<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from
____________ to ____________
Commission file number 1-7872
---------------------
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 Allen Road 07938
Liberty Corner, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 903-1600
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.01
(Title of class)
New York Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of June 7, 1999, the aggregate market value of voting stock held by
non-affiliates of the registrant based on the last sales price as reported by
the New York Stock Exchange on such date was $122,730,560.00. (See Item 12)
As of June 7, 1999, the registrant had 6,136,528 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's Annual Report for the fiscal year ended March 31, 1999 is
incorporated by reference into Part I and II hereof.
The registrant's Proxy Statement for the fiscal year ended March 31, 1999
is incorporated by reference into Part III hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS.
GENERAL
TransTechnology Corporation develops, manufactures and sells a wide
range of products in two industry segments, as described below. TransTechnology
Corporation was originally organized in 1962 as a California corporation and
reincorporated in Delaware in 1986. Unless the context otherwise requires,
references to the "Company" or the "Registrant" refer to TransTechnology
Corporation (including the California corporation prior to the reincorporation)
and its consolidated subsidiaries. The Company's fiscal year ends on March 31.
Accordingly, all references to years in this report refer to the fiscal year
ended March 31 of the indicated year.
TransTechnology Corporation's core business areas are specialty
fastener products and aerospace products. During 1999, the Company continued its
program to improve its position as one of the world's major suppliers of
specialty fasteners to the transportation and industrial markets. Key aspects of
this program include growth through acquisitions and the consolidation and
rationalization of its domestic retaining ring manufacturing operations. Actions
taken during 1999 to accomplish these goals included the acquisition of all of
the outstanding stock of Aerospace Rivet Manufacturers Corporation. For a more
detailed description of this transaction, see Note 3 of "Notes to Consolidated
Financial Statements" included in the Company's 1999 Annual Report on page 14
which is incorporated herein by reference. Additionally, the Company has
substantially completed the process of consolidating its United States retaining
ring manufacturing distribution facilities into one cost efficient manufacturing
facility and one overall distribution facility both located in New Jersey. These
actions, together with additional strategic acquisition activities during and
subsequent to the close of the fiscal year, further strengthen the Company's
position as one of the world's major suppliers of specialty fastener products to
the transportation and industrial markets.
Breeze-Eastern and NORCO, Inc. ("NORCO") make up the aerospace products
segment, and are the world's leading designers and manufacturers of
sophisticated helicopter rescue hoists, cargo winches, cargo hook systems,
mechanical components such as hold open rods, and application-specific
mechanical and linear motion systems. These products are sold primarily to
military and civilian agencies and aerospace contractors. The acquisition of all
of the outstanding stock of NORCO was accomplished in 1999. For a more detailed
description of this transaction, see Note 3 of "Notes to Consolidated Financial
Statements" included in the Company's 1999 Annual Report on page 14 which is
incorporated herein by reference.
SPECIALTY FASTENER PRODUCTS
The Company's specialty fastener products are manufactured by its
Seeger Group of companies ("Seeger-Orbis", "Anderton", and "Seeger Reno"), its
Breeze Industrial Products division ("Breeze Industrial"), its Palnut Company
division ("Palnut"), TCR Corporation ("TCR"), Waldes/IRR division
("Waldes/IRR"), the Pebra hose clamp business ("Pebra") and Aerospace Rivet
Manufacturers Corporation ("ARM"). The Seeger Group of companies and Waldes/IRR
all design and manufacture highly engineered retaining rings for both the
domestic and international transportation and industrial markets. Breeze
Industrial designs and manufactures a diverse line of high-quality stainless
steel hose clamps including worm drive hose clamps, T-Bolt and V-Band clamps,
and light duty clamps for use in the heavy truck and industrial equipment
industries by both original equipment manufacturers and replacement suppliers.
Pebra designs and manufactures hose clamps primarily for heavy truck
manufacturers in Europe. The Palnut Company manufactures single and multi-thread
metal fasteners for the automotive and industrial products markets. These
include lock nuts used
1
<PAGE> 3
for load carrying in light duty assemblies or as a supplement to ordinary nuts
to assure tightness; the On-Sert(R) fastener, which is pressed onto hollow
plastic bosses to increase torque and minimize stripping; push-nuts used as
temporary fasteners that hold pre-inserted bolts in place for final assembly or
in ratchet plates which fasten onto a shaft or stud; self-threaders used in the
installation of automotive trim; U-Nuts that provide one-sided screw assembly
and are used to fasten bumpers, fenders and grills to vehicles; and various
single-threaded parts designed for insertion into metal or plastic panels. TCR
Corporation designs and manufactures sophisticated externally threaded fastening
devices and custom industrial components by combining its expertise in cold
forging and machining technologies. TCR products are used by industrial
customers worldwide, with key market groups including the automotive, hydraulic
and recreational product industries. ARM designs and manufactures rivets and
externally threaded fasteners primarily for the aerospace industry.
Specialty fasteners are marketed through a combination of a direct
sales force, distributors and manufacturing representatives. Such products
contributed 78%, 83% and 81% of the Company's consolidated net sales in 1999,
1998 and 1997, respectively.
At March 31, 1999, the Company's Specialty Fastener Products segment
backlog was $45.9 million, compared to $43.5 million at March 31, 1998. The
increase is primarily the result of the acquisition of ARM. Substantially all of
the March 31, 1999 backlog is scheduled to be shipped during fiscal 2000.
AEROSPACE PRODUCTS
The Company's aerospace products are designed, developed and
manufactured by Breeze-Eastern and NORCO. Breeze-Eastern specializes in the
design, development and manufacture of sophisticated lifting and restraining
products, principally helicopter rescue hoists, reeling machines and external
hook systems. In addition, Breeze-Eastern designs, develops and manufactures
winches and hoists for aircraft cargo and weapon-handling systems with
applications ranging from cargo handling on fixed-wing aircraft to positioning
television cameras on blimps, antenna and gear drives. Management believes that
Breeze-Eastern is the industry market share leader in sales of personnel-rescue
hoists and cargo hook equipment. As a pioneer of helicopter hoist technology,
Breeze-Eastern continues to develop sophisticated helicopter hoist systems,
including systems for the current generation of Seahawk, Chinook, Dolphin,
Merlin and Super Stallion helicopters. Breeze-Eastern also supplies equipment
for the United States, Japanese and European Multiple-Launch Rocket Systems
which use two specialized hoists to load and unload rocket pod containers.
Breeze-Eastern's external cargo-lift hook systems are original equipment on most
helicopters manufactured today. These hook systems range from small 1,000-pound
capacity models up to the largest 36,000-pound capacity hooks employed on the
Super Stallion helicopter. Breeze-Eastern also manufactures aircraft and cargo
tie-downs. NORCO designs, develops and manufactures mechanical components and
systems such as hold open rods, quick connect/disconnect locking systems,
helicopter blade restraint systems, latch assemblies, safety locks and
application-specific mechanical systems. Its power transmission line of products
include rollnuts, rollnut longspan assemblies, ball reversers, ball oscillators,
FlenNut(TM) assemblies and other application-specific linear motion assemblies.
Breeze-Eastern and NORCO sell their products through internal marketing
representatives and several independent sales representatives and distributors.
The Aerospace product lines contributed 22%, 17% and 19% to the Company's
consolidated net sales in 1999, 1998 and 1997, respectively.
The Aerospace Product segment backlog varies substantially from time to
time due to the size and timing of orders. At March 31, 1999, the backlog of
unfilled orders was $43.8 million, compared to $32.4 million at March 31, 1998.
The increase is primarily the result of the acquisition of NORCO. The majority
of the March 31, 1999 backlog is expected to be shipped during fiscal 2000.
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DEFENSE INDUSTRY SALES
Approximately 10% of the Company's consolidated net sales in 1999, as
compared to 11% and 9% in 1998 and 1997, respectively, were derived from sales
to the United States Government, principally the military services of the
Department of Defense and its prime contractors. These contracts typically
contain precise performance specifications and are subject to customary
provisions which give the United States Government the contractual right of
termination for convenience. In the event of termination for convenience,
however, the Company is typically protected by provisions allowing reimbursement
for costs incurred as well as payment of any applicable fees or profits.
