms of the related underwriting agreement.
Section 6.10. NO INCONSISTENT AGREEMENTS. The Company will not, at
any time after the effective date of this Agreement, enter into any agreement
or contract (whether written or oral) with respect to any of its securities
which is inconsistent in
<PAGE> 25
any respect with the registration rights granted by the Company to Holders
pursuant to Article VI of this Agreement or otherwise conflicts with the
provisions hereof.
Section 6.11. REGISTRABLE SECURITIES HELD BY THE COMPANY. Whenever the
consent or approval of Holders of Registrable Securities is required pursuant to
this Article VI, Registrable Securities held by the Company shall not be counted
in determining whether such consent or approval was duly and properly given by
such Holders pursuant to and in compliance with any of the terms of Article VI
of this Agreement.
Section 6.12. TERM. The agreements of the Company contained in this
Article VI shall continue in full force and effect so long as any Holder holds
any Registrable Securities.
ARTICLE VII
-----------
PUT OPTION
----------
Section 7.1. RIGHT TO PUT SECURITIES. At any time (a) after the
occurrence and during the continuance of an Event of Default under and as
defined in the Subordinated Loan Agreement, and (b) after the seventh (7th)
anniversary of the Closing Date, each Holder (a "TENDERING HOLDER") may, by
notice to the Company (a "PUT NOTICE"), require the Company to repurchase from
such Tendering Holder, at the Repurchase Price specified in Section 7.4 hereof,
such number of Securities held by such Tendering Holder as are specified
in the Put Notice. Promptly upon its receipt of a Put Notice, the Company shall
give written notice of the particulars thereof to each other Holder (other than
to the Tendering Holder) and, if any of such Holders delivers a Put Notice to
the Company within ten (10) days after its receipt of such notice from the
Company, the holders of all of such Securities shall be entitled to close their
put of such Securities on but not before the date scheduled pursuant to Section
7.2 for the closing of the put referred to in the Company's notice to them
pursuant to this Section 7.1. Except to the extent prohibited by applicable law,
and in any event subject to customary confidentiality and non-transfer
agreement, within five (5) business days of its receipt of any Put Notice, the
Company shall deliver to each of the Tendering Holders a certificate signed by
an authorized officer of the Company outlining in reasonable detail the
particulars of any potential transactions which the Company is considering at
such time and that may be material to the exercise of such Tendering Holder's
rights under this Section 7, including any plans or proposals for any mergers,
sales of assets, acquisitions and substantial sales of stock by its
stockholders and each such Tendering Holder shall have five (5) business days
after its receipt of such certificate to rescind its Put Notice. The Company
acknowledges that the disclosure contained in any certificate delivered to such
Tendering Holder pursuant to the immediately preceding sentence shall be relied
on by such Tendering Holder in its determination of whether to put at such
time.
<PAGE> 26
Section 7.2. PUT CLOSING. The closing, except as otherwise provided in
Section 7.6, shall take place at the offices of the Company at 10:00 a.m. local
time on a date (a) not more than ninety (90) days after the date a Put Notice
is received by the Company as the Company shall specify by notice to the
Tendering Holders, or at such later time as Fair Market Value shall have been
determined under Section 7.4(b) hereof, or (b) at such other time and place as
the Tendering Holders and the Company may agree upon (a "PUT CLOSING DATE"). At
the closing such holders will deliver to the Company a certificate or
certificates evidencing all of the Warrant Shares and Warrants being put which
are held by the Tendering Holders (properly endorsed or accompanied by stock
powers or, in the case of any Warrants, assignments, with signature(s)
guaranteed or similar appropriate documentation of authority to transfer)
against payment of the Repurchase Price to such Tendering Holder in the manner
specified in Section 7.3 hereof. Except to the extent prohibited by applicable
law and in any event subject to customary confidentiality and non-transfer
agreements, prior to the Put Closing Date, the Company will provide such
Tendering Holder with all available information that may be material to the
exercise of such Tendering Holder's rights under this Section 7, including any
plans or proposals for any mergers, sales of assets, acquisitions and
substantial sales of stock by its stockholders.
Section 7.3. PAYMENT. The Company shall pay the Repurchase Price at any
closing under Section 7.2 hereof out of funds legally available therefor in
cash or immediately available funds. In the event that any portion of the
aggregate Repurchase Price is not paid as a result of any insufficiency of
legally available funds or as a result of any limitations on the repurchase of
shares of the Company's Common Stock under the Subordinated Loan Agreement or
the Credit Agreement or otherwise, either (A) the Tendering Holders may rescind
their Put Notice or (B) the Company shall pay to the Tendering Holders that
portion of the aggregate Repurchase Price which the Company is able to pay PRO
RATA to each such Tendering Holder based on the ratio of the Repurchase
Price payable to such Tendering Holder to the aggregate Repurchase Price
payable to all such Tendering Holders and such Tendering Holders shall retain a
contract claim for the unpaid balance of the Repurchase Price and shall retain
all their respective rights hereunder and under and in connection with such
Securities, as to that number of such Warrant Shares or portion of such
Warrants exercisable for that number of shares as such unpaid portion
represents (the "UNREPURCHASED SECURITIES"), until such time as the unpaid
portion of the Repurchase Price shall be paid to such Tendering Holders in
full. In the event of any failure of the Company to pay in full the Repurchase
Price of any Warrants and Warrant Shares which are put to the Company on the
scheduled Put Closing Date, all references in this ss.7 to such Put Closing
Date (including without limitation any such references used in determining the
Repurchase Price for such Securities to the extent they constitute
Unrepurchased Securities) shall, but only with respect to such Unrepurchased
Securities, be deemed to refer to the date on which payment in full therefor is
actually made. The unpaid portion of the Repurchase Price allocable to the
Unrepurchased Securities shall remain an obligation of the Company, shall bear
interest at the rate of eighteen percent (18%) PER ANNUM, and shall become due
and payable (including interest accrued in respect thereof), in cash or
immediately available funds, as soon as there are funds legally available
therefor.
<PAGE> 27
Section 7.4. REPURCHASE PRICE FOR SECURITIES.
(a) REPURCHASE PRICE. The repurchase price (the "REPURCHASE PRICE")
shall, except as otherwise provided in ss.7.6, be an amount equal to (i) in the
case of each portion of any Warrants exercisable for one Warrant Share, the
difference between the repurchase price per share of the Warrant Shares as
determined under clause (ii) below of this ss.7.4 and the exercise price per
share specified therein, and (ii) in the case of each Warrant Share, the
quotient obtained by dividing (A) the SUM of the GREATER of either the Fair
Market Value of the Company's common stock equity (as determined pursuant to
Section 7.4(b) hereof) or the Formula Value of the Company's common stock
equity (as determined pursuant to Section 7.4(c) hereof) PLUS the aggregate
consideration to be paid to the Company upon the exercise of all then
outstanding Warrants, by (B) the sum of the number of shares of Common Stock
then outstanding on a fully diluted basis, including the number of shares of
Common Stock then issuable upon exercise of the Warrants.
(b) FAIR MARKET VALUE. The fair market value of the Company's common
stock equity (the "FAIR MARKET VALUE") shall be determined as follows:
(i) if at any date of determination of the Repurchase Price
the Common Stock of any class shall then be publicly traded, the Fair
Market Value of the Company on such date shall be the Market Price on
such date multiplied by the number of shares of Common Stock then
outstanding on a fully diluted basis; and
(ii) if at any date of determination of the Repurchase Price
the Common Stock of any class shall not then be publicly traded, for a
period of ten (10) days after the date of any Put Notice (the
"NEGOTIATION PERIOD"), each party hereto agrees to negotiate in good
faith to reach agreement upon the Fair Market Value. In the event that
the Company and the Holders are unable to agree upon the Fair Market
Value by the end of the Negotiation Period, for a period of ten (10)
days after the end of the Negotiation Period, the Company and the
Holders shall endeavor to agree on an independent appraiser (the
"CONSENSUS APPRAISER") who shall be jointly appointed by the Company
and the Holders to make a binding determination of the Fair Market
Value of the Company's common stock equity. In the event that the
Company and the Holders are unable to agree on a Consensus Appraiser by
the end of such period, the Fair Market Value of the Company's common
stock equity shall be determined for purposes of this Section 7.5(b)
initially by an independent appraiser selected by the Company (the
"COMPANY APPRAISER") and whose appraisal (the "COMPANY APPRAISAL")
shall be furnished to each of the Holders to which such put relates
within thirty (30) days after the end of the Negotiation Period. If the
Holders do not object to such determination within fifteen (15) days
after receipt of such Appraisal, the fair market value determined by
Company Appraiser shall be the Fair Market Value. If any of the Holders
object to the Fair Market Value determined by the Company Appraiser,
such objecting Holders may select an appraiser (the "HOLDER APPRAISER")
who shall review the determination of the Company Appraiser
<PAGE> 28
and issue a report thereon (the "HOLDER APPRAISAL"), within thirty (30)
days after delivery to each of the Holders to which such put relates of
the Company Appraisal. Within ten (10) days after delivery to the
Holders of the Holder Appraisal, the Holders will either accept the
Company Appraisal or deliver the Holder Appraisal to the Company. If
the Holders decide to deliver the Holder Appraisal to the Company, the
Company Appraiser and the Holder Appraiser shall meet within ten (10)
days after such delivery in order to resolve any questions or
differences with respect to the Fair Market Value. If the Company
Appraiser and the Holder Appraiser agree on a Fair Market Value of the
Company's common stock equity, such Fair Market Value shall be the Fair
Market Value. If no agreement is reached, the Company Appraiser and the
Holder Appraiser shall jointly select an appraiser (the "THIRD
APPRAISER") within five (5) days after such meeting. Fair Market Value
shall then be determined by the Third Appraiser within thirty (30) days
after delivery to the Company of the Holder Appraisal, and the
determination of the Third Appraiser (which determination shall not be
less than the determination of the Company Appraiser or greater than
the determination of the Holder Appraiser) shall be conclusive and
binding upon the Company and each of the Holders to which such put
relates. Fair Market Value shall in all cases be calculated by
determining the Fair Market Value of the entire common stock equity
interest of the Company taken as a whole, without premium for control
or discounts for minority interests or restrictions on transfer but
taking into consideration any plans or proposals (to the extent they
are reasonably likely to occur) for any mergers, sales of assets,
acquisitions or substantial sales of stock by the Company or its
stockholders relating to the Company. All expenses of the Consensus
Appraiser and of the Company Appraiser shall be borne by the Company;
all expenses of the Holder Appraiser shall be borne by the Holder or
Holders to which such put relates on a PRO RATA basis based on the
number of shares for which such Warrants held by each of such Holders
are exercisable and the number of such Warrant Shares held by each of
such Holders; and all expenses of the Third Appraiser shall be borne
50% by the Company and 50% by the Holders to which such put relates in
the same proportions as in the case of the Holder Appraisal.
(c) FORMULA VALUE. The "FORMULA VALUE" of the Company's common stock
equity at any particular date of determination shall be an amount calculated by
multiplying Consolidated EBITDA for the period of 4 full fiscal quarters most
recently ended prior to such date by the number 6.25.
Section 7.5. ADDITIONAL PAYMENTS UPON MERGER, ETC. If at any time
within twelve months after any Put Closing Date with respect to the repurchase
or exchange of any Warrants and/or Warrant Shares, the Company shall have
entered into any agreement or letter of intent with respect to any Capital
Transaction, the Company shall, simultaneously with the consummation of such
Capital Transaction or at such later time as any payment is received by the
Company or any of their stockholders in respect of such Capital Transaction,
make an additional payment to each former holder of such Warrant or Warrant
Shares in an amount equal to the
<PAGE> 29
excess of the amount such Holder would have received (or the Company would have
received and in which such holder would have had a beneficial interest as a
stockholder) in respect of such Warrant and/or Warrant Shares had such Warrants
and/or Warrant Shares not been previously repurchased pursuant to Sections 7.2
or 7.3 hereof, but instead had been purchased pursuant to Section 7.6 hereof
over the payment received by such holder pursuant to Sections 7.2 or 7.3
hereof. Each payment to such Holder pursuant to this Section 7.5 shall be
made either in cash or in the form of the securities and other property
received by the holders of common equity of the Company.