ENVIRONMENTAL MATTERS
Due primarily to Federal and State legislation which imposes liability,
regardless of fault, upon commercial product manufacturers for environmental
harm caused by chemicals, processes and practices that were commonly and
lawfully used prior to the enactment of such legislation, the Company may be
liable for all or a portion of the environmental clean-up costs at sites
previously owned or leased by the Company (or corporations acquired by the
Company). The Company's contingencies associated with environmental matters are
described in Note 12 of Notes to Consolidated Financial Statements included in
the Company's 1999 Annual Report on page 20 which is incorporated herein by
reference.
COMPETITION
The Company's businesses compete in some markets with entities that are
larger and have substantially greater financial and technical resources than the
Company. Generally, competitive factors include design capabilities, product
performance, delivery and price. The Company's ability to compete successfully
in such markets will depend on its ability to develop and apply technological
innovations and to expand its customer base and product lines. The Company is
successfully doing so both internally and through acquisitions. There can be no
assurance that the Company will continue to successfully compete in any or all
of the businesses discussed above. The failure of the Company to compete in more
than one of these businesses could have a materially adverse effect on the
Company's profitability.
RAW MATERIALS
The various components and raw materials used by the Company to produce
its products are generally available from more than one source. In those
instances where only a single source for any material is available, such items
can generally be redesigned to accommodate materials made by other suppliers. In
some cases, the Company stocks an adequate supply of the single source materials
for use until a new supplier can be approved. The Company's business is not
dependent upon a single supplier or a few suppliers, the loss of which would
have a materially adverse effect on the Company's consolidated financial
position.
3
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EMPLOYEES
As of May 28, 1999, the Company employed 1,750 people. There were 1,438
employees associated with the Specialty Fastener Products segment, 291 with the
Aerospace Products segment and 21 with the corporate office.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Financial information relating to each of the Company's segments has
been included in Note 13 of Notes to Consolidated Financial Statements included
in the Company's 1999 Annual Report on pages 20-22 and is incorporated herein by
reference.
FOREIGN OPERATIONS AND SALES
The Company's foreign-based facilities during fiscal 1999 consisted of
the Seeger-Orbis and Pebra facilities located in Germany, the Anderton facility
located in the U.K., a sales office in Paris, France and the Seeger Reno
facility located in Brazil. The Company acquired all of these businesses on June
30, 1995, except for Pebra which was acquired on June 18, 1996. The Company had
foreign sales of $56.7 million, $57.2 million and $58.0 million in fiscal 1999,
1998 and 1997, respectively, representing 25%, 28% and 32% of the Company's
consolidated net sales in each of those years, respectively. The Company had
export sales of $31.2 million, $20.3 million and $19.8 million in fiscal 1999,
1998 and 1997, respectively, representing 14%, 10% and 11% of the Company's
consolidated net sales in each of those years, respectively. The risk and
profitability attendant to these sales is generally comparable to similar
products sold in the United States. Net sales, profits and identifiable assets
attributable to the Company's foreign and domestic operations, and the
identification of export sales by geographic area, are set forth in Note 13 of
Notes to Consolidated Financial Statements in the Company's 1999 Annual Report
on pages 20-22 and is incorporated herein by reference.
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ITEM 2. PROPERTIES
The following table sets forth certain information concerning the
Company's principal facilities for its continuing operations:
<TABLE>
<CAPTION>
Owned or
Location Use of Premises Leased Sq. Ft
-------- --------------- ------ ------
<S> <C> <C> <C>
Liberty Corner, New Jersey Executive Offices Leased 13,000
SPECIALTY FASTENER
PRODUCTS SEGMENT
Saltsburg, Pennsylvania Breeze Industrial offices and Owned 120,000
manufacturing plant
Mountainside, New Jersey Palnut offices and manufacturing Owned 142,000
plant
Irvington, New Jersey Industrial Retaining Ring Owned 37,000
manufacturing plant
Millburn, New Jersey Waldes/IRR offices Leased 53,100
and distribution center
Santa Fe Springs, California Aerospace Rivet Manufacturers Leased 33,000
Corporation office and
manufacturing plant
Southfield, Michigan Specialty fastener sales office Leased 1,000
Konigstein, Germany Seeger Group offices and Owned 149,000
Seeger-Orbis manufacturing
plant
Minneapolis, Minnesota TCR Corporation offices Leased 137,000
and plant
Bingley, England Anderton offices and Owned 124,000
manufacturing plant
Sao Paulo, Brazil Seeger Reno offices and Owned 85,000
manufacturing plant
Paris, France Retaining ring sales office Leased 500
Frittlingen, Germany Pebra offices and Owned 30,000
manufacturing plant
</TABLE>
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AEROSPACE PRODUCTS SEGMENT
<TABLE>
<S> <C> <C> <C>
Union, New Jersey Breeze-Eastern offices Owned 188,000
and manufacturing plant
Ridgefield, Connecticut NORCO, Inc. Owned 35,000
</TABLE>
The Company believes that such facilities are suitable and adequate for
the Company's foreseeable needs and that additional space, if necessary, will be
available. The Company continues to own or lease property that it no longer
needs in its operations. These properties are located in California,
Pennsylvania, New York and Illinois. In some instances, the properties are
leased or subleased and in nearly all instances these properties are for sale.
ITEM 3. LEGAL PROCEEDINGS
The information required has been included in Note 12 of Notes to
Consolidated Financial Statements included in the Company's 1999 Annual Report
on page 20 and is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the three month period ended March 31, 1999.
6
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, par value $0.01, is traded on the New York
Stock Exchange under the symbol TT. The following table sets forth the range of
high and low closing sales prices of the Company's Common Stock for the calendar
quarters indicated, as reported by the New York Stock Exchange.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal 1998
First Quarter $ 22-7/8 $ 19-7/8
Second Quarter 26-11/16 22-3/4
Third Quarter 28-5/16 26
Fourth Quarter 30-5/16 25-1/2
Fiscal 1999
First Quarter $ 30-5/8 $ 25-9/16
Second Quarter 27-1/8 20-1/4
Third Quarter 23-11/16 18-9/16
Fourth Quarter 20-3/4 16-1/2
Fiscal 2000
First Quarter $ 21-1/4 $ 16-1/2
(through June 7, 1999)
</TABLE>
As of June 7, 1999, the number of stockholders of record of the Common
Stock was 1,878. On June 7, 1999, the closing sales price of the Common Stock
was $20.00.
The Company's bank indebtedness permits quarterly dividend payments
which cannot exceed 25% of the Company's cumulative net income in each year. The
Company paid a regular quarterly dividend of $0.065 per share on June 2,
September 1 and December 1, 1997, March 2, June 1, September 1 and December 1,
1998 and March 1, 1999.
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ITEM 6. SELECTED FINANCIAL DATA
The information required has been included in the Company's 1999 Annual
Report on page 1 and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required has been included in the Company's 1999 Annual
Report on pages 24-29 and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required has been included in the Company's 1999 Annual
Report on pages 28-29 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements: The information required has been included in the
Company's 1999 Annual Report on pages 9-29 and is incorporated herein
by reference.
Quarterly Financial Data: The information required has been included in
Note 14 of Notes to Consolidated Financial Statements in the Company's
1999 Annual Report on page 22 and is incorporated herein by reference.
Financial Statement Schedules:
Schedule II --
Consolidated Valuation and Qualifying Accounts for years ended
March 31, 1999, 1998 and 1997.
Schedules required by Article 5 of Regulation S-X, other than
that listed above, are omitted because of the absence of the
conditions under which they are required.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1999 and is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1999 and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1999 and is incorporated herein by
reference.