Section 7.6. REPURCHASE UPON CHANGE OF CONTROL. The Company will give
each Holder of Securities at least thirty (30) days' prior written notice of
any Change of control following the first anniversary of the Closing Date. At
the time of the consummation of such Change of control following the first
anniversary of the Closing Date, the Holders of Securities may, at their
option, sell and the Company shall be required to repurchase all of the
Securities then outstanding and the Repurchase Price, for purposes of this
Section 7.6, shall be equal to (a) in the case of each portion of any Warrant
exercisable for one Warrant Share, the Repurchase Price per Warrant Share as
determined pursuant to clause (b) below LESS the exercise price for such share
and (b) in the case of each Warrant Share, (i) in the case of a merger, public
offering, dissolution or liquidation the Company or of the Parent, or any other
stock transaction, the highest price per share received by any holder of Common
Stock in connection with such transaction and (ii) in the case of any
liquidation or sale of assets, the quotient of (A) the Adjusted Net Worth of
the Company immediately prior to such liquidation or immediately after such
sale, DIVIDED BY (B) the sum of the number of shares of Common Stock then
outstanding PLUS the number of shares of Common Stock then issuable upon the
exercise of then outstanding warrants, options or convertible securities, in
each case to the extent then exercisable.
ARTICLE VIII
------------
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION, ETC.
--------------------------------------------------
Section 8.1. SURVIVAL OF REPRESENTATIONS. The representations and
warranties of the Company and of the Purchasers and the Holders contained in
this Agreement or any agreement, instrument or document delivered pursuant to
any of the provisions of this Agreement shall survive the execution and delivery
of this Agreement, any examination or investigation conducted by or on behalf of
the Company or the Holders, and the Closing hereunder.
Section 8.2. INDEMNIFICATION FOR MISREPRESENTATIONS. The Company
agrees to indemnify and hold the Holders harmless from and against, and to pay
to the Holders, on demand by the Holders from time to time, the full amount of
any loss, claim, damage, liability, cost or expense (including reasonable
attorneys' fees) resulting to the Holders from any false, incorrect or
misleading representation or warrants of the Company contained in this
Agreement or any agreement,
<PAGE> 30
instrument or document delivered by the Company to the Holders pursuant to any
of the provisions hereof or thereof.
Section 8.3. EXPENSES. Whether or not all or any of the arrangements or
transactions contemplated by this Agreement or by any of the Warrants shall be
consummated, the Company agrees to pay to the Holders, on demand by the Holders
at any time and as often as the occasion therefor may require: (a) all of the
reasonable legal fees, PLUS all reasonable out-of-pocket expenses and
disbursements, of Bingham Dana LLP, special counsel for the Holders, which have
been or shall be incurred or sustained at any time in connection with the
preparation, negotiation, execution or delivery of this Agreement, any of the
Warrants or any other agreements, instruments or documents relating thereto; and
(b) all reasonable out-of-pocket costs and expenses which shall be incurred or
sustained by any Holder at any time in connection with any modifications or
amendments to or consents, approvals or waivers under this Agreement or any of
the Warrants, or in connection with any action or proceeding taken by any Holder
to protect or preserve all or any of the rights, remedies, powers or privileges
of such Holder under any of such documents or to enforce any of the covenants,
agreements or obligations of the Company under any of such documents (including,
without limitation, all of the reasonable fees and disbursements of legal
counsel for each Holder).
ARTICLE IX
----------
MISCELLANEOUS
-------------
Section 9.1. NOTICES.
(a) All notices and other communications pursuant to this Agreement
shall be in writing, either delivered in hand, mailed by United States
registered or certified first-class mail, postage prepaid, sent by overnight
courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as follows:
(i) if to the Company, at TransTechnology Corporation, 150
Allen Road, Liberty Corner, New Jersey 07938, Attention: General
Counsel, or at such other address as shall have been furnished to each
of the Holders in writing by the Company, and a copy thereof shall in
any event be simultaneously transmitted to Hahn Loeser & Parks LLP,
3300 BP America Building, 200 Public Square, Cleveland, Ohio,
Attention: F. Ronald O'Keefe, Esq.; or
(ii) if to any Holder, at such addresses (in each case) as
shall have been furnished to the Company and to the other Holders by
such Holder in writing, and copies thereof shall in any event be
simultaneously transmitted to (A) the Administrative Agent at
BankBoston, N.A., 100 Federal Street, Boston, Massachusetts 02110,
Attention: Maura C. Wadlinger and (B) Bingham Dana LLP, 150 Federal
Street, Boston, Massachusetts 02110, Attention: T. Malcolm Sandilands,
Esq.
<PAGE> 31
(b) Any notice or other communication pursuant to this Agreement shall
be deemed to have been duly given or made and to have become effective (i) if
delivered by hand, overnight courier or facsimile to a responsible officer of
the party to which it is directed, at the time of receipt thereof by such
officer or the sending of such facsimile or (ii) if sent by registered or
certified first-class mail, postage prepaid, on the third business day following
the mailing thereof.
Section 9.2. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO TAKE EFFECT
AS A SEALED INSTRUMENT. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Section 9.3. AMENDMENTS AND WAIVERS.
(a) Except as otherwise provided by paragraph (b) of this Section 9.3,
and except as otherwise expresslY required by any other provisions of this
Agreement, none of the terms or provisions contained in this Agreement, and
none of the agreements, obligations or covenants of the Company contained in
this Agreement, may be amended, modified, supplemented, waived or terminated
unless (i) the Company shall execute an instrument in writing agreeing or
consenting to such amendment, modification, supplement, waiver or termination,
and (ii) the Company shall receive a prior written Holder Consent therefor.
(b) Each of the terms and provisions contained in this Section 9.3
or in the definitions of PERMITTED TRANSFEREE, HOLDER CONSENT or MAJORITY
HOLDERS contained in Article I hereof may be amended, modified, supplemented,
waived or terminated only by a written instrument or consent signed by the
Company and by each of the Holders holding of record any Securities at the
effective date thereof.
(c) In connection with any action taken or to be taken pursuant to
paragraph (a) of this Section 9.3, there shall be no obligation or requirement
on the part of the Company, any of the Holders or any other Persons (i) to
solicit or to attempt to solicit from all of the Holders the consent or
approval of all of the Holders for such action, or (ii) to submit any notices
of any kind to all of the Holders in advance of any action proposed to be taken
pursuant to paragraph (a) of this Section 9.3. However, copies of all written
consents or approvals given by Holders in connection with any action taken or
to be taken pursuant to and in compliance with paragraph (a) of this Section
9.3 shall be sent by the Company, promptly after the receipt thereof by the
Company, to each Holder who shall have failed or refused to give a written
consent or approval for such action.
(d) Any action taken pursuant to and in compliance with paragraph (a)
of this Section 9.3 shall be binding upon the Company and upon all of the
Holders, including all of the Holders who shall have failed or refused to give
a written consent or approval for such action.
<PAGE> 32
Section 9.4. PROPORTIONAL ADJUSTMENTS. There are references in this
Agreement to a specific price per share of the Company's Common Stock or to a
specific number of shares in the capital of the Company. The specific price per
share and the specific number of shares so stated are effective as of the
Closing Date. The specific price per share and the specific number of shares so
stated shall (in each case) be proportionally adjusted from time to time if (and
on each occasion that) there shall be effected by the Company any stock
dividend, stock split, subdivision of shares, combination of shares,
reclassification, recapitalization or other similar corporate reorganization
affecting the capital structure of the Company. The exact amount and the
effective date of each adjustment effected pursuant to this ss.9.4 shall be
determined in good faith and on a reasonable basis by the Board of Directors of
the Company. The Company shall promptly notify each Holder in writing of each
such adjustment.
Section 9.5. INTEGRATION. Annexed to this Agreement are SCHEDULE 1,
SCHEDULE 2 and EXHIBIT A. Such SCHEDULES and EXHIBIT are an integral part of
this Agreement and are hereby incorporated by reference.
Section 9.6. RIGHTS AND OBLIGATIONS SEVERAL. The rights and
obligations of each of the parties hereto shall be several (and not joint),
except as otherwise expressly provided by this Agreement.
Section 9.7. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of any party hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 9.8. ENTIRE AGREEMENT. This Agreement, including the
SCHEDULES and EXHIBITS hereto, the Warrants, the Warrant Agreement, the Warrant
Escrow Agreement, the Subordinated Loan Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and supersedes any prior understandings or agreements concerning the subject
matter hereof.
Section 9.9. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
Section 9.10. BINDING EFFECT. All of the covenants and agreements of
the Company contained in, and all of the rights granted by the Company pursuant
to, this Agreement, shall inure to the benefit of each Holder, including each
of the Permitted Transferees of such Holder. None of such covenants, agreements
or rights shall be assignable or transferable by any Holder to any Person
except to a Person who is a Permitted Transferee of such Holder.
Section 9.11. COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
agreement. In making proof of this
<PAGE> 33
Agreement, it shall not be necessary to produce or account for more than one
such counterpart signed by each of the parties hereto.
<PAGE> 34
IN WITNESS WHEREOF, the parties have caused this Warrant Holders'
Agreement to be duly executed as of the date first written above.
THE COMPANY:
TRANSTECHNOLOGY
CORPORATION
By:/s/ Joseph F. Spanier
---------------------------
Name:Joseph F. Spanier
Title: Vice President & CFO
THE PURCHASERS:
--- -----------
BANKBOSTON, N.A.
By:/s/ Robert W. MacElhiney
---------------------------
Name: Robert W. MacElhiney
Title: Vice President
ABN AMRO BANK N.V.
By:/s/ Lisa Megeaski
---------------------------
Name: LISA MEGEASKI
Title: VICE PRESIDENT
By:/s/ Edward D. Puckhaber
---------------------------
Name: Edward D. Puckhaber
Title: Assistant Vice President
FIRST CHICAGO CAPITAL
CORPORATION
By:/s/ Kevin J. Rooney
----------------------------
Name: Kevin Rooney
Title: Director
<PAGE> 35
THE ADMINISTRATIVE AGENT:
-------------------------
BANKBOSTON, N.A., as
Administrative Agent
By:/s/ Robert W. MacElhiney
----------------------------
Name: Robert W. MacElhiney
Title: Vice President
<PAGE> 36
EXHIBIT A
---------
TO WARRANT
HOLDERS' AGREEMENT
Instrument of Accession
-----------------------
The undersigned, ____________________, in order to become the owner or
holder of ________ shares of Common Stock, $0.01 par value per share (the
"SHARES"), of TRANSTECHNOLOGY CORPORATION, a Delaware corporation, hereby agrees
to become a Holder party to that certain Warrant Holders' Agreement, dated as of
August 31, 1999 (the "WARRANT HOLDERS' AGREEMENT"), a copy of which is attached
hereto. This Instrument of Accession shall become a part of such Warrant
Holders' Agreement.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature: ___________________________
Address: ___________________________
___________________________
___________________________
Date: ___________________________
Accepted:
TRANSTECHNOLOGY CORPORATION
By:__________________________________
Title:_______________________________
Date:________________________________
<PAGE> 1
------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of August 31, 1999
by and among
TransTechnology Corporation,
the Guarantors named herein,
and
BankBoston, N.A., as Administrative Agent
------------------------------------------------------------------------
<PAGE> 2
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of August 31, 1999, by and among TransTechnology Corporation, a
Delaware corporation (the "Company"), the Guarantors listed on the signature
pages hereto as such (together with any future subsidiary of the Company that
executes a guarantee in accordance with the provisions of the Purchase Agreement
referred to below, the "Guarantors"), and BankBoston, N.A., in its capacity as
administrative agent for the initial purchasers (the "Initial Purchasers"), of
the Company's Bridge Notes in the original principal amount of $75,000,000 (the
"Bridge Notes") under and pursuant to that certain Senior Subordinated Note
Purchase Agreement, dated as of August 31, 1999 (the "Purchase Agreement"), by
and among the Company, the Administrative Agent, BancBoston Robertson Stephens
Inc., as the arranger (in such capacity, the "Arranger") and the Initial
Purchasers.
This Agreement is made pursuant to the Purchase Agreement. In order to
induce the Initial Purchasers to purchase the Bridge Notes, the Company and the
Guarantors (collectively, the "Issuers") have agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
ADMINISTRATIVE AGENT: As defined in the preamble hereto.
AFFILIATE: With respect to any specified Person, any Person directly or
indirectly controlling or controlled by such specified Person, or any Person
under direct or common control with such specified Person.
BRIDGE NOTES: As defined in the preamble hereto.
BUSINESS DAY: Any day other than a Saturday, a Sunday or a day on which
banking institutions in Boston, Massachusetts, or at any other place of payment
hereunder are authorized by law, regulation or executive order to remain closed.
BROKER-DEALER: Any broker or dealer registered as such under the
Exchange Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
<PAGE> 3
-2-
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuers
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Notes, each Interest Payment
Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5 hereof.
EXCHANGE ESCROW AGREEMENT: As defined in the Purchase Agreement.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the issuers under the Act of the
Series B Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
GUARANTORS: As defined in the preamble hereto.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of the date hereof, among the
Issuers and State Street Bank and Trust Company, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
INITIAL MATURITY DATE: August 31, 2000.
INITIAL PURCHASERS: As defined in the preamble hereto.
INTEREST PAYMENT DATE: As defined in the Notes.
LIQUIDATED DAMAGES: As defined in Section 5 hereof.
<PAGE> 4
-3-
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, limited liability
company, limited liability partnership, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
PURCHASE AGREEMENT: As defined in the preamble hereto.
RECORD HOLDER: With respect to any Damages Payment Date relating to the
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
SERIES A NOTES: The Company's Series A Senior Subordinated Notes due
2009 to be issued under the Indenture in exchange for Term Notes pursuant to
Section 5 of the Purchase Agreement, together with the guarantee thereof by any
Guarantor.
SERIES B NOTES: The Company's Series B Senior Subordinated Notes due
2009 to be issued pursuant to the Indenture in the Exchange Offer, together with
the guarantee thereof by any Guarantor.
SHELF FILING DEADLINE: As defined in Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TERM NOTE: As defined in the Purchase Agreement.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
<PAGE> 5
-4-
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and the
Note for which it is exchanged is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Note has been effectively registered under
the Act and disposed of in accordance with a Shelf Registration Statement or (c)
the date on which such Note is permitted to be distributed to the public
pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
WARRANT HOLDERS' AGREEMENT: As defined in the Purchase Agreement.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities. A Holder is deemed a "selling
Holder" whenever such Holder notifies the Company of such Holder's intent to
sell Transfer Restricted Securities pursuant to a Shelf Registration Statement.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission as soon as practicable after the Initial Maturity Date, but in no
event later than 60 days after the Initial Maturity Date, an Exchange Offer
Registration Statement, (ii) use commercially reasonable efforts to cause such
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Initial Maturity Date, (iii) in
connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act, and (C) cause
all necessary filings in connection with the registration and qualification of
the Series B Notes to be made under the Blue Sky laws of such jurisdictions as
are necessary to permit the Exchange Offer to be Consummated, and (iv) upon the
effectiveness of such Registration Statement, commence the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Series B Notes to be offered in exchange for the Transfer Restricted
<PAGE> 6
-5-
Securities and to permit resales of Notes held by Broker-Dealers as contemplated
by Section 3(c) below.
(b) The Company shall use commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use commercially reasonable efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
Subject to Section 4(c), the Issuers shall use commercially reasonable
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Notes acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities, and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 180 days from the date on which the Exchange Offer Registration
Statement is declared effective.
The Issuers shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
180 day period in order to facilitate such resales.
<PAGE> 7
-6-
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Issuers are not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Days after the Exchange Offer shall have been Consummated (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its Affiliates, then the Issuers
shall:
(x) use commercially reasonable efforts to file a
shelf registration statement pursuant to Rule 415 under the Act, which
may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement") on or prior to the
earliest to occur of (1) the 60th day after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement or (2) the 60th day after the date on which the
Company receives notice from a Holder of Transfer Restricted Securities
as contemplated by clause (ii) above (such earliest date being the
"Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to
Section 4(b) hereof; and
(y) use commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective by the Commission
on or before the 120th day after the obligation to file the Shelf
Registration Statement arises.
Subject to Section 4(c), the Issuers shall use commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years following the
Closing Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 15 Business Days after receipt of a request
therefor, such information as the Company may
<PAGE> 8
-7-
reasonably request for use in connection with any Shelf Registration Statement
or Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages (as defined)
pursuant to Section 5 hereof unless and until such Holder shall have used its
best efforts to provide all such reasonably requested information. Each Holder
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(c) The Company shall be entitled to suspend the effectiveness of any
Shelf Registration Statement and the duration of such suspension shall be
excluded from the calculation of the two-year period referred to in Section
4(a). Such suspension shall be effected only if the Board of Directors of the
Company determines reasonably and in good faith that the effectiveness of the
Shelf Registration Statement would materially impede, delay or interfere with
any financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Affiliates or require disclosure of material information which the Company
has a lawful and bona fide business purpose for preserving as confidential,
which financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction is under active consideration by
the Company at the time of such suspension described above; PROVIDED, HOWEVER,
that the Company shall not be entitled to more than one suspension, which
suspension shall be no longer than six weeks in duration. If the Company shall
so suspend the effectiveness of a Shelf Registration Statement it shall, as
promptly as possible, deliver a certificate signed by the President, Chief
Executive Officer or Chief Financial Officer of the Company to the Initial
Purchasers and Holders of Transfer Restricted Securities as to such
determination, and such Initial Purchasers and Holders shall receive an
extension of the applicable registration period equal to the number of days of
the suspension.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose (except pursuant to Section 4(c)) prior to the
expiration of the time period specified by this Agreement without being
succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such event referred to in clauses (i) through (iv), a
"Registration Default", and each period during which a Registration Default has
occurred and is continuing, a "Registration Default Period"), the Issuers hereby
jointly and severally agree that liquidated damages ("Liquidated Damages"), in
<PAGE> 9
-8-
addition to the base interest that would otherwise accrue on the Transfer
Restricted Securities, shall accrue at a per annum rate of 0.25% of the
aggregate principal amount of such Transfer Restricted Securities outstanding
for the first 90 days of the Registration Default Period, at a per annum rate of
0.50% of the aggregate principal amount of such Transfer Restricted Securities
for the second 90 days of the Registration Default Period, at a per annum rate
of 0.75% of the aggregate principal amount of such Transfer Restricted
Securities for the third 90 days of the Registration Default Period and at a per
annum rate of 1.0% of the aggregate principal amount of such Transfer Restricted
Securities outstanding thereafter for the remaining portion of the Registration
Default Period. All accrued liquidated damages shall be paid to Record Holders
by the Company by wire transfer of immediately available funds or by federal
funds check on each Damages Payment Date. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of Liquidated Damages with respect to such Transfer Restricted Securities will
cease immediately.
All obligations of the Issuers set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use commercially reasonable efforts to effect such exchange
and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Issuers hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the Issuers to
Consummate an Exchange Offer for such Series A Notes. The Issuers
hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Issuers hereby agree, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted, and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the time that it is Consummated, a written representation to
the Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration
<PAGE> 10
-9-
Statement) to the effect that (A) it is not an affiliate of the
Issuers, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate
in, a distribution of the Series B Notes to be issued in the Exchange
Offer, (C) it is acquiring the Series B Notes in its ordinary course of
business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers' preparations for
the Exchange Offer and (D) such other customary representations as the
Issuers may reasonably request. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange
Offer to participate in a distribution of the securities to be acquired
in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the
Commission enunciated in MORGAN STANLEY AND CO., INC. (available June
5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and similar no-action letters (including any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of
the Act in connection with a secondary resale transaction and that such
a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the
Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuers shall provide a supplemental letter
to the Commission (A) stating that the Issuers are registering the
Exchange Offer in reliance on the position of the Commission enunciated
in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, and (B)
including a representation that neither the Company nor any Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in
its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Series B
Notes received in the Exchange Offer.
(b) SHELF REGISTRATION STATEMENT. In connection with any Shelf
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto the Issuers will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended and
lawful method or methods of distribution thereof.
<PAGE> 11
-10-
(c) GENERAL PROVISIONS. Subject to Section 4(c), in connection with any
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Issuers shall:
(i) use commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements (including, if required by the Act or any
regulation thereunder, financial statements of the Guarantors) for the
period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers shall file promptly an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use its commercially reasonable efforts to
cause such amendment to be declared effective and such Registration
Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been exchanged
or cease to be Transfer Restricted Securities; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under
the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state
<PAGE> 12
-11-
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Upon receipt
of written notice of any stop order described in the preceding clause
(C), selling Holders shall refrain from delivering any Prospectus or
Prospectus Supplement in the jurisdiction issuing such stop order until
notification by the Issuers that such stop order has been lifted or
withdrawn. Upon the receipt of written notice of any fact or event
described in the preceding clause (D), selling Holders shall refrain
from delivering any Prospectus or Prospectus Supplement requiring
amendment or supplement as described therein. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Issuers shall use
commercially reasonable efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least three Business Days, and the Issuers will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which a selling Holder
of Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably object within
three Business Days after the receipt thereof;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers representatives available for
discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably
may request, provided that the Company may require any such Person to
enter into a customary confidentiality agreement;
(vi) subject to the receipt of confidentiality agreements as
provided above, make available at reasonable times for inspection by
the selling Holders,
<PAGE> 13
-12-
any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers
and cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Issuers are notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Notes covered thereby or the underwriter(s), if
any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers
hereby consent to the use of the Prospectus and any amendment or
supplement thereto in accordance with this Agreement by each of the
selling Holders and each of the underwriter(s), if any, in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such reasonable and customary representations and
warranties, and take all such other actions in connection therewith as
reasonably necessary in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any Registration
Statement contemplated by this Agreement, all to
<PAGE> 14
-13-
such extent as may be reasonably requested by any Initial Purchaser or
by any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration
Statement contemplated by this Agreement; and whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to the selling Holders and each
underwriter, if any, in the event of a Shelf Registration
Statement, and furnish to any Holder tendering Notes in an
Exchange Offer, if any, in the event of an Exchange Offer, in
each case, in such substance and scope as they may reasonably
request and as are customarily made by issuers to underwriters
in primary underwritten offerings, upon the date of the
Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date the
Exchange Offer is Consummated or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, signed by (y) the President or any
Vice President and (z) a principal financial or
accounting officer of the Company confirming, as of
the date thereof, the matters set forth in Sections
8.1 - 8.5 of the Purchase Agreement and such other
matters as such parties may reasonably request;
(2) an opinion, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Issuers, covering
the matters customarily opined to in connection with
the registration of securities as contemplated by
Sections 3 and 4 of this Agreement and such other
matter as such parties may reasonably request, and in
any event including a statement to the effect that
such counsel has participated in conferences with
officers and other representatives of the Company and
the Guarantors, representatives of the independent
public accountants for the Company and the
Guarantors, representatives of the Holders and their
counsel in connection with the preparation of the
Registration Statement and related Prospectus and
have considered the matters required to be stated
therein and the statements contained therein and,
although they have not independently verified and are
not passing upon and assume no responsibility for the
accuracy, completeness or fairness of such
statements, on the basis of the foregoing, they
hereby confirm that no facts came to their attention
that caused them to believe that the Registration
Statement and related Prospectus, as of their date,
contained or contains an untrue statement of a
material fact or omitted or omits to state a material
fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which
<PAGE> 15
-14-
they were made, not misleading. Without limiting the
foregoing, such counsel may state further that such
counsel expresses no belief or opinion with respect
to, assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of exhibits, the financial statements, notes
and schedules and other financial data included in
any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of
the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Issuers'
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters by underwriters in connection with
primary underwritten offerings;
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Issuers pursuant to this clause
(xi), if any.