For purposes of the calculation of the aggregate market value of voting
stock held by non-affiliates, the Company has assumed that the shares of Common
Stock beneficially owned by Dr. Arch C. Scurlock are not held by an affiliate of
the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained in the Company's
Proxy Statement for the year ended March 31, 1999 and is incorporated herein by
reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of the Annual Report:
1. Financial Statements:
Consolidated Balance Sheets at March 31, 1999 and 1998
Statements of Consolidated Operations for the years ended
March 31, 1999, 1998 and 1997
Statements of Consolidated Cash Flows for the years ended
March 31, 1999, 1998 and 1997
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. Financial Statement Schedules:
Independent Auditors' Report
Schedule II - Consolidated Valuation and Qualifying Accounts
for the years ended March 31, 1999, 1998 and 1997
3. Exhibits:
The exhibits listed on the accompanying Index to Exhibits are
filed as part of this report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three-month
period ended March 31, 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 11, 1999
TRANSTECHNOLOGY CORPORATION
By: /s/Michael J. Berthelot
Michael J. Berthelot,
Chairman of the Board, President
and Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Michael J. Berthelot Chairman of the Board, President June 11, 1999
- ----------------------------------- and Chief Executive Officer
MICHAEL J. BERTHELOT (Principal Executive Officer)
/s/Joseph F. Spanier Vice President, Chief Financial Officer June 11, 1999
- ----------------------------------- and Treasurer
JOSEPH F. SPANIER (Principal Financial and Accounting Officer)
/s/Walter Belleville Director June 11, 1999
- -----------------------------------
WALTER BELLEVILLE
/s/Gideon Argov Director June 11, 1999
- -----------------------------------
GIDEON ARGOV
/s/Thomas V. Chema Director June 11, 1999
- -----------------------------------
THOMAS V. CHEMA
/s/James A. Lawrence Director June 11, 1999
- -----------------------------------
JAMES A. LAWRENCE
/s/Michel Glouchevitch Director June 11, 1999
- -----------------------------------
MICHEL GLOUCHEVITCH
/s/William J. Recker Director June 11, 1999
- -----------------------------------
WILLIAM J. RECKER
</TABLE>
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INDEPENDENT AUDITORS' REPORT
To the Stockholders and the Board of Directors of TransTechnology Corporation:
We have audited the consolidated financial statements of TransTechnology
Corporation and subsidiaries as of March 31, 1999 and 1998, and for each of the
three years in the period ended March 31, 1999, and have issued our report
thereon dated May 12, 1999; such consolidated financial statements and report
are included in your 1999 Annual Report and are incorporated herein by
reference. Our audits also included the financial statement schedule of
TransTechnology Corporation, listed in Item 14. This financial statement
schedule is the responsibility of the Corporation's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
May 12, 1999
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TRANSTECHNOLOGY CORPORATION
SCHEDULE II
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR YEARS ENDED MARCH 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING OF COSTS AND OTHER AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- -------------------- ------------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1999
Allowances for
doubtful accounts
and sales returns $ 556 $ 230 $ 40(A) $ 586 $ 240
Inventory reserves $6,382 $1,432 -- $3,099 $4,715
Environmental
reserves $3,141 $ 479 -- $1,480 $2,140
1998
Allowances for
doubtful accounts
and sales returns $ 588 $ 537 $ 20(B) $ 589 $ 556
Inventory reserves $6,363 $1,014 -- $ 995 $6,382
Environmental
reserves $3,177 $ 642 -- $ 678 $3,141
1997
Allowances for
doubtful accounts
and sales returns $ 735 $ 139 $ 246 $ 532 $ 588
Inventory reserves $7,704 $ 825 -- $2,166 $6,363
Environmental $3,885 $ 238 -- $ 946 $3,177
reserves
</TABLE>
(A) Amount represents balances acquired from ARM and NORCO, Inc. acquisitions.
(B) Amount represents balance acquired from TCR Corporation acquisition.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
Sequentially
Numbered
<S> <C>
3.1 Certificate of Incorporation of the Company.(1) --
3.2 Bylaws of the Company Amended and Restated as of April 15, 1999. --
10.1 1996 - 1998 Incentive Compensation Plan of the Company.(10) --
10.2 Amended and Restated 1992 Long Term Incentive Plan of the Company.(2) --
10.3 Form of Incentive Stock Option Agreement.(2) --
10.4 Form of Director Stock Option Agreement.(3) --
10.5 Form of Restricted Stock Award Agreement used under the Company's Amended and
Restated 1992 Long Term Incentive Plan.(4) --
10.6 Indemnification Agreement dated February 11, 1987 between the Company and each of
its officers and directors.(5) --
10.7 Executive Life Insurance Plan.(6) --
10.8 Amended and Restated Credit Agreement dated as of June 30, 1995 and amended and
restated as of July 24, 1998 between the Company and BankBoston, N.A. --
10.9 Amendment Agreement No. 1 to the Amended and Restated Credit Agreement dated
as of August 21, 1998 between the Company and BankBoston, N.A. --
10.10 Amendment Agreement No. 2 to the Amended and Restated Credit Agreement dated
as of November 27, 1998 between the Company and BankBoston, N.A. --
10.11 Amendment Agreement No. 3 to the Amended and Restated Credit Agreement dated
as of December 23, 1998 between the Company and BankBoston, N.A. --
10.14 Form of Executive Severance Agreement with Officers of the Company.(10) --
10.15 Form of Executive Severance Agreement with Subsidiary Presidents.(10) --
10.16 Form of Executive Severance Agreement with Division Presidents.(10) --
10.17 Form of Executive Severance Agreement with Overseas Subsidiary Managing Directors.(10) --
10.18 Form of First Amendment to Executive Severance Agreement with Officers of the Company.(11) --
10.19 Form of First Amendment to Executive Severance Agreement with Subsidiary Presidents.(11) --
10.20 Form of First Amendment to Executive Severance Agreement with Division Presidents.(11) --
10.21 Form of First Amendment to Executive Severance Agreement with Overseas Subsidiary
Managing Directors.(11) --
10.22 Consulting Agreement with John Dalton. --
10.23 1999-2001 Incentive Compensation Plan of the Company. --
10.24 1998 Non-Employee Directors' Stock Option Plan of the Company.(12) --
</TABLE>
15
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<TABLE>
<CAPTION>
Page
Sequentially
Numbered
<S> <C>
10.25 Form of Stock Option Agreement used under the Company's 1998 Non-Employee
Directors' Stock Option Plan --
13 The Company's 1999 Annual Report. --
21 List of Subsidiaries of the Company. --
27 Financial Data Schedule. --
- ---------------------
(1) Incorporated by reference from the Company's Form 8-A Registration Statement
No. 2-85599 dated February 9, 1987. --
(2) Incorporated by reference from the Company's Registration Statement on
Form S-8 No. 333-45059 dated January 28, 1998. --
(3) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1995. --
(4) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1994. --
(5) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1987. --
(6) Incorporated by reference from the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1989. --
(7) Incorporated by reference from the Company's Report on Form 8-K
filed on July 14, 1995. --
(8) Incorporated by reference from the Company's Annual Report on Form 10-K for
the Fiscal Year ended March 31, 1996. --
(9) Incorporated by reference from the Company's Report on Form 8-K
filed on April 29, 1997. --
(10) Incorporated by reference from the Company's Annual Report on Form 10-K for
the Fiscal Year ended March 31, 1997. --
(11) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the Quarter ended December 27, 1998. --
(12) Incorporated by reference from the Company's Registration Statement on
Form S-8 No. 333-70877 dated January 20, 1999. --
</TABLE>
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Exhibit 3.2
BYLAWS
OF
TRANSTECHNOLOGY CORPORATION
(A Delaware Corporation)
ARTICLE I
Offices
Section 1.01. REGISTERED OFFICE. The registered office of
TransTechnology Corporation (the "Corporation") in the State of Delaware shall
be at Corporation Trust Center, 100 West Tenth Street, in the City of
Wilmington, County of New Castle, State of Delaware, and the name of the
registered agent at that address shall be The Corporation Trust Company.
Section 1.02. PRINCIPAL EXECUTIVE OFFICE. Effective as of May 10, 1996
the principal executive address of the corporation shall be located at 150 Allen
Road, Liberty Corner, New Jersey 07938. The Board of Directors of the
Corporation (the "Board") may change the location of said principal executive
office.
Section 1.03. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of
the Corporation shall be held on such date and at such time as the Board shall
determine. At each annual meeting of stockholders, directors shall be elected in
accordance with the provisions of Section 3.03 and any other proper business may
be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for
any purpose may be called at any time by a majority of the Board, the Chairman
of the Board, the President or the Secretary. Special meetings may not be called
by any other person. Each special meeting shall be held at such date and time as
is requested by the person or persons calling the meeting, within the limits
fixed by law.
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board
or, if no such determination is made, at such place as may be determined by the
Chairman of the Board. If no location is so determined, any annual or special
meeting shall be held at the principal executive office of the Corporation.