If at any time during which a Registration Statement is required to be
effective under this Agreement the Issuers become aware that the representations
and warranties of the Issuers contemplated in clause (A)(1) above cease to be
true and correct, the Issuers shall so advise the Initial Purchaser and the
underwriter(s), if any, and each selling Holder promptly and, if requested by
such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions (within the United
States, Canada or, with respect to sales to institutions, the United
Kingdom) as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the
Transfer Restricted Securities covered by the Shelf Registration
Statement; provided, however, that neither the Company nor any
Guarantor shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
<PAGE> 16
-15-
(xiii) to the extent lawful, issue, upon the request of any
Holder of Series A Notes covered by the Shelf Registration Statement,
Series B Notes, having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes surrendered to the Company
by such Holder in exchange therefor or being sold by such Holder; such
Series B Notes to be registered in the name of such Holder or in the
name of the purchaser(s) of such Notes, as the case may be; in return,
the Series A Notes held by such Holder shall be surrendered to the
Company for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two Business Days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use commercially reasonable efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities within the United States, as may be reasonably necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) subject to Section 6(c)(i), if any fact or event
contemplated by clause (c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material- fact or
omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed
certificates for the Transfer Restricted Securities that are in a form
eligible for deposit with The Depository Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use commercially reasonable
efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities (within the
United States, Canada or the United Kingdom) as may be necessary to
enable the
<PAGE> 17
-16-
Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;
(xix) otherwise commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) if so required under the TIA, cause the Indenture to be
qualified under the TIA not later than the effective date of the first
Registration Statement required by this Agreement, and, in connection
therewith, cooperate with the Trustee and the Holders of Notes to
effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely
manner;
(xxi) provide promptly to each Holder upon request each
document filed by the Company with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Issuers' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
<PAGE> 18
-17-
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or compliance
with this Agreement will be borne by the Company or the respective Guarantor,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone
incurred by the Company the Guarantors and their agents; (iv) all fees and
disbursements of counsel for the Company and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities, (v) all application and filing fees
in connection with listing Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuers will bear their internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by any issuer.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors will, jointly and severally,
indemnify and hold harmless each Holder against any losses, claims, damages or
liabilities, joint or several, to which such Holder may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will
<PAGE> 19
-18-
reimburse each Holder for any legal or other expenses reasonably incurred by
such Holder in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Registration Statement or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Holder expressly for use therein.
(b) Each Holder will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Registration Statement
or Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use therein; and will reimburse the Company and the Guarantors for
any legal or other expenses reasonably incurred by the Company and the
Guarantors in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or
<PAGE> 20
-19-
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors on the one hand and
the Holders on the other from the sale by the Company of the Series A Notes. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantors on the one hand and the
Holders on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Holders on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Notes (before deducting expenses) received
by the Company and the Guarantors bear to the total proceeds received by such
holder upon the sale of the Notes giving rise to such indemnification
obligations. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors on the one hand or the Holders on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Guarantors agree, and the Holders shall be deemed to have agreed, that it
would not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Holder shall be required to contribute any
amount in excess of the amount by which the total net proceeds received by such
Holder with respect to the Notes exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
<PAGE> 21
-20-
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 8 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Holder within the meaning
of the Act; and the obligations of the Holders under this Section 8 shall be in
addition to any liability which the respective Holders may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company and the Guarantors and to each person, if any, who controls the
Company within the meaning of the Act the amount by which the total net proceeds
received by such Holder with respect to the Notes exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of misrepresentation within the meaning of Section 11(a) of the Act shall
be entitled to contribution from any person who was not guilty of such
misrepresentation.
(f) Notwithstanding anything to the contrary in this Section 8, the
Company and the Guarantors shall not be required to indemnify and hold harmless
any party with respect to any loss, liability, claim, damage or expense to the
extent arising out of (x) the use of a Prospectus relating to a Shelf
Registration Statement during any period when its use has been suspended
pursuant to Section 4(c) after the Issuers have provided (and such party has
actually received) written notice of such suspension pursuant to Section 12(e);
PROVIDED that the Company shall have established beyond a reasonable doubt in a
court of competent jurisdiction that such Holder actually received such written
notice on a timely basis and that such loss, liability, claim, damage or expense
would have been completely avoided had such notice been complied with or (y) the
use of an outdated Prospectus relating to a Shelf Registration Statement
following the delivery of an updated Prospectus correcting the untrue statement
or omission giving rise to the loss, liability, claim, damage or expense to any
Holder; provided, that the Company shall have established beyond a reasonable
doubt in a court of competent jurisdiction that (i) any such untrue statement or
omission was fully corrected in such updated Prospectus, (ii) that the delivery
of such updated Prospectus by such Holder would not have given rise to such
loss, liability, claim, damage or expense and (iii) such Holder was provided
with sufficient quantities of such updated Prospectus and written notice of
suspension of the prior Prospectus, each on a timely basis. Any amounts paid by
the Issuers to a Holder pursuant to this Agreement as a result of such losses,
liabilities, claims, damages or expenses shall be returned to the Issuer, if it
shall be finally determined by a court of competent jurisdiction that such
Holder was not entitled to indemnification by the Issuers by virtue of this
Section 8(f).
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of
<PAGE> 22
-21-
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration with respect
to any Notes hereunder unless such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements, and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) REMEDIES. The Issuers agree that monetary damages (including the
Liquidated Damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuers will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company nor any of
the Guarantors have previously entered into any agreement granting any
registration rights with respect to its securities to any Person, other than the
Warrant Holders' Agreement. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to any
of the holders of the Issuers' securities under any agreement in effect on the
date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. The Issuers will not take any
action, or permit any change to occur, with respect to the terms of the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
<PAGE> 23
-22-
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Issuers have obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Issuers:
TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07938
Telecopier No.: (908) 903-1616
Attention: Chief Financial Officer
with a copy to
F. Ronald O'Keefe, Esq.
Hahn Loeser & Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Telecopier No.: (216) 241-2824
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
<PAGE> 24
-23-
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that anyone or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, the Indenture, the Notes and the Exchange Escrow Agreement, is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuers with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[Signature page follows]
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first set forth above.
THE COMPANY:
TRANSTECHNOLOGY CORPORATION
By:/s/Joseph F. Spanier
---------------------------
Name: Joseph F. Spanier
Title: Vice President & CFO
THE GUARANTORS:
TRANSTECHNOLOGY ACQUISITION CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
PALNUT FASTENERS, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
INDUSTRIAL RETAINING RING COMPANY
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
RETAINERS, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 26
RANCHO TRANSTECHNOLOGY CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SYSTEMS & SERVICES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELECTRONIC CONNECTIONS AND ASSEMBLIES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INDUSTRIES
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
SSP INTERNATIONAL SALES, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY SEEGER, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 27
SEEGER INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TCR CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
NORCO, INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
AEROSPACE RIVET MANUFACTURERS CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
ELLISON RING & WASHER INC.
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
TRANSTECHNOLOGY ENGINEERED COMPONENTS, LLC
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
<PAGE> 28
TRANSTECHNOLOGY CANADA CORPORATION
By:/s/Gerald C. Harvey
---------------------------
Name: Gerald C. Harvey
Title: Vice President & Secretary
THE ADMINISTRATIVE AGENT:
BANKBOSTON, N.A., as Administrative Agent on
behalf of the Initial Purchasers and Holders
By:/s/ Robert W. MacElhiney
----------------------------
Name: Robert W. MacElhiney
Title: Vice President
<PAGE> 1
WARRANT ESCROW AGREEMENT
------------------------
This WARRANT ESCROW AGREEMENT (this "AGREEMENT"), dated as of August
31, 1999, among TransTechnology Corporation, a Delaware corporation or another
Surviving Person in accordance with Section 5.01 of the Warrant Agreement (the
"COMPANY"), State Street Bank and Trust Company, as warrant agent (in such
capacity, the "WARRANT AGENT") and as escrow agent (in such capacity, the
"ESCROW AGENT"), BankBoston, N.A. ("BANKBOSTON") as Administrative Agent (in
such capacity, the "ADMINISTRATIVE AGENT"), for the ratable benefit of the
Holders (as defined below) from time to time.
RECITALS:
---------
WHEREAS, the Company has entered into a Senior Subordinated Note
Purchase Agreement (the "LOAN AGREEMENT"), dated as of the date hereof, among
the Company, the Lenders party thereto and the Administrative Agent;
WHEREAS, the Company and the Warrant Agent have entered into a Warrant
Agreement dated as of the date hereof (the "WARRANT AGREEMENT") pursuant to
which the Company has agreed to issue on the date hereof the Warrants to be held
by the Escrow Agent and released subject to the terms hereof; and
WHEREAS, the Company and the Administrative Agent desire to appoint the
Escrow Agent as escrow agent for the purpose of receiving, holding and
distributing the Escrowed Property, and the Escrow Agent is willing to serve as
escrow agent, subject to and in accordance with the terms and provisions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS; APPOINTMENT; DEPOSIT, REPRESENTATIONS AND COVENANTS;
RELEASE.
1.1. DEFINITIONS. Capitalized terms used herein and not defined shall
have the meanings assigned to them in the Loan Agreement.
"CONTESTING PARTY": see Section 2.7.
"ESCROW ACCOUNT": see Section 1.3(a).
"ESCROWED PROPERTY" shall mean, with respect to any date, (i) the
Warrants as represented by the Warrant Certificates and (ii) the Warrant
Proceeds, if any, in each case, held in the Escrow Account on such date.
<PAGE> 2
-2-
"HOLDERS" means any Holder of a Note under the Loan Agreement or the
Indenture referred to therein.
"INITIAL RELEASE DATE": see Section 1.5(a).
"LOAN AGREEMENT": see the recitals to this Agreement.
"RELEASE DATE": see Section 1.5(b).
"SHARES" shall have the meaning ascribed to such term in the Warrant
Agreement.
"WARRANT AGREEMENT": see the recitals to this Agreement.
"WARRANT CERTIFICATES" shall mean the certificates evidencing the
Warrants executed by the Company and issued pursuant to the Warrant Agreement.
"WARRANT PROCEEDS" shall mean all Distributions and Distribution Rights
(as such terms are defined in Section 5.03 of the Warrant Agreement) in respect
of the Warrants in the Escrow Account.
"WARRANTS" shall have the meaning ascribed to such term in the Warrant
Agreement.
1.2. APPOINTMENT OF THE ESCROW AGENT. The Company appoints the Escrow
Agent as escrow agent in accordance with the terms and conditions set forth
herein and the Escrow Agent hereby accepts such appointment.
1.3. ESCROW ACCOUNT; ESCROW DEPOSIT.
(a) Prior to the execution hereof, the Company shall have caused the
Escrow Agent to have opened an account for the deposit of the Warrant
Certificates (the "ESCROW ACCOUNT") at its offices in Boston, Massachusetts
(Account No. [ ]), in the name of and under the sole dominion and control of the
Escrow Agent and subject to the terms of this Agreement. Simultaneously with the
execution hereof, the Company has caused to be delivered to the Escrow Agent,
and the Escrow Agent hereby acknowledges receipt of, for deposit in the Escrow
Account, Warrant Certificates representing the right to purchase, in the
aggregate, 10.0% of the issued and outstanding Common Stock of the Company on a
fully diluted basis as of the Closing Date (after giving effect to the issuance
of such Warrants and all other warrants, options, or other convertible
securities exercisable for or convertible such shares of Common Stock of the
Company outstanding as of the Closing Date).
(b) The Company shall cause to be delivered to the Escrow Agent, from
time to time, for deposit in the Escrow Account, all Warrant Proceeds, to the
extent such Warrant Proceeds relate to the Warrants in the Escrow Account, on
the date of
<PAGE> 3
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the granting or distribution, as applicable, of such Warrant Proceeds, in
accordance with Section 5.03 of the Warrant Agreement.
(c) In the event that the Company takes any action at any time during
the term of this Agreement which would require an adjustment in respect of the
Warrants under Section 5.01 of the Warrant Agreement, then the Warrant
Certificates in the Escrow Account shall be deemed to be so adjusted as provided
in the Warrant Agreement.
(d) The Escrow Agent shall provide to the Administrative Agent and the
Company monthly statements identifying transactions, transfers or holdings of
the Escrowed Property and in the absence of manifest error, each such statement
shall be deemed to be correct and final upon receipt thereof by the
Administrative Agent and the Company unless and except to the extent the Escrow
Agent is notified in writing to the contrary within thirty (30) Business Days of
the date of such statement.
1.4. REPRESENTATION, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants, covenants and agrees that:
(a) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company, and is
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and (ii)
general principles of equity including without limitation concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief (regardless of
whether considered in a proceeding in equity or at law); and the execution,
delivery and performance of this Agreement by the Company does not and will not
violate any applicable law or regulation.
(b) The Company shall not create, incur, or assume any lien on or
security interest in the Escrowed Property, and the Company hereby represents
and warrants that the Warrants and the Shares have been duly authorized and the
Warrants have been duly issued and delivered to the Escrow Agent (as evidenced
by the Warrant Certificates, respectively) on the date hereof and that the
Shares, if and when issued, will be fully paid and nonassessable and free and
clear of any Lien, encumbrance, charge, security interest or other claim of
others created by the Company.
(c) In the event that the Company takes any action at any time during
the term of this Agreement which would result in an adjustment to the number of
Shares, the Company shall provide to the Escrow Agent a copy of the notice and
certificate provided pursuant to Section 5.01 of the Warrant Agreement at the
same time as such documents are provided thereunder.
1.5. RELEASE OF THE ESCROWED PROPERTY
<PAGE> 4
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(a) Subject to the terms and conditions set forth herein, the Escrow Agent shall
release the Escrowed Property in installments to the Administrative Agent, for
the account of each of the Holders (as certified to the Escrow Agent by the
Administrative Agent) in accordance with this Section 1.5. Subject to Section
1.5(b) below, on the one year anniversary of the Closing Date (the "Initial
Release Date"), and at the end of each three-month period following the Initial
Release Date as set forth in Column A below (or at such later date following
written notice from the Administrative Agent pursuant to Section 1.5(c) below)
(each such date, a "Release Date"), if any Notes are outstanding and have not
been paid in full or otherwise repurchased or redeemed by the Company prior to
such Release Date (as certified to the Escrow Agent by the Administrative
Agent), the Escrow Agent shall release a percentage of the Warrants (and a
percentage of the Warrant Proceeds, if any) then remaining in the Escrow Account
hereunder to the Administrative Agent for the account of each of the Holders, in
an amount in the case of each such Holder (as certified to the Escrow Agent by
the Administrative Agent), equal to the product of (i) the percentage of the
Warrants and any related Warrant Proceeds then held by the Escrow Agent as is
set forth in Column B below opposite the applicable Release Date and (ii) the
ratio of (x) the aggregate principal amount of Notes, without regard to accrued
interest, held by such Holder at such time, as certified by the Administrative
Agent pursuant to Section 1.5(c)(ii) below, to (y) the aggregate principal
amount of all outstanding Notes at such time, as certified by the Administrative
Agent pursuant to Section 1.5(c)(ii) below, without regard to accrued interest
(such Warrants only to be earned on each Release Date and not for any interim
period ending prior to the next Release Date):
A B
------------------------------ --------------------------------
Initial Release Date 20%
90th day following Initial 25%
Release Date
180th day following Initial 33 1/3%
Release Date
270th day following Initial 50%
Release Date
360th day following Initial 100%
Release Date
No Warrants or related Warrant Proceeds (except those previously earned
in and not yet released to a Holder) will be delivered by the Administrative
Agent to a Holder after the date upon which all Notes held by such Holder are
completely repaid (including by repurchase or redemption) or such Holder has
ceased to hold any Notes.
<PAGE> 5
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(b) Two (2) Business Days following its receipt of written notice from
the Administrative Agent of the repayment of all Notes held by the Holders as of
the Initial Release Date (including by repurchase or redemption) or any
subsequent Release Date, the Escrow Agent shall release to the Company all
Escrowed Property remaining in the Escrow Account and the Escrow Agent shall be
discharged from all obligations under this Agreement and shall have no further
duties or responsibilities in connection herewith and the Holders shall have no
further right to earn or have released from escrow any Escrowed Property.
(c) The Administrative Agent shall (i) notify the Escrow Agent promptly
in writing of the repayment of all of the Notes as described in Section 1.5(b),
and (ii) certify to the Escrow Agent no more than five (5) Business Days prior
to each scheduled Release Date and at least two (2) Business Days prior to each
actual Release Date that, as of the date of such certification, there are then
Notes outstanding which have not been paid in full or otherwise repurchased or
redeemed by the Company, together with a statement of (i) the principal amounts
of such Notes then outstanding, (ii) the Holders thereof, and (iii) the
Administrative Agent's calculation of the ratios described in Section 1.5(a)(ii)
above. The Escrow Agent shall not be required to release any of the Escrowed
Property on any scheduled Release Date unless it shall first have received from
the Administrative Agent the certification described in the foregoing clause
(ii) with respect to such Release Date, and upon receipt of such certification,
the Escrow Agent shall comply with Section 1.5(a) no earlier than the first to
occur of (A) applicable Release Date or (B) the second (2nd) Business Day
following such receipt, and the date of such compliance shall be deemed to be
the Release Date for purposes hereof. Any such certification by the
Administrative Agent shall include registration and delivery instructions, in
the case of Warrants then held in escrow hereunder in the form of definitive
Warrants, and participant account or other necessary information in the case of
Warrants held in escrow hereunder in the form of Global Warrants, and payment
(and/or delivery) instructions in the case of Warrant Proceeds, as the case may
be, as the Escrow Agent may deem necessary to carry out such release. Any
notices or instructions provided by the Administrative Agent to the Escrow Agent
may be reasonably relied upon in good faith by the Escrow Agent for any purpose
hereunder, including without limitation for the purposes of Section 1.5(a)
above, and shall be conclusive notwithstanding any instructions to the contrary
provided by the Company.
(d) Upon release of any Escrowed Property pursuant to Section 1.5(a)
above to the Administrative Agent for the benefit of the Holders, each Holder
shall be entitled as between itself, the Administrative Agent and other Holders
(but not with respect to the Company) to all the rights and privileges with
respect to its pro rata share, in accordance with the respective unpaid
principal amounts of the Notes without regard to accrued interest), held by the
Holders as of the applicable Release Date, of such Escrowed Property, of the
Warrants underlying the released Warrant Certificate (together with the related
Warrant Proceeds, if any) as if such Holder possessed a Warrant Certificate and
Warrant Proceeds corresponding to such PRO RATA share.
<PAGE> 6
-6-
(e) The Company agrees that upon presentment by the Administrative
Agent of any properly released Warrant Certificate (together with the released
Warrant Proceeds, if any, attributable to the Warrants underlying such released
Warrant Certificate), that it shall issue new Warrant Certificates (in
accordance with the provisions of the Warrant Agreement), as applicable,
together with applicable Warrant Proceeds, as applicable, registered in the
names of the Holders on a PRO RATA basis, in accordance with the respective
unpaid outstanding principal amount of the Notes held by the Holders, as
applicable, as of the applicable Release Date for the presented Warrant
Certificate, and will deliver such Warrant Certificates to the Administrative
Agent for delivery to the Holders; PROVIDED that the Company shall not be held
liable with respect to such issuances if the Company acted in good faith based
upon instructions from the Administrative Agent.
(f) Notwithstanding anything to the contrary stated herein, the Escrow
Agent shall not be obligated to carry out any release pursuant to this Section
1.5 sooner than the third Business Day after it has received the requisite
documents and passage of the required date for release, as applicable.
2. EXCULPATION AND INDEMNIFICATION OF THE ESCROW AGENT.
2.1. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein and no duties, responsibilities or
obligations shall be inferred or implied. The Escrow Agent shall not be subject
to, nor required to comply with, any other agreement between or among the
Company and the Holders to which the Company or the Holders are a party, even
though reference thereto may be made herein, or to comply with any direction or
instruction (other than those contained herein or delivered in accordance with
this Agreement). The Escrow Agent shall not be required to, and shall not,
expend or risk any of its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder. The Escrow Agent shall have
no duty to enforce any obligation of any other person to make any payment or
delivery, or to direct or cause any payment or delivery to be made by any other
person, or to enforce any obligation of any other person to perform any other
act. In no event shall the Escrow Agent be held to a higher degree of care
toward the Escrowed Property under this Agreement than it exercises toward its
own similar property. The Escrow Agent shall be under no liability to the other
parties hereto or to the Holders or to anyone else by reason of any failure on
the part of any party hereto or any maker, guarantor, endorser or other
signatory of any document or any other person to perform such person's
obligations under any such document.
2.2. The Escrow Agent shall not be liable to the other parties hereto
or to the Holders or to anyone else for any action taken or omitted by it, or
any action suffered by it to be taken or omitted, in good faith and in the
exercise of its own reasonable judgment and the absence of gross negligence or
willful misconduct. The Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of it (including but
not limited to any act or provision of any present or future law or regulation,
or governmental authority, any act of God or war, or the
<PAGE> 7
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unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility). The Escrow Agent may (in the absence of bad faith) rely
conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by it),
statement, instrument, report or other paper or document (not only as to its due
execution and the validity and effectiveness of its provisions but also as to
the truth and acceptability of any information therein contained) which is
reasonably believed by it to be genuine and to be signed or presented by the
proper person or persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this Agreement
or any of the terms hereof, unless evidenced by a writing delivered to it signed
by the proper party or parties and, if its duties or rights are affected, unless
it shall deliver its written consent thereto. In no event shall the Escrow Agent
be liable (i) for (in the absence of bad faith) acting in accordance with or
relying upon any instruction, notice, demand, certificate or document from any
party or any entity acting on behalf of any party, (ii) for any consequential,
punitive or special damages, (iii) for the acts or omissions of its nominees,
correspondents, designees, subagents or subcustodians or (iv) for an amount in
excess of the value of the Escrowed Property.
2.3. The Escrow Agent shall (in the absence of bad faith) not be
responsible for the sufficiency or accuracy of the form of, or the execution,
validity, value or genuineness of, any document or property received, held or
delivered by it hereunder, or of any signature or endorsement thereon, or for
any lack of endorsement thereon, or for any description therein, nor shall the
Escrow Agent be responsible or liable to the other parties hereto or to anyone
else in any respect on account of the identity, authority or rights of the
persons executing or delivering or purporting to execute or deliver any document
or property or this Agreement. The Escrow Agent shall have no responsibility
with respect to the use or application of any funds or other property paid or
delivered by the Escrow Agent pursuant to the provisions hereof.
2.4. The Escrow Agent shall be indemnified and held harmless by the
Company from and against any and all claims, losses, liabilities, costs, damages
or expenses, including reasonable counsel fees and disbursements, incurred by
the Escrow Agent in connection with or related to this Escrow Agreement or its
being Escrow Agent hereunder, including, but not limited to all claims, losses,
liabilities, costs, damages or expenses, including reasonable counsel fees and
disbursements, incurred by the Escrow Agent in connection with any action, suit
or other proceeding involving any claim, or in connection with any claim or
demand, which in any way, directly or indirectly, arises out of or relates to
this Agreement, the services of the Escrow Agent hereunder, the monies or other
property held by it hereunder, except to the extent such liability, expense or
claim is attributable to the bad faith, gross negligence or willful misconduct
of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of
any such demand or claim or the commencement of any such action, suit or
proceeding, the Escrow Agent shall, if a claim in respect thereof is to be made
against any of the other parties hereto, notify such other parties thereof in
writing, and such other party may by written notice to the Escrow Agent
accepting its obligation to indemnify the Escrow Agent hereunder with
<PAGE> 8
-8-
respect thereto assume the defense of such claim; but the failure by the Escrow
Agent to give such notice shall not relieve the Company from any liability which
the Company may have to the Escrow Agent hereunder except to the extent the
Company is actually prejudiced thereby. For the purposes hereof, the term
"claims, losses, liabilities, costs, damages or expenses" shall include all
amounts paid or payable to satisfy any claim, demand or liability, or in
settlement of any claim, demand, action, suit or proceeding settled with the
express written consent of the Company, and all costs and expenses, including,
but not limited to, reasonable counsel fees and disbursements paid or incurred
in investigating or defending against any such claim, demand, action, suit or
proceeding.