Section 2.04. NOTICE OF MEETINGS. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than 10 nor more than sixty days before the date of the meeting
to each stockholder of record entitled to vote
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at such meeting by delivering a typewritten or printed notice thereof to him
personally, or by depositing such notice in the United States mail, in a postage
prepaid envelope, directed to him at his post-office address furnished by him to
the Secretary for such purpose or, if he shall not have furnished to the
Secretary his address for such purpose, then at his post-office address last
known to the Secretary, or by transmitting a notice thereof to him at such
address by telegraph, cable or wireless.
Except as otherwise expressly required by law, the notice shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose for which the meeting is called. Notice of any
meeting of stockholders shall not be required to be given to any stockholder to
whom notice may be omitted pursuant to applicable Delaware law or who shall have
waived such notice and such notice shall be deemed waived by any stockholder who
shall attend such meeting in person or by proxy, except a stockholder who shall
attend such meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Except as otherwise expressly required by law,
notice of any adjourned meeting of the stockholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board may determine subject to the requirements of applicable law and, as to
matters not governed by such rules and procedures, as the chairman of such
meeting shall determine. The chairman of any annual or special meeting of
stockholders shall be the Chairman of the Board if he is willing, and if not,
then the President. The Secretary, or in the absence of the Secretary, a person
designated by the Chairman of the Board or President, as the case may be, shall
act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders, the presence, in
person or by proxy, of the holders of record of a majority of shares then issued
and outstanding and entitled to vote at the meeting shall constitute a quorum
for the transaction of business; provided, however, that this Section 2.06 shall
not affect any different requirement which may exist under statute, pursuant to
the rights of any authorized class or series of stock, or under the Certificate
of Incorporation of the Corporation (the "Certificate") for the vote necessary
for the adoption of any measure governed thereby. In the absence of a quorum,
the stockholders present in person or by proxy, by majority vote and without
further notice, may adjourn the meeting from time to time until a quorum is
attained. At any reconvened meeting following such an adjournment at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2.07. VOTES REQUIRED. A majority of the votes cast at a duly
called meeting of stockholders, at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless the vote of a greater or different number thereof is
required by statute, by the rights of any authorized class of stock or by the
Certificate. Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number of votes per share, or limits or
denies voting rights, each outstanding share of stock, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of
record by him either in person or by proxy executed in writing (which shall
include writings sent by telex, telegraph,
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cable or facsimile transmission) by the stockholder himself or by his duly
authorized attorney-in-fact. No proxy shall be valid after 3 years from its
date, unless the proxy provides for a longer period. Each proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
and dated, but it need not be sealed, witnessed or acknowledged.
Section 2.09. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least 10 days
before every meeting of stockholders, a complete list of stockholders entitled
to vote at the meeting, arranged in alphabetical order and showing the address
of, and the number of shares registered in the name of, each stockholder. Such
list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the duration thereof, and may be inspected by any stockholder who is
present.
Section 2.10. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board may appoint Inspectors of Election to act at such
meeting or at any adjournments thereof. If such Inspectors are not so appointed
or fail or refuse to act, the chairman of any such meeting may (and, upon the
demand of any stockholder or stockholder's proxy, shall) make such an
appointment.
The number of Inspectors of Election shall be 1 or 3. If there are 3
Inspectors of Election, the decision, act or certificate of a majority shall be
effective and shall represent the decision, act or certificate of all. No such
Inspector need be a stockholder of the Corporation.
The Inspectors of Election shall determine the number of shares
outstanding, the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies;
they shall receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close and
determine the result; and finally, they shall do such acts as may be proper to
conduct the election or vote with fairness to all stockholders. On request, the
Inspectors shall make a report in writing to the secretary of the meeting
concerning any challenge, question or other matter as may have been determined
by them and shall execute and deliver to such secretary a certificate of any
fact found by them.
ARTICLE III
Directors
Section 3.01. GENERAL POWERS. Subject to any requirements in the
Certificate or the Bylaws, and of applicable law as to action which must be
authorized or approved by the stockholders, any and all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be under the direction of, the Board to the fullest extent
permitted by law. Without limiting the generality of the foregoing, it is hereby
expressly declared that the directors shall have the following powers, to wit:
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First - To select and remove all the officers, agents and employees of
the Corporation, prescribe such powers and duties for them as may not
be inconsistent with law, with the Certificate or the Bylaws and fix
their compensation.
Second - To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Certificate or the Bylaws, as they
may deem best.
Third - To change the location of the registered office of the
Corporation in Section 1.01; to change the principal executive office
for the transaction of the business of the Corporation from one
location to another as provided in Section 1.02; to fix and locate,
from time to time, one or more subsidiary offices of the Corporation
within or without the State of Delaware as provided in Section 1.03; to
designate any place within or without the State of Delaware for the
holding of any stockholders' meeting; and to adopt, make and use a
corporate seal, and to prescribe the forms of certificates of stock,
and to alter the form of such seal and of such certificates, from time
to time, and in their judgment as they may deem best; provided,
however, that such seal and such certificates shall at all times comply
with the law.
Fourth - To authorize the issuance of shares of stock of the
Corporation, from time to time, upon such terms and for such
considerations as may be lawful.
Fifth - To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor.
Section 3.02. NUMBER AND TERM OF OFFICE. Effective as of April 15,
1999, the authorized number of directors of the corporation shall be eight until
this section is amended by a resolution duly adopted by the Board or by the
stockholders, in either case in accordance with the provisions of Article V of
the Certificate. Directors need not be stockholders. Each of the directors shall
hold office until his successor shall have been duly elected and shall qualify
or until he shall resign or shall have been removed in the manner hereinafter
provided.
Section 3.03. ELECTION OF DIRECTORS. The directors shall be elected by
the stockholders of the Corporation, and at each election the persons receiving
the greater number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate relating thereto.
Section 3.04. RESIGNATIONS. Any director may resign at any time by
giving written notice to the Board or to the Secretary. Any such resignation
shall take effect at the time specified therein, or, if the time is not
specified, it shall take effect immediately upon receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.05. VACANCIES. Except as otherwise provided in the
Certificate, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office until
his
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successor shall have been elected and shall qualify or until he shall resign or
shall have been removed.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 3.06. PLACE OF MEETING, ETC. The Board or any committee thereof
may hold any of its meetings at any place, within or without the State of
Delaware, as the Board or such committee may, from time to time, by resolution
designate or as shall be designated by the person or persons calling the meeting
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board or such
committee can hear each other, and such participation shall constitute presence
in person at such meeting.
Section 3.07. FIRST MEETING. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.08. REGULAR MEETING. Regular meetings of the Board may be
held at such times as the Board shall, from time to time, by resolution
determine. If any date fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting shall be held at the
same hour and place on the next succeeding business day not a legal holiday.
Except as provided by law, notice of regular meetings need not be given.
Section 3.09. SPECIAL MEETING. Special meetings of the Board for any
purpose shall be called at any time by the Chairman of the Board or, if he is
absent or unable or refuses to act, by the President or, if he is absent or
unable or refuses to act, by any Vice President, Secretary or by any two
directors. For any special meeting of the Board of Directors, the Executive
Committee, if such a committee has been created pursuant to Section 3.13 hereof,
may by resolution change the location of that meeting, provided the Executive
Committee resolution to that effect is adopted not later than the later of a)
five days before the called date of the meeting, or b) one day after the receipt
of the call of the meeting by the Chairman of the Executive Committee. Except as
otherwise provided by law or by the Bylaws, written notice of the time and place
of special meetings shall be delivered personally to each director, or sent to
each director by mail or by other form of written communication, charges
prepaid, addressed to him at his address as it is shown upon the records of the
Corporation, or if it is not so shown on such records and is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be deposited in the
United States mail or delivered to the telegraph company in the county in which
the principal executive office for the transaction of business of the
Corporation is located at least forty-eight hours prior to the time of the
holding of the meeting. In case such notice is delivered personally as above
provided, it shall be so delivered at least 24 hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above provided
shall be due, legal and personal notice to such director. Except where otherwise
required by law or by the Bylaws, notice of the purpose of a special meeting
need not be given. Notice of any meeting of the Board shall not be required to
be given to any director who is present at such meeting, except a director who
shall attend such meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
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Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise provided
in the Bylaws, the Certificate or by applicable law, the presence of a majority
of the total number of directors shall be required to constitute a quorum for
the transaction of business at any meeting of the Board, and all matters shall
be decided at any such meeting, a quorum being present, by the affirmative votes
of a majority of the directors present. In the absence of a quorum, a majority
of directors present at any meeting may adjourn the same, from time to time,
until a quorum shall be present. Notice of any adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
Section 3.11. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or committee.