2.5. The Escrow Agent makes no representation as to the validity,
value, genuineness or collectibility of any security or other document or
instrument held by or delivered to it. The Escrow Agent does not make any
representation as to the validity or sufficiency of this Agreement, except for
the due execution and delivery of this Agreement by the Escrow Agent, as to
which it hereby so represents and warrants.
2.6. The Escrow Agent shall not be called upon to advise any party as
to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
2.7. If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrowed Property
(including, but not limited to, orders of attachment or garnishment or other
forms of levies or injunctions or stays relating to the transfer of Escrowed
Property), the Escrow Agent shall give prompt written notice thereof to the
Agents and the Company. Unless the Administrative Agent or the Company or both
of them shall, within ten Business Days after receipt of such notice by the last
of the addressees thereof to receive it, advise the Escrow Agent in writing of
the intention of the Administrative Agent, the Company or both of them (the
"CONTESTING PARTY") to contest diligently and in good faith such order,
judgment, decree, writ or other form of process at the sole cost and expense of
such contesting party, the Escrow Agent is authorized to comply therewith in any
manner as it or its legal counsel of its own choosing deems appropriate; and if
the Escrow Agent complies with any such judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process, the
Escrow Agent shall (in the absence of bad faith) not be liable to any of the
parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect. If at any time
the Escrow Agent is served with any final judicial or administrative order,
judgment, decree, writ or other form of judicial or administrative process which
is not subject to appeal and which in any way affects the Escrowed Property
(including but not limited to orders of attachment or garnishment or other forms
of levies or injunctions or stays relating to the transfer of the Escrowed
Property), the Escrow Agent is authorized (in the absence of bad faith) to
comply therewith in any manner as it or its legal counsel of its own choosing
deems appropriate.
<PAGE> 9
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2.8. The Escrow Agent is authorized (in the absence of bad faith) to
comply with and rely upon any notices, instructions or other communications
reasonably believed by it to have been sent or given by the Administrative Agent
or by a person or persons authorized by the Administrative Agent. Whenever under
the terms hereof the time for giving a notice or performing an act falls upon a
day that is not a Business Day, such time shall be extended to the next
succeeding Business Day.
2.9. This Agreement is for the exclusive benefit of the parties hereto
and their respective successors hereunder, and shall not be deemed to give,
either express or implied, any legal or equitable right, remedy, or claim to any
other entity or person whatsoever.
2.10 The Escrow Agent shall not be under any obligation to invest (or
otherwise pay interest on) any funds it may receive from time to time hereunder
as part of any Warrant Proceeds.
3. COMPENSATION OF THE ESCROW AGENT. The Escrow Agent shall be entitled
to payment from the Company for all services rendered subsequent to the date
hereof, in the amounts and at the times set forth on SCHEDULE 1 hereto or as
shall be agreed upon between the Company and the Escrow Agent from time to time,
and reimbursement from the Company, upon demand, for all expenses, payments and
advances paid or incurred by it in the administration of its duties hereunder,
including, but not limited to, all reasonable counsel and agents' fees and
disbursements and all taxes or other governmental charges. The Escrow Agent
shall be paid any compensation or reimbursement of expenses owed to it by the
Company, and the Escrow Agent shall have no interest in the Escrowed Property
with respect to such amounts.
4. FURTHER ASSURANCES. From time to time on and after the date hereof,
the other parties hereto shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do and cause to be done
such further acts as the Escrow Agent shall reasonably request (it being
understood that the Escrow Agent shall have no obligation to make any such
request) to carry out more effectively the provisions and is Agreement.
5. TERMINATION OF AGREEMENT OF THE ESCROW AGENT.
(a) The Escrow Agent may at any time resign as such by delivering
written notice of such resignation in duplicate, one copy to the Administrative
Agent and one copy to the Company. The resignation of the Escrow Agent will take
effect on the appointment of a successor designated by the Administrative Agent
and reasonably acceptable to the Company. If a successor Escrow Agent has not
accepted its appointment within thirty calendar days after the Escrow Agent
gives notice to the Administrative Agent and the Company of its intention to
resign, the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor, and the costs and expenses (including reasonable
counsel fees and disbursements) incurred by the Escrow Agent in connection with
such proceeding
<PAGE> 10
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shall be paid by the Company. Upon the appointment of a successor Escrow Agent,
the resigning Escrow Agent shall deliver the Escrowed Property to the successor
Escrow Agent, whereupon the resigning Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Agreement.
This Agreement shall terminate on the final disposition of the Escrowed Property
in accordance with the terms of this Agreement, PROVIDED, HOWEVER, that upon any
termination, Sections 2, 3, 6 and 8.4 shall survive the termination hereof.
(b) The Administrative Agent may, at any time and for any reason, and
shall, upon any event set forth in the next succeeding sentence, remove the
Escrow Agent and appoint a successor Escrow Agent by written instrument in
duplicate, specifying such removal and the date on which it is intended to
become effective, signed on behalf of the Administrative Agent, one copy of
which shall be delivered to the Escrow Agent being removed and one copy to the
successor Escrow Agent. The Escrow Agent shall be removed as aforesaid if it
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Escrow Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. Any removal of
the Escrow Agent and any appointment of a successor Escrow Agent shall become
effective upon acceptance of appointment by the successor Escrow Agent. As soon
as practicable after appointment of the successor Escrow Agent, the
Administrative Agent shall cause written notice of the change in the Escrow
Agent to be given to the Company and to each Holder.
6. CONSENT TO SERVICE OF PROCESS. Each of the parties hereto hereby
irrevocably consents to the jurisdiction of the courts of the Commonwealth of
Massachusetts and of any federal court located in the City of Boston in
connection with any action, suit or other proceeding arising out of or relating
to this Agreement or any action taken or omitted hereunder, and waives personal
service of any summons, complaint or other process and agrees that the service
thereof may be made by certified or registered mail directed to such person at
such person's address for purposes of notices hereunder. Should the person so
served fail to appear or answer within the time prescribed by law, that person
shall be deemed in default and judgment may be entered against that person for
the amount or other relief as demanded in any summons, complaint or other
process so served.
7. NOTICES. All notices, requests, demands and other communications
provided for herein shall be writing, shall be delivered by hand, by first-class
mail or by facsimile transmission, shall be deemed given or sent when received,
and shall be addressed to the parties hereto at their respective addresses and,
if applicable, facsimile numbers listed below or to such other persons or
addresses or facsimile numbers as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
If to the Company, to:
TransTechnology Corporation
150 Allen Road
<PAGE> 11
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Liberty Corner, New Jersey 07930
Facsimile No.: (908) 903-1616
Attention: Chief Financial Officer
With a separate copy delivered to:
Hahn Loeser & Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Facsimile No.: (216) 241-2824
Attention: F. Ronald O'Keefe, Esq.
if to the Administrative Agents, to:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Facsimile No.: (617) 434-6685
Attention: Maura C. Wadlinger
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Facsimile No.: (617) 951-8736
Attention: T. Malcolm Sandilands, Esq.
if to the Escrow Agent, to:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Facsimile No.: (617) 662-1465
Attention: Corporate Trust Department
Attention: TransTechnology Corporation
Warrant Escrow Agreement
8. MISCELLANEOUS.
8.1. All amounts referred to herein are expressed in Dollars and all
payments by or to the Escrow Agent shall made in Dollars.
8.2. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing such
instrument to be drafted. The terms "HEREBY", "HEREIN", "HEREOF", "HERETO",
"HEREUNDER" and any similar terms, as used in this Agreement, refer to this
Agreement in its entirety and
<PAGE> 12
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not only to the particular portion of this Agreement where the term is used. The
word "person" shall mean any natural person, partnership, corporation,
government and any other form of business or legal entity. All words or terms
used in this Agreement, regardless of the number or gender in which they are
used, shall be deemed to include any other number and any other number as the
context may require.
8.3. This Agreement and the rights and obligations hereunder of the
Company may be assigned by it only to a successor to its entire business. The
succession, resignation or replacement of the Administrative Agent shall be in
accordance with and subject to the provisions of the Loan Agreement. Any
corporation into which the Escrow Agent may be merged or converted, or any
corporation resulting from any consolidation to which the Escrow Agent or any of
its respective successors shall be a party, and any corporation which acquires
substantially all of the corporate trust business of the Escrow Agent or any of
its respective successors, shall be a successor Escrow Agent, as the case may
be, without any further act. Any such successor Escrow Agent shall promptly
cause written notice of its succession as Escrow Agent to be delivered to the
Company and the Administrative Agent. This Agreement shall be binding upon and
inure to the benefit of each party's respective successors, heirs and permitted
assigns. No other person shall acquire or have any rights under or by virtue of
this Agreement. This Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow Agent
and the other parties hereto. This Agreement is intended to be for the sole
benefit of the parties hereto and their respective successors, heirs and assigns
and none of the provisions of this Agreement are intended to be, nor shall they
be construed to be, for the benefit of any other person.
8.4. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
8.5. This Agreement may be executed in any number of counterparts, and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement. One or more counterparts of this
Escrow Agreement may be delivered via telecopier, with the intention that they
shall have the same effect as an original counterpart hereof.
8.6. The headings contained in this Agreement are for convenience of
reference only and shall have no effect on the interpretation or operation
thereof.
8.7. This Agreement shall constitute the entire agreement of the
parties with respect to the subject matter and supersedes all prior oral or
written agreements in regard thereto. Except as otherwise permitted herein, this
Escrow Agreement may be modified only by a written amendment signed by all the
parties hereto, and no waiver of any provision hereof shall be effective unless
expressed in a writing signed by the party to be charged.
<PAGE> 13
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[SIGNATURE PAGE FOLLOWS]
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
TRANSTECHNOLOGY CORPORATION
By: /s/ Joseph F. Spanier
---------------------------------
Name: Joseph F. Spanier
Title: Vice President & CFO
BANKBOSTON, N.A.,
as Administrative Agent
By: /s/ Robert W. MacElhiney
---------------------------------
Name: Robert W. MacElhiney
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
as Warrant Agent and Escrow Agent
By: /s/ Jill Olson
---------------------------------
Name: Jill Olson
Title: Vice President
<PAGE> 1
EXCHANGE ESCROW AGREEMENT
This EXCHANGE ESCROW AGREEMENT (this "AGREEMENT"), dated as of August
31, 1999, among TransTechnology Corporation, a Delaware corporation or any
successor thereof (the "COMPANY"), State Street Bank and Trust Company, as
Trustee under the Indenture (as defined below) (in such capacity, the "TRUSTEE")
and as escrow agent hereunder (in such capacity, the "ESCROW AGENT"), and
BankBoston, N.A. ("BANKBOSTON") as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT"), for the ratable benefit of the Holders (as defined
below) from time to time.
RECITALS:
WHEREAS, the Company has entered into a Senior Subordinated Note
Purchase Agreement (the "LOAN AGREEMENT"), dated as of the date hereof, among
the Company, the Lenders party thereto and the Administrative Agent;
WHEREAS, pursuant to the Loan Agreement, the Company has executed and
delivered to the Escrow Agent (i) an Indenture among the Company, the Guarantors
named therein (collectively, the "GUARANTORS"), and State Street Bank and Trust
Company, as Trustee (the "INDENTURE"), and (ii) a Series A Senior Subordinated
Note in global form made by the Company and guaranteed by the Guarantors, in an
aggregate principal amount equal to $75,000,000 (the "GLOBAL EXCHANGE NOTE";
together with the Indenture, the "ESCROWED PROPERTY"); and
WHEREAS, the Company and the Administrative Agent desire to appoint the
Escrow Agent as escrow agent for the purpose of receiving and holding the
Escrowed Property, and the Escrow Agent is willing to serve as escrow agent,
subject to and in accordance with the terms and provisions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS; APPOINTMENT; DEPOSIT, REPRESENTATIONS AND COVENANTS;
RELEASE.
1.1. DEFINITIONS. Capitalized terms used herein and not defined shall
have the meanings assigned to them in the Loan Agreement.
"CONTESTING PARTY": see Section 2.7.
"ESCROW ACCOUNT": see Section 1.3(a).
"ESCROWED PROPERTY": see the recitals to this Agreement.
"EXCHANGE NOTICE" See Section 1.5(a).
<PAGE> 2
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"GLOBAL EXCHANGE NOTE": see the recitals to this Agreement.
"GUARANTORS": see the recitals to this Agreement.
"HOLDERS" means any Holder of a Note under the Loan Agreement or the
Indenture referred to therein.
"INDENTURE": see the recitals to this Agreement.
"INITIAL RELEASE DATE": see Section 1.5(a).
"LOAN AGREEMENT": see the recitals to this Agreement.
1.2. APPOINTMENT OF THE ESCROW AGENT. The Company appoints the Escrow
Agent as escrow agent in accordance with the terms and conditions set forth
herein and the Escrow Agent hereby accepts such appointment.
1.3. ESCROW ACCOUNT; ESCROW DEPOSIT. Prior to the execution hereof, the
Company shall have caused the Escrow Agent to have opened an account for the
deposit of the Escrowed Property (the "ESCROW ACCOUNT") at its offices in
Boston, Massachusetts (Account No. [ ]), in the name of and under the sole
dominion and control of the Escrow Agent and subject to the terms of this
Agreement. Simultaneously with the execution hereof, the Company has caused to
be delivered to the Escrow Agent, (i) and the Escrow Agent hereby acknowledges
receipt of, for deposit in the Escrow Account, each of the Global Exchange Note,
executed by the Company and each of the Guarantors, and (ii) four originals of
the Indenture, each executed by the Company and each of the Guarantors.
1.4. REPRESENTATION, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants, covenants and agrees that:
(a) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company, and is
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and (ii)
general principles of equity including without limitation concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief (regardless of
whether considered in a proceeding in equity or at law); and the execution,
delivery and performance of this Agreement by the Company does not and will not
violate any applicable law or regulation.
(b) The Company shall not create, incur, or assume any lien on or
security interest in the Escrowed Property, and the Company hereby represents
and warrants that each of the Escrowed Documents have been duly authorized and
the
<PAGE> 3
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Global Exchange Note has been duly issued and delivered to the Escrow Agent
on the date hereof.
1.5. RELEASE OF THE ESCROWED PROPERTY
(a) Subject to the terms and conditions set forth herein, the Escrow
Agent shall release the Escrowed Property to the Trustee under the Indenture in
accordance with this Section 1.5. Subject to Section 1.5(b) below, at any time
following the one year anniversary of the Closing Date, if any Notes are then
outstanding and have not been paid in full or otherwise repurchased or redeemed
by the Company (as certified to the Escrow Agent by the Administrative Agent)
the Escrow Agent shall upon the written direction of the Administrative Agent
(an "EXCHANGE NOTICE") certifying that such release and delivery has been
requested by a Holder or Holders of Term Notes pursuant to and in accordance
with Section 5 of the Loan Agreement (such Holder(s), the "REQUESTING
HOLDER(S)"), release and deliver (i) to the Company, two of the originals of the
Indenture executed by the Company and the Guarantors, (ii) to the Trustee two of
the originals of the Indenture executed by the Company and the Guarantors, and
(iii) to the Trustee, the Global Exchange Note executed by the Company and the
Guarantors, to be held by the Trustee as Custodian therefor pursuant to the
Indenture, PROVIDED that at the time of such release the aggregate principal
amount of the Global Exchange Note shall be endorsed by the Trustee in
accordance with Section 2.01(b) of the Indenture on the date of such release in
an amount equal to the principal amount of the Notes or Notes then held by such
Requesting Holder or Holders (as certified to the Escrow Agent and the Trustee
by the Administrative Agent and the Company in the Exchange Notice), and such
Global Exchange Note shall thereupon constitute the initial Global Note under
and as defined in the Indenture, and shall be subject to subsequent adjustment
in accordance with the provisions thereof.
(b) Two (2) Business Days following its receipt of written notice from
the Administrative Agent of the repayment of all Notes (including by repurchase
or redemption), the Escrow Agent shall release to the Company all Escrowed
Property remaining in the Escrow Account and the Escrow Agent shall be
discharged from all obligations under this Agreement and shall have no further
duties or responsibilities in connection herewith. The Administrative Agent
agrees that it shall notify the Escrow Agent promptly in writing of the
repayment of all of the Notes.
(c) The Escrow Agent shall not be required to release any of the
Escrowed Property unless it shall first have received from the Administrative
Agent the Exchange Notice containing the certifications described in the
foregoing clause (a), and upon receipt of such Exchange Notice, the Escrow Agent
shall comply with Section 1.5(a) no earlier than the second (2nd) Business Day
following such receipt. Any such Exchange Notice shall include such participant
account or other necessary information with respect to the Global Exchange Note
as the Escrow Agent and/or the Trustee may deem necessary to carry out such
release. Any notices or instructions provided or certified to the Escrow Agent
and/or the Trustee by the Administrative Agent in or pursuant to any Exchange
Notice or otherwise may be reasonably relied upon in good faith by the Escrow
Agent and the Trustee for any
<PAGE> 4
-4-
purpose hereunder or under the Indenture, including without limitation for the
purposes of Section 1.5(a) above and Sections 2.01(b) and 2.06 of the Indenture.
(d) Notwithstanding anything to the contrary stated herein, the Escrow
Agent shall not be obligated to carry out any release pursuant to this Section
1.5 sooner than the third Business Day after it has received the requisite
documents specified in this Section 1.5 and passage of the required date for
release, as applicable.
2. EXCULPATION AND INDEMNIFICATION OF THE ESCROW AGENT.
2.1. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein and no duties, responsibilities or
obligations shall be inferred or implied. The Escrow Agent shall not be subject
to, nor required to comply with, any other agreement between or among the
Company and the Holders to which the Company or the Holders are a party, even
though reference thereto may be made herein, or to comply with any direction or
instruction (other than those contained herein or delivered in accordance with
this Agreement). The Escrow Agent shall not be required to, and shall not,
expend or risk any of its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder. The Escrow Agent shall have
no duty to enforce any obligation of any other person to make any payment or
delivery, or to direct or cause any payment or delivery to be made by any other
person, or to enforce any obligation of any other person to perform any other
act. In no event shall the Escrow Agent be held to a higher degree of care
toward the Escrowed Property under this Agreement than it exercises toward its
own similar property. The Escrow Agent shall be under no liability to the other
parties hereto or to the Holders or to anyone else by reason of any failure on
the part of any party hereto or any maker, guarantor, endorser or other
signatory of any document or any other person to perform such person's
obligations under any such document.
2.2. The Escrow Agent shall not be liable to the other parties hereto
or to the Holders or to anyone else for any action taken or omitted by it, or
any action suffered by it to be taken or omitted, in good faith and in the
exercise of its own reasonable judgment and the absence of gross negligence or
willful misconduct. The Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of it (including but
not limited to any act or provision of any present or future law or regulation,
or governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication facility). The
Escrow Agent may (in the absence of bad faith) rely conclusively and shall be
protected in acting upon any order, notice, demand, certificate, opinion or
advice of counsel (including counsel chosen by it), statement, instrument,
report or other paper or document (not only as to its due execution and the
validity and effectiveness of its provisions but also as to the truth and
acceptability of any information therein contained) which is reasonably believed
by it to be genuine and to be signed or presented by the proper person or
persons. The Escrow Agent shall not be bound by any notice or demand, or any
waiver,
<PAGE> 5
-5-
modification, termination or rescission of this Agreement or any of the terms
hereof, unless evidenced by a writing delivered to it signed by the proper party
or parties and, if its duties or rights are affected, unless it shall deliver
its written consent thereto. In no event shall the Escrow Agent be liable (i)
for (in the absence of bad faith) acting in accordance with or relying upon any
instruction, notice, demand, certificate or document from any party or any
entity acting on behalf of any party, (ii) for any consequential, punitive or
special damages, (iii) for the acts or omissions of its nominees,
correspondents, designees, subagents or subcustodians or (iv) for an amount in
excess of the value of the Escrowed Property.
2.3. The Escrow Agent shall (in the absence of bad faith) not be
responsible for the sufficiency or accuracy of the form of, or the execution,
validity, value or genuineness of, any document or property received, held or
delivered by it hereunder, or of any signature or endorsement thereon, or for
any lack of endorsement thereon, or for any description therein, nor shall the
Escrow Agent be responsible or liable to the other parties hereto or to anyone
else in any respect on account of the identity, authority or rights of the
persons executing or delivering or purporting to execute or deliver any document
or property or this Agreement. The Escrow Agent shall have no responsibility
with respect to the use or application of any funds or other property paid or
delivered by the Escrow Agent pursuant to the provisions hereof.
2.4. The Escrow Agent shall be indemnified and held harmless by the
Company from and against any and all claims, losses, liabilities, costs, damages
or expenses, including reasonable counsel fees and disbursements, incurred by
the Escrow Agent in connection with or related to this Escrow Agreement or its
being Escrow Agent hereunder, including, but not limited to all claims, losses,
liabilities, costs, damages or expenses, including reasonable counsel fees and
disbursements, incurred by the Escrow Agent in connection with any action, suit
or other proceeding involving any claim, or in connection with any claim or
demand, which in any way, directly or indirectly, arises out of or relates to
this Agreement, the services of the Escrow Agent hereunder, the monies or other
property held by it hereunder, except to the extent such liability, expense or
claim is attributable to the bad faith, gross negligence or willful misconduct
of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall, if a claim in respect thereof is to be made against any of
the other parties hereto, notify such other parties thereof in writing and such
other party may, by written notice to the Escrow Agent accepting its obligation
to indemnify the Escrow Agent hereunder with respect to such claim, assume the
defense of such claim; but the failure by the Escrow Agent to give such notice
shall not relieve the Company from any liability which the Company may have to
the Escrow Agent hereunder except to the extent the Company is actually
prejudiced thereby. For the purposes hereof, the term "claims, losses,
liabilities, costs, damages or expenses" shall include all amounts paid or
payable to satisfy any claim, demand or liability, or in settlement of any
claim, demand, action, suit or proceeding settled with the express written
consent of the Company, and all costs and expenses, including, but not limited
to, reasonable counsel fees and
<PAGE> 6
-6-
disbursements paid or incurred in investigating or defending against any such
claim, demand, action, suit or proceeding.
2.5. The Escrow Agent makes no representation as to the validity,
value, genuineness or collectibility of any security or other document or
instrument held by or delivered to it. The Escrow Agent does not make any
representation as to the validity or sufficiency of this Agreement, except for
the due execution and delivery of this Agreement by the Escrow Agent, as to
which it hereby so represents and warrants.