Section 3.12. COMPENSATION. Directors who are not employees of the
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including each meeting
of a committee of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving compensation therefor.
Section 3.13. COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board and subject to any
restrictions or limitations on the delegation of power and authority imposed by
applicable law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Any such committee may keep written minutes of its meetings and
shall report on its meetings to the Board at the next regular meeting of the
Board.
Section 3.14 MEETINGS OF COMMITTEES. Each committee of the Board shall
fix its own rules of procedure consist with the provisions of applicable law and
of any resolutions of the Board governing such committee. Each committee shall
meet as provided by such rules or such resolution of the Board. Unless otherwise
provided by such rules or by such resolution, the provisions of the Bylaws under
Article III entitled "Directors" relating to the place of holding meetings and
the notice required for meetings of the Board of Directors shall govern the
place of meetings and notice of meetings for committees of the Board. A majority
of the members of each committee shall constitute a quorum thereof, except that
when a committee consists of 1 member, then the 1 member shall constitute a
quorum. In the absence of a quorum, a majority of the members present at the
time and place of any meeting may adjourn the meeting from time to time until a
quorum shall be present and the meeting may be held as adjourned without further
notice or waiver. Except in cases where it is otherwise provided by the rules of
such committee or by a resolution of the Board, the vote of a majority of the
members present at a duly constituted meeting at which a quorum is present shall
be sufficient to pass any measure by the committee.
ARTICLE IV
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Officers
Section 4.01 DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Vice-Chairman of the Board, a President, a chief financial officer,
such vice presidents as the Board deems appropriate, and a Secretary. These
officers shall be elected annually by the Board at the organizational meeting
immediately following the annual meeting of stockholders, and each such officer
shall hold office until the corresponding meeting of the Board in the next year
and until his successor shall have been elected and qualified or until his
earlier resignation, death or removal. In its discretion, the Board may leave
unfilled for any period it may fix any office to the ext allowed by law. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term by the Board at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside, if present and willing, at all stockholders and Board of Directors'
meetings. In addition, he shall have such other duties as may, from
time-to-time, be assigned to him by the Board of Directors.
Section 4.03. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the
Board shall, in the absence or inability of the Chairman of the Board to perform
such duties, assume the duties and responsibilities of the Chairman of the Board
as defined in Section 4.02 of these Bylaws; and shall have such other duties as
may, from time-to-time, be assigned him by the Board of Directors.
Section 4.04. PRESIDENT. Except to the extent that the Bylaws or the
Board of Directors assign specific powers and duties to the Chairman of the
Board and/or the Vice-Chairman of the Board, the President shall be the
Corporation's General Manager and Chief Executive Officer and, subject to the
control of the Board of Directors, shall have general charge, supervision and
control over the Corporation's assets, businesses, operations and its officers.
The managerial powers and duties of the President include, but are not limited
to, all of the general powers and duties of management usually vested in the
office of a president of a corporation, and the making of reports to the Board
of Directors and stockholders.
Section 4.05. EXECUTIVE VICE PRESIDENT. The Board may appoint an
Executive Vice President, who shall be accountable to the President. He shall
perform such duties as may be assigned to him, from time to time, by the Board
in its enabling resolution and by the President.
Section 4.06. VICE PRESIDENT/CHIEF FINANCIAL OFFICER. The chief
financial officer of the Corporation shall be a vice president. He shall report
to the President and be responsible for the management and supervision of all
financial matters and for the financial growth and stability of the Corporation.
In addition, he shall have the duties usually vested in the treasurer's office
of a corporation.
Section 4.07. VICE PRESIDENTS. Vice Presidents of the Corporation that
are elected by the Board shall perform such duties as may be assigned to them,
from time to time, by the President. Such vice presidents may be designated as
Group Vice Presidents, Senior Vice Presidents or other appropriate designations
given by the Board in its enabling resolutions.
Section 4.08. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board and all committee meetings. He shall be
the custodian of the corporate seal and shall affix it to all documents which he
is authorized by law or the Board to sign and seal.
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He also shall perform such other duties as may be assigned to him, from time to
time, by the Chairman of the Board or the Board.
Section 4.09. OTHER OFFICERS. The Board may also elect one or more
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.
Section 4.10. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case
of the absence or disability of an officer or for any other reason that may seem
sufficient to the Board, the Board, or any officer designated by it, or the
Chairman of the Board may, for the time of the absence or disability, delegate
such officer's duties and powers to any other officer of the Corporation.
Section 4.11. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board, to the Chairman of the Board, to the
President, or to the Secretary. Any such resignation shall take effect at the
time specified therein unless otherwise determined by the Board. The acceptance
of a resignation by the Corporation shall not be necessary to make it effective.
Section 4.12. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire
Board.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
Section 5.01. EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in the Bylaws, may authorize any officer or officers, agent or agents,
to enter into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by the Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such officer, assistant, agent or attorney
shall give such bond, if any, as the Board may require.
Section 5.03. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited, from time to time, to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such powers shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the chief financial officer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board) may endorse,
sign and deliver checks, drafts and other orders for the payment of money which
are payable to the order of the Corporation.
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Section 5.04. GENERAL AND SPECIAL BANK ACCOUNTS. The Board may, from
time to time, authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositaries as the Board may
select or as may be selected by any officer, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of the Bylaws as it may deem expedient.
ARTICLE VI
Indemnification
Except to the extent prohibited by then applicable law, the Corporation
(i) shall indemnify and hold harmless each person who was or is a party to, or
is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the
Corporation, and whether civil, criminal, administrative, investigative or
otherwise (any such action, suit or proceeding being hereafter in this Article
referred to as a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Corporation, is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or was a director or officer of a
foreign or domestic corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation; and (ii) may indemnify and hold harmless each person who was or is
a party to, or is threatened to be made a party to, any such proceeding by
reason of the fact that such person is or was an employee or agent of the
Corporation, is or was serving at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or was an employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the Corporation or of any enterprise at
the request of such corporation (any such person being hereafter in the Article
referred to as an "indemnifiable party"). Where required by law, the
indemnification provided for in this Article shall be made only as authorized in
the specific case upon a determination, in the manner provided by law, that the
indemnification of the indemnifiable party is proper in the circumstances. The
Corporation shall advance to indemnifiable parties expenses incurred in
defending any proceeding prior to the final disposition thereof except to the
ext prohibited by then applicable law. This Article shall create a right of
indemnification for each such indemnifiable party whether or not the proceeding
to which the indemnification relates arose in whole or in part prior to adoption
of this Article (or the adoption of the comparable provisions of the Bylaws of
the Corporation's predecessor corporation) and, in the event of the death of an
indemnifiable party, such right shall extend to such indemnifiable party's legal
representatives. The right of indemnification hereby given shall not be
exclusive of any right such indemnifiable party may have, whether by law or
under any agreement, insurance policy, vote of the Board or stockholders, or
otherwise. The Corporation shall have power to purchase and maintain insurance
on behalf of any indemnifiable party against any liability asserted against or
incurred by the indemnifiable party in such capacity or arising out of the
indemnifiable party's status as such whether or not the Corporation would have
the power to indemnify the indemnifiable party against such liability.
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ARTICLE VII
Stock
Section 7.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board and the
President, together with the Secretary. Any or all of the signatures on any
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
Section 7.02. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's registrar if
the Corporation has a registrar. The Board shall have power and authority to
make such other rules and regulations concerning the issue, transfer and
registration of certificates of the Corporation's stock as it may deem
expedient.
Section 7.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board or the Secretary may, from time to time, define. No
certificate of stock shall be valid until countersigned by a transfer agent, if
the Corporation has a transfer agent, or until registered by a registrar, if the
Corporation has a registrar. The duties of transfer agent and registrar may be
combined.
Section 7.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
Section 7.05. RECORD DATES. The Board shall fix, in advance, a date as
the record date for the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or in order to make a determination of
stockholders for any other proper purpose. Such date in any case shall be not
more than sixty days, and in case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. Only those stockholders of record
on the date so fixed shall be entitled to any of the foregoing rights,
notwithstanding the transfer of any such stock on the books of the Corporation
after any such record date fixed by the Board.
Section 7.06. NEW CERTIFICATES. In case any certificate of stock is
lost, stolen, mutilated or destroyed, the Board may authorize the issuance of a
new certificate in place thereof upon such terms and conditions as it may deem
advisable; or the Board may delegate such power to the Secretary; but the Board
or Secretary or agents, in their discretion, may refuse to issue such a new
certificate unless the Corporation is ordered to do so by a court of competent
jurisdiction.
BYLAWS - Page 10
<PAGE> 11
ARTICLE VIII
General Provisions
Section 8.01. DIVIDENDS. Subject to limitations contained in Delaware
Law and the Certificate, the Board may declare and pay dividends upon the shares
of capital stock of the Corporation, which dividends may be paid either in cash,
securities of the Corporation or other property.
Section 8.02. VOTING OF STOCK IN OTHER CORPORATIONS. Any shares of
stock in other corporations or associations which may, from time to time, be
held by the Corporation, may be represented and voted at any of the
stockholders' meetings thereof by the Chairman of the Board, the President or
the Secretary. The Board, however, may by resolution appoint some other person
or persons to vote such shares, in which case such person or persons shall be
entitled to vote such shares upon the production of a certified copy of such
resolution.
Section 8.03. AMENDMENTS. These Bylaws may be adopted, repealed,
rescinded, altered or amended only as provided in the Certificate.
Restated: April 15, 1999
BYLAWS - Page 11
<PAGE> 1
Exhibit 10.8
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of June 30, 1995
and amended and restated as of July 24, 1998
among
TRANSTECHNOLOGY CORPORATION,
TRANSTECHNOLOGY SEEGER-ORBIS GmbH,
ANDERTON INTERNATIONAL 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,
and
BANKBOSTON, N.A.
as Agent and Issuing Bank
Arranged by:
BANCBOSTON SECURITIES, INC.
<PAGE> 2
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION...................................................1
1.1. Definitions....................................................................1
1.2. Rules of Interpretation........................................................23
2. THE REVOLVING CREDIT FACILITY.............................................................23
2.1. Commitment to Lend..............................................................23
2.2. Revolving Credit Commitment Fee. ...............................................24
2.3. Reduction of Total Revolving Credit Commitment..................................24
2.4. The Revolving Credit Notes......................................................24
2.5. Interest on Revolving Credit Loans..............................................25
2.6. Requests for Revolving Credit Loans.............................................25
2.7. Conversion Options..............................................................26
2.7.1. Conversion to Different Type of Revolving Credit Loan. .............26
2.7.2. Continuation of Type of Revolving Credit Loan. .....................26
2.7.3. Eurocurrency Rate Loans..............................................27
2.8 Funds for Revolving Credit Loans.................................................27
2.9. Maturity of Revolving Credit Loans..............................................27
2.10. Mandatory Repayments of Revolving Credit Loans.................................27
2.11. Optional Repayments of Revolving Credit Loans..................................27
3. INTERNATIONAL CREDIT FACILITY.............................................................28
3.1. DM Facility Loans..............................................................28
3.2. Mandatory Repayments of DM Facility Loans.......................................29
3.3. Sterling Facility Loans........................................................29
3.4. Mandatory Repayments of Sterling Facility Loans................................29
3.5. Interest on International Facility Loans.......................................30
3.6. Requests for DM Eurocurrency Loans.............................................30
3.7. Requests for Sterling Eurocurrency Loans.......................................31
3.8. Evidence of DM Facility Loans..................................................31
3.9. Evidence of Sterling Facility Loans............................................31
3.10. Maturity of DM Facility Loans.................................................32
3.11. Maturity of Sterling Facility Loans...........................................32
3.12. Optional Repayment of International Facility Loans.............................32
3.13. DM Facility Commitment Fee.....................................................33
3.14. Sterling Facility Commitment Fee...............................................33
4. MANDATORY PREPAYMENT OF LOANS..............................................................34
4.1. Mandatory Prepayments from Asset Sales or New Debt..............................34
4.2. Mandatory Prepayments from New Equity...........................................34
4.3. Application of Proceeds.........................................................34
5. LETTERS OF CREDIT. ........................................................................34
5.1. Letter of Credit Commitments....................................................34
5.1.1. Commitment to Issue Letters of Credit................................35
5.1.2. Letter of Credit Applications........................................35
5.1.3. Terms of Letters of Credit...........................................35
5.1.4. Reimbursement Obligations of Lenders.................................35
5.1.5. Participations of Lenders............................................36
5.2. Reimbursement Obligation of TransTechnology.....................................36
5.3. Letter of Credit Payments.......................................................37
</TABLE>
<PAGE> 3
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<TABLE>
<S> <C>
5.4. Obligations Absolute............................................................37
5.5. Reliance by Issuing Bank........................................................38
5.6. Letter of Credit Fee............................................................38
5.7. Resignation of Issuing Bank.....................................................39
6. CERTAIN GENERAL PROVISIONS.................................................................39
6.1. Closing and Structuring Fees....................................................39
6.2. Agent's Fee.....................................................................40
6.3. Payment Provisions.............................................................40
6.3.1. Currency of Account..................................................40
6.3.2. Application of Interest Payments.....................................40
6.3.3. Judgment Currency....................................................41
6.3.4. Time of Payment......................................................41
6.3.5. Payments by Agent....................................................41
6.3.6. No Offset, etc.......................................................42
6.4. Computations....................................................................42
6.5. Inability to Determine Eurocurrency Rate........................................42
6.6. Illegality......................................................................43
6.7. Additional Costs, etc...........................................................43
6.8. Capital Adequacy................................................................45
6.9. Certificate.....................................................................45
6.10. Indemnity......................................................................46
6.11. Interest After Default.........................................................46
6.11.1. Overdue Amounts.....................................................46
6.11.2. Amounts Not Overdue.................................................46
6.12. Fronting Bank Provisions.......................................................46
6.12.1. Fronting Fee........................................................47
6.12.2. Indemnities.........................................................47
6.12.3. Resignation of Fronting Bank........................................48
6.12.4. Notice to Lenders. ...............................................49
6.13. Limits on Number of Separate Eurocurrency Rate Loans...........................49
7. COLLATERAL SECURITY AND GUARANTIES.........................................................49
7.1. Security of Borrowers...........................................................49
7.2. Guaranties and Security of Subsidiaries.........................................50
7.3.Pledges of Stock..................................................................49
7.4.Guarantees and Pledges of Assets of Foreign Subsidiaries..........................49
8. REPRESENTATIONS AND WARRANTIES.............................................................50
8.1. Corporate Authority.............................................................51
8.1.1. Incorporation; Good Standing.........................................51
8.1.2. Authorization........................................................50
8.1.3. Enforceability.......................................................50
8.2.Governmental Approvals............................................................51
8.3.Title to Properties; Leases.......................................................51
8.4. Financial Statements and Projections............................................52
8.4.1. Financial Statements................................................52
8.4.2. Projections.........................................................52
8.5. No Material Changes, etc........................................................53
8.6. Franchises, Patents, Copyrights, etc............................................53
8.7. Litigation......................................................................53
</TABLE>
<PAGE> 4
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<TABLE>
<S> <C>
8.8. No Materially Adverse Contracts, etc............................................54
8.9. Compliance with Other Instruments, Laws, etc....................................54
8.10. Tax Status.....................................................................54
8.11. No Event of Default............................................................54
8.12. Holding Company and Investment Company Acts....................................54
8.13. Absence of Financing Statements, etc...........................................55
8.14. Perfection of Security Interest................................................55
8.15. Certain Transactions...........................................................55
8.16. Employee Benefit Plans.........................................................55
8.16.1. In General..........................................................55
8.16.2. Terminability of Welfare Plans......................................56
8.16.3. Guaranteed Pension Plans............................................56
8.16.4. Multiemployer Plans.................................................56
8.16.5. Compliance with Employment Benefit Laws.............................57
8.17. Use of Proceeds................................................................57
8.18. Environmental Compliance.......................................................57
8.19. Subsidiaries, etc..............................................................58
8.20. Bank Accounts..................................................................58
8.21. Year 2000 Compliance...........................................................58
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.....................................................59
9.1. Punctual Payment................................................................59
9.2. Maintenance of Offices..........................................................59
9.3. Records and Accounts............................................................60
9.4. Financial Statements, Certificates and Information..............................60