2.6. The Escrow Agent shall not be called upon to advise any party as
to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
2.7. If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrowed Property
(including, but not limited to, orders of attachment or garnishment or other
forms of levies or injunctions or stays relating to the transfer of Escrowed
Property), the Escrow Agent shall give prompt written notice thereof to the
Administrative Agent and the Company. Unless the Administrative Agent or the
Company or both of them shall, within ten Business Days after receipt of such
notice by the last of the addressees thereof to receive it, advise the Escrow
Agent in writing of the intention of the Administrative Agent, the Company or
both of them (the "CONTESTING PARTY") to contest diligently and in good faith
such order, judgment, decree, writ or other form of process at the sole cost and
expense of such contesting party, the Escrow Agent is authorized to comply
therewith in any manner as it or its legal counsel of its own choosing deems
appropriate; and if the Escrow Agent complies with any such judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process, the Escrow Agent shall (in the absence of bad faith) not
be liable to any of the parties hereto or to any other person or entity even
though such order, judgment, decree, writ or process may be subsequently
modified or vacated or otherwise determined to have been without legal force or
effect. If at any time the Escrow Agent is served with any final judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which is not subject to appeal and which in any way
affects the Escrowed Property (including but not limited to orders of attachment
or garnishment or other forms of levies or injunctions or stays relating to the
transfer of the Escrowed Property), the Escrow Agent is authorized (in the
absence of bad faith) to comply therewith in any manner as it or its legal
counsel of its own choosing deems appropriate.
2.8. The Escrow Agent is authorized (in the absence of bad faith) to
comply with and rely upon any notices, instructions or other communications
reasonably believed by it to have been sent or given by the Administrative Agent
or by a person or persons authorized by the Administrative Agent. Whenever under
the terms hereof the time for giving a notice or performing an act falls upon a
day that is not a Business Day, such time shall be extended to the next
succeeding Business Day.
<PAGE> 7
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2.9. This Agreement is for the exclusive benefit of the parties hereto
and their respective successors hereunder, and shall not be deemed to give,
either express or implied, any legal or equitable right, remedy, or claim to any
other entity or person whatsoever.
2.10 The Escrow Agent shall not be required to receive or hold any
payments of interest upon or any other payment with respect to the Global
Exchange Note, and may return any such payment to the Company or transfer any
such payment to the Administrative Agent without liability to any other party
hereto.
3. COMPENSATION OF THE ESCROW AGENT. The Escrow Agent shall be entitled
to payment from the Company for all services rendered subsequent to the date
hereof, in the amounts and at the times set forth on SCHEDULE 1 hereto or as
shall be agreed upon between the Company and the Escrow Agent from time to time,
and reimbursement from the Company, upon demand, for all expenses, payments and
advances paid or incurred by it in the administration of its duties hereunder,
including, but not limited to, all reasonable counsel and agents' fees and
disbursements and all taxes or other governmental charges. The Escrow Agent
shall be paid any compensation or reimbursement of expenses owed to it by the
Company, and the Escrow Agent shall have no interest in the Escrowed Property
with respect to such amounts.
4. FURTHER ASSURANCES. From time to time on and after the date hereof,
the other parties hereto shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do and cause to be done
such further acts as the Escrow Agent shall reasonably request (it being
understood that the Escrow Agent shall have no obligation to make any such
request) to carry out more effectively the provisions and is Agreement.
5. TERMINATION OF AGREEMENT OF THE ESCROW AGENT.
(a) The Escrow Agent may at any time resign as such by delivering
written notice of such resignation in duplicate, one copy to the Administrative
Agent and one copy to the Company. The resignation of the Escrow Agent will take
effect on the appointment of a successor designated by the Administrative Agent
and reasonably acceptable to the Company. If a successor Escrow Agent has not
accepted its appointment within thirty calendar days after the Escrow Agent
gives notice to the Administrative Agent and the Company of its intention to
resign, the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor, and the costs and expenses (including reasonable
counsel fees and disbursements) incurred by the Escrow Agent in connection with
such proceeding shall be paid by the Company. Upon the appointment of a
successor Escrow Agent, the resigning Escrow Agent shall deliver the Escrowed
Property to the successor Escrow Agent, whereupon the resigning Escrow Agent
shall be discharged of and from any and all further obligations arising in
connection with this Agreement. This Agreement shall terminate on the final
disposition of the Escrowed Property in
<PAGE> 8
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accordance with the terms of this Agreement, PROVIDED, HOWEVER, that upon any
termination, Sections 2, 3, 6 and 8.4 shall survive the termination hereof.
(b) The Administrative Agent may, at any time and for any reason, and
shall, upon any event set forth in the next succeeding sentence, remove the
Escrow Agent and appoint a successor Escrow Agent by written instrument in
duplicate, specifying such removal and the date on which it is intended to
become effective, signed on behalf of the Administrative Agent, one copy of
which shall be delivered to the Escrow Agent being removed and one copy to the
successor Escrow Agent. The Escrow Agent shall be removed as aforesaid if it
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Escrow Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. Any removal of
the Escrow Agent and any appointment of a successor Escrow Agent shall become
effective upon acceptance of appointment by the successor Escrow Agent. As soon
as practicable after appointment of the successor Escrow Agent, the
Administrative Agent shall cause written notice of the change in the Escrow
Agent to be given to the Company and to each Holder.
6. CONSENT TO SERVICE OF PROCESS. Each of the parties hereto hereby
irrevocably consents to the jurisdiction of the courts of the Commonwealth of
Massachusetts and of any federal court located in the City of Boston in
connection with any action, suit or other proceeding arising out of or relating
to this Agreement or any action taken or omitted hereunder, and waives personal
service of any summons, complaint or other process and agrees that the service
thereof may be made by certified or registered mail directed to such person at
such person's address for purposes of notices hereunder. Should the person so
served fail to appear or answer within the time prescribed by law, that person
shall be deemed in default and judgment may be entered against that person for
the amount or other relief as demanded in any summons, complaint or other
process so served.
7. NOTICES. All notices, requests, demands and other communications
provided for herein shall be writing, shall be delivered by hand, by first-class
mail or by facsimile transmission, shall be deemed given or sent when received,
and shall be addressed to the parties hereto at their respective addresses and,
if applicable, facsimile numbers listed below or to such other persons or
addresses or facsimile numbers as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
If to the Company, to:
TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07930
Facsimile No.: (908) 903-1616
Attention: Chief Financial Officer
<PAGE> 9
-9-
With a separate copy delivered to:
Hahn Loeser & Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Facsimile No.: (216) 241-2824
Attention: F. Ronald O'Keefe, Esq.
if to the Administrative Agents, to:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Facsimile No.: (617) 434-6685
Attention: Maura C. Wadlinger
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Facsimile No.: (617) 951-8736
Attention: T. Malcolm Sandilands, Esq.
if to the Escrow Agent, to:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Facsimile No.: (617) 662-__________
Attention: Corporate Trust Department
Attention: TransTechnology Corporation
Warrant Escrow Agreement
8. MISCELLANEOUS.
8.1. All amounts referred to herein are expressed in Dollars and all
payments by or to the Escrow Agent shall made in Dollars.
8.2. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing such
instrument to be drafted. The terms "HEREBY", "HEREIN", "HEREOF", "HERETO",
"HEREUNDER" and any similar terms, as used in this Agreement, refer to this
Agreement in its entirety and not only to the particular portion of this
Agreement where the term is used. The word "person" shall mean any natural
person, partnership, corporation, government and any other form of business or
legal entity. All words or terms used in this Agreement, regardless of the
number or gender in which they are used, shall be
<PAGE> 10
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deemed to include any other number and any other number as the context may
require.
8.3. This Agreement and the rights and obligations hereunder of the
Company may be assigned by it only to a successor to its entire business. The
succession, resignation or replacement of the Administrative Agent shall be in
accordance with and subject to the provisions of the Loan Agreement. Any
corporation into which the Escrow Agent may be merged or converted, or any
corporation resulting from any consolidation to which the Escrow Agent or any of
its respective successors shall be a party, and any corporation which acquires
substantially all of the corporate trust business of the Escrow Agent or any of
its respective successors, shall be a successor Escrow Agent, as the case may
be, without any further act. Any such successor Escrow Agent shall promptly
cause written notice of its succession as Escrow Agent to be delivered to the
Company and the Administrative Agent. This Agreement shall be binding upon and
inure to the benefit of each party's respective successors, heirs and permitted
assigns. No other person shall acquire or have any rights under or by virtue of
this Agreement. This Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow Agent
and the other parties hereto. This Agreement is intended to be for the sole
benefit of the parties hereto and their respective successors, heirs and assigns
and none of the provisions of this Agreement are intended to be, nor shall they
be construed to be, for the benefit of any other person.
8.4. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
8.5. This Agreement may be executed in any number of counterparts, and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement. One or more counterparts of this
Escrow Agreement may be delivered via telecopier, with the intention that they
shall have the same effect as an original counterpart hereof.
8.6. The headings contained in this Agreement are for convenience of
reference only and shall have no effect on the interpretation or operation
thereof.
8.7. This Agreement shall constitute the entire agreement of the
parties with respect to the subject matter and supersedes all prior oral or
written agreements in regard thereto. Except as otherwise permitted herein, this
Escrow Agreement may be modified only by a written amendment signed by all the
parties hereto, and no waiver of any provision hereof shall be effective unless
expressed in a writing signed by the party to be charged.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
TRANSTECHNOLOGY CORPORATION
By:/s/Joseph F. Spanier
---------------------------
Name: Joseph F. Spanier
Title: Vice President & CFO
BANKBOSTON, N.A.,
as Administrative Agent
By:/s/Robert W. MacElhiney
---------------------------
Name: Robert W. MacElhiney
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
as Trustee and Escrow Agent
By:/s/Jill Olson
---------------------------
Name: JILL OLSON
Title: VICE PRESIDENT
<PAGE> 12
[STATE STREET LOGO]
SCHEDULE OF FEES
TRUSTEE, WARRANT AGENT AND ESCROW AGENT SERVICES
TRANSTECHNOLOGY CORPORATION
EXCHANGE NOTES AND WARRANTS
ACCEPTANCE FEE (ONE TIME)
- -------------------------
Covers the complete study and consideration of the Indenture, the Warrant
Agreement and the Escrow Agreement and/or other instruments together with all
supporting documents up to and including the closing:
$4,500.00
ANNUAL EXCHANGE NOTES ADMINISTRATION FEE
- ----------------------------------------
Compensate the Trustee for regular administrative services which include, but
are not limited to the following:
Maintenance of documents, periodic monitoring of the Trustee's
eligibility, reports to bondholders, furnishings periodic reports for
issuer use, furnishing information to issuer auditors and responding to
correspondence and telephone inquiries, registration of bonds, transfer
of bonds, disbursing principal and interest, IRS bondholder reporting,
address changes, certificate replacement, normal correspondence, etc.:
$5,000.00 PER ANNUM
$ 6.00 PER BONDHOLDER PER ANNUM, SUBJECT TO A $1,000.00
MINIMUM ANNUAL CHARGE (WAIVED IF THE ENTIRE ISSUE
IS REPRESENTED BY A GLOBAL CERTIFICATE)
$ 20.00 PER WIRE TRANSFER
MISCELLANEOUS FEES
- ------------------
WARRANT AGENT FEE, FOR SO LONG $2,500.00 PER ANNUM
AS WARRANTS REMAIN UNEXERCISED
ESCROW AGENT FEE $3,500.00
<PAGE> 13
[STATE STREET LOGO]
EXTRAORDINARY ADMINISTRATION EXPENSES
- -------------------------------------
Fees for services not specifically set forth in this schedule will be determined
by appraisal. Such services may include, but are not limited to, additional
responsibilities and services incurred in connection with solicitation of
consents to amend the Indenture, tender offers for the Exchange Notes and/or
Warrants, or in case of litigation, restructuring or default.
OUT-OF-POCKET EXPENSES
- ----------------------
Any out-of-pocket expenses incurred by us will be billed at cost. These items
will include, but not be limited to, legal fees, travel expenses, courier
charges, etc.
COUNSEL
- -------
State Street's Counsel legal fees and disbursements will be billed at cost.
State Street will engage Peabody & Arnold as Counsel.
BILLING AND PAYMENTS
- --------------------
The one-time Acceptance Fee, the Escrow Agent Fee and Counsel's costs will be
payable at the closing. Thereafter, Annual Fees for the Exchange Notes and
Warrants will be billed annually in advance, retroactive to their original
issuance, only if they are released from escrow to the lenders. Other fees and
charges will be billed as incurred.
AUGUST 11, 1999