9.5. Notices.........................................................................61
9.5.1. Defaults.............................................................61
9.5.2. Environmental Events.................................................61
9.5.3. Notification of Claims against Collateral............................62
9.5.4. Notice of Litigation and Judgments...................................62
9.6. Corporate Existence; Maintenance of Properties..................................62
9.7. Insurance.......................................................................63
9.8. Taxes...........................................................................63
9.9. Inspection of Properties and Books, etc.........................................63
9.9.1. General..............................................................63
9.9.2. Environmental Assessments............................................64
9.9.3. Communications with Accountants......................................64
9.10. Compliance with Laws, Contracts, Licenses, and Permits.........................65
9.11. Employee Benefit Plans.........................................................65
9.12. Use of Proceeds................................................................65
9.13. Additional Mortgaged Property..................................................65
9.14. Bank Accounts..................................................................66
9.15. Interest Rate Protection.......................................................66
9.16. Further Assurances.............................................................66
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...............................................66
10.1. Restrictions on Indebtedness...................................................67
10.2. Restrictions on Liens..........................................................68
10.3. Restrictions on Investments....................................................69
10.4. Distributions..................................................................70
</TABLE>
<PAGE> 5
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<TABLE>
<S> <C>
10.5. Merger, Consolidation and Disposition of Assets................................70
10.5.1. Mergers and Acquisitions............................................70
10.5.2. Disposition of Assets...............................................71
10.6. Sale and Leaseback.............................................................72
10.7. Compliance with Environmental Laws.............................................72
10.8. Subordinated Debt..............................................................72
10.9. Employee Benefit Plans.........................................................72
10.10. Bank Accounts.................................................................73
10.11. Operating Leases..............................................................73
10.12.SO OHG Partnership Agreement....................................................71
10.13.Maintenance of Business.........................................................71
11. FINANCIAL COVENANTS OF THE BORROWERS......................................................74
11.1. Consolidated EBITDA to Consolidated Total Interest Expense.....................74
11.2. Debt to Capital Ratio..........................................................74
11.3. Leverage.Ratio.................................................................74
11.4. Minimum Net Worth..............................................................74
11.5. Capital Expenditures...........................................................74
12. CLOSING CONDITIONS. ......................................................................75
12.1. Loan Documents.................................................................75
12.2. Certified Copies of Charter Documents..........................................75
12.3. Corporate Action...............................................................76
12.4. Incumbency Certificate.........................................................76
12.5. Validity of Liens..............................................................76
12.6. Perfection Certificates and UCC Search Results.................................76
12.7. Surveys........................................................................76
12.8. Title Insurance................................................................77
12.9. Landlord Consents..............................................................77
12.10. Certificates of Insurance.....................................................77
12.11. Bank Agency Agreements........................................................77
12.12. Hazardous Waste Assessments...................................................77
12.13. Solvency Certificate..........................................................77
12.14. Opinions of Counsel...........................................................78
12.15. Payment of Fees...............................................................78
13. CONDITIONS TO ALL BORROWINGS..............................................................75
13.1. Representations True; No Event of Default......................................78
13.2. No Legal Impediment............................................................79
13.3. Governmental Regulation........................................................79
13.4. Proceedings and Documents......................................................79
14. EVENTS OF DEFAULT; ACCELERATION; ETC......................................................80
14.1. Events of Default and Acceleration.............................................80
14.2. Termination of Commitment......................................................83
14.3. Remedies.......................................................................83
14.4. Distribution of Collateral Proceeds............................................84
15. SETOFF. ..................................................................................84
16. THE AGENT. ...............................................................................85
16.1. Authorization..................................................................85
16.2. Employees and Agents...........................................................86
16.3. No Liability...................................................................86
</TABLE>
<PAGE> 6
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<TABLE>
<S> <C>
16.4. No Representations.............................................................87
16.5. Payments.......................................................................87
16.5.1. Payments to Agent...................................................87
16.5.2. Distribution by Agent...............................................87
16.5.3. Delinquent Lenders..................................................88
16.6. Holders of Notes...............................................................88
16.7. Indemnity......................................................................88
16.8. Agent as Lender................................................................89
16.9. Resignation of Agent...........................................................89
17. EXPENSES. ................................................................................89
18. INDEMNIFICATION. .........................................................................91
19. SURVIVAL OF COVENANTS, ETC................................................................91
20. ASSIGNMENT AND PARTICIPATION..............................................................92
20.1. Conditions to Assignment.......................................................92
20.2. Certain Representations and Warranties; Limitations; Covenants.................92
20.3. Register.......................................................................94
20.4. New Notes......................................................................94
20.5. Participations.................................................................95
20.6. Disclosure.....................................................................95
20.7. Assignee or Participant Affiliated with TransTechnology........................95
20.8. Miscellaneous Assignment Provisions............................................96
20.9. Assignment by the Borrowers....................................................96
20.10. Syndication...................................................................91
21. NOTICES, ETC. ............................................................................96
22. GOVERNING LAW. ...........................................................................97
23. HEADINGS. ................................................................................98
24. COUNTERPARTS. ............................................................................99
25. ENTIRE AGREEMENT, ETC. ...................................................................99
26. WAIVER OF JURY TRIAL. ....................................................................99
27. CONSENTS, AMENDMENTS, WAIVERS, ETC........................................................99
27.1. Voting Procedures..............................................................99
27.2. Borrowers' Consent Not Required for Certain Amendments.........................101
27.3. Course of Dealing..............................................................101
28. SEVERABILITY. ............................................................................101
29. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.............................................95
29.1. Sharing of Information with Section 20 Subsidiary..............................101
29.2. Confidentiality................................................................102
29.3. Prior Notification.............................................................102
29.4. Other..........................................................................102
30.TRANSITIONAL ARRANGEMENTS...................................................................97
30.1. Original Credit Agreement Superseded...........................................97
30.2. Interest and Fees Under Superseded Agreement...................................103
</TABLE>
<PAGE> 7
List of Schedules and Exhibits
Exhibits
Exhibit A - Revolving Credit Note
Exhibit B - Form of Loan Request
Exhibit C - Compliance Certificate
Exhibit D - Form of 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
Schedule 10.5.2 - Disposable Assets
<PAGE> 8
AMENDED AND RESTATED
CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is made as of June 30, 1995,
and amended and restated as of July 24, 1998, 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 on the date hereof at Konigstein, Germany ("GmbH"),
ANDERTON INTERNATIONAL LIMITED, an English limited liability company (registered
no. 3062174) having its registered office at P.O. Box 6, Ferncliffe Road,
Bingley, West Yorkshire BD16 2PL, England ("Limited"), 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"), 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") and BANKBOSTON,
N.A., as Agent for the Lenders, the Sterling Fronting Bank, the DM Fronting Bank
and the Issuing Bank (in such capacity, the "Agent").
WHEREAS, pursuant to the Revolving Credit and Term Loan Agreement dated
as of June 30, 1995 (as amended and in effect from time to time, the "Original
Credit Agreement"), by and among the Borrowers, BankBoston (then known as The
First National Bank of Boston), the other Lenders (as defined therein) (as
defined therein) and BankBoston, as 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 Original Credit Agreement, and the Lenders and the Agent are willing
to amend the Original Credit Agreement on the terms and conditions set forth
herein;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent agree that on
the Closing Date the Original 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.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Acquisition Closing Date. The date of completion of any Approved
Acquisition.
<PAGE> 9
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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.
Affiliate. With respect to any Person, any other Person that would be
considered to be an affiliate of such Person under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if such Person were issuing securities.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham Dana LLP, or such other counsel as may
be approved by the Agent.
Applicable Margin. For each period commencing on a Reset Date through
the date immediately preceding the next Reset Date (each such period, a "Rate
Setting Period"), the Applicable Margin shall be the applicable percentage set
forth in the chart below (the "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 applicable Rate Setting Period.
<TABLE>
<CAPTION>
Applicable Margin
Leverage Ratio Base Rate Eurocurrency Commitment
Loans Rate Loans Fee Rate
<S> <C> <C> <C>
2.00:1 or lower 0% 1.0% .25%
2.50:1 or lower, but higher than 0% 1.25% .30%
2.00:1
3.00:1 or lower, but higher than 0% 1.5% .375%
2.50:1
3.50:1 or lower, but higher than 0.25% 1.75% .5%
3.00:1
Higher than 3.50:1 0.5% 2.0% .5%
</TABLE>
Notwithstanding the foregoing, from the Closing Date until the earlier
of the Placing Date and December 31, 1998, (i) the Commitment Fee Rate shall not
be less than 0.30%, and (ii) the Applicable Margin with respect to Eurocurrency
Rate Loans and Letter of Credit Fees shall not be less than 1.25%.
If no Compliance Certificate is delivered when required by Section
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 Agent of such Compliance Certificate, the
Applicable Margin and the Commitment Fee Rate shall be set at the highest
applicable rate or margin set forth above.
<PAGE> 10
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Approved Acquisition. An acquisition by any member of the
TransTechnology Group of the shares or of substantially all of the assets of a
corporation or business, as the case may be, whose operations are substantially
concentrated in the Business (such corporation or business, the "Target"),
provided that either (i) audited financial statements for the Target are
available for its most recently ended fiscal year and have been delivered to the
Agent and each of the Lenders, and the aggregate consideration payable by the
applicable member of the TransTechnology Group either (A) does not exceed
$30,000,000 in cash on the Acquisition Closing Date with respect thereto, 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 sum of (i) the purchase price payable for the Target
(including all deferred amounts), plus (ii) all Indebtedness
of the Target being assumed by the purchaser in connection
with the acquisition, shall not exceed seven (7) times the
Target's Consolidated EBITDA (mutatis mutandis to reflect such
amount's reference to the Target) for the Reference Period
ended on the last day of the fiscal quarter ended immediately
preceding the proposed Acquisition Closing Date;
(b) 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;
(c) 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;
(d) 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;
(e) without limiting the requirement in clause (d) 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
<PAGE> 11
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acquisition exceeds $10,000,000, TransTechnology shall have
delivered to the Agent prior to the applicable Acquisition
Closing Date pro forma financial statements in form and
substance satisfactory to the Agent evidencing such
compliance, certified by the principal financial or accounting
officer of TransTechnology;
(f) the Agent shall have received documentation (including,
without limitation, legal opinions and other documentation
similar to that required to be delivered in connection with
the 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;
(g) if the Target's assets include any freehold interests in real
property, the Agent shall have received Phase One
environmental site assessments and appraisals of such real
property in form and substance reasonably satisfactory to the
Agent;
(h) 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;
(i) 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;
(k) the proposed Acquisition Closing Date shall be no later than
the date two (2) years prior to the Revolving Credit Loan
Maturity Date; and
(l) the 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 Securities, Inc.
Assignment and Acceptance. See Sections 20.1.1 and 20.1.2.
Balance Sheet Date. March 31, 1998.
BankBoston. See the preamble to this Credit Agreement.
<PAGE> 12
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Base Rate. With respect to amounts denominated in Dollars, the Dollar
Base Rate; with respect to amounts denominated in Deutschmarks, the DM Base
Rate; and with respect to amounts denominated in Sterling, the Sterling Base
Rate, with each of the Dollar Base Rate, DM Base Rate and Sterling Base Rate
being referred to herein as a "Base Rate".
Base Rate Loans. Any Revolving Credit Loans and International Facility
Loans bearing interest calculated by reference to a Base Rate.
Borrowers. TransTechnology, GmbH and Limited, collectively, and each
individually being referred to as a "Borrower".
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 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.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by
TransTechnology or any of its Subsidiaries in connection with the purchase or
lease by TransTechnology or any of its Subsidiaries of Capital Assets that would
be required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles.
Capitalized Leases. Leases (unless otherwise stated, under which
TransTechnology or any of its Subsidiaries is the lessee or obligor), the
discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.
CERCLA. See Section 8.18.
<PAGE> 13
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Charges over Shares. The Charge over Shares, dated June 30, 1995, from
TTSO Inc. in favor of the Agent with respect to 65% of the share capital of
Limited and the Charge over Shares, dated June 30, 1995, from Limited in favor
of the Agent with respect to the entire share capital of Anderton (Predecessors)
Limited, each as amended and in effect from time to time.
Closing Date. The first date on which the conditions set forth in
Section 12 have been satisfied and any Revolving Credit Loan or International
Facility Loan are to be made or any Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of
TransTechnology and its Subsidiaries that are or are intended to be subject to
the security interests and mortgages created by the Security Documents.
Collateral Assignment of Acquisition Agreement. Any assignment of
rights under any acquisition agreement by TransTechnology or any of its
Subsidiaries in favor of the Agent, for the benefit of the Lenders, in each case
in form and substance satisfactory to the Lenders and the Agent.
Collateral Instrument. Letters of credit, guarantees, indemnities and
performance bonds in form and substance satisfactory to 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
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 Pricing Grid under the column headed "Commitment Fee Rate" with
respect to the Performance Ratio applicable to such Rate Setting Period.
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 EBITDA. With respect to any Reference Period, Earnings
Before Interest and Taxes for such Reference Period, before provision for 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 Target during the period prior to the
applicable Acquisition Closing Date included in such Reference Period, but only
to the extent evidenced by
<PAGE> 14
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audited financial statements of the Target or as otherwise previously approved
in writing by the Agent and the Majority Lenders, and all as determined in
accordance with generally accepted accounting principles.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of TransTechnology and its Subsidiaries, after deduction of all
expenses, taxes and other proper charges, determined in accordance with
generally accepted accounting principles.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, less, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
Consolidated 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 Original 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 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 Agent and in
form and substance satisfactory to the Lenders and the Agent.
Counter Indemnity. Any indemnity or counter indemnity from GmbH or
Limited, as the case may be, in favor of the 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> 15
-8-
letter of credit application incorporating indemnification language satisfactory
to such Fronting Bank.
Credit Agreement. This 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 Agent, and the Debenture dated June 30, 1995 made by Anderton
(Predecessors) Limited in favor of the Agent, 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 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,
<PAGE> 16
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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.
Dollar Base Rate. The higher of (i) the annual rate of interest
announced from time to time by the 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 Agent from three funds brokers of recognized standing selected by the Agent.
Dollar Equivalent. On any date of determination, with respect to an
amount denominated in Dollars, such amount of Dollars, and with respect to an
amount denominated in Sterling or Deutschmarks, the amount of Dollars which
could be purchased with that amount of Sterling or Deutschmarks, as the case may
be, at the spot rate of exchange quoted by the Fronting Bank in the London
Foreign Exchange Market at or about 11:00 a.m. (London time) on the date of
determination for the purchase of Dollars with Sterling or Deutschmarks, as the
case may be.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each 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.
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 or of the Commonwealth of Puerto Rico.
<PAGE> 17
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Drawdown Date. The date on which any Revolving Credit Loan or any
International Facility 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.
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; and
(vi) if, but only if, any Event of Default has occurred and is continuing, any
other bank, insurance company, commercial finance company, investment fund or
other financial institution or other Person approved by the Agent, such approval
not to be unreasonably withheld.
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 Agent, and the Deed of Guarantee of
Indemnity, June 30, 1995, made by Anderton (Predecessors) Limited in favor of
the 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.
<PAGE> 18
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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 and International
Facility Loans 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 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
<PAGE> 19
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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
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 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);
<PAGE> 20
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(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 Agent with respect to the share capital of GmbH, and the pledge of
Partnership Interests by GmbH in favor of the 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 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).
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
<PAGE> 21
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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), as amended.
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;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the relevant Borrower shall fail to give notice as
provided in Section 2.7, such Borrower shall be deemed to have
requested a conversion of the affected Eurocurrency Rate Loan to a Base
Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans
on the last day of the then current Interest Period with respect
thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan
that begins on the last Eurocurrency Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurocurrency Business Day of a calendar month; and
<PAGE> 22
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(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,
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.
<PAGE> 23
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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 EBITDA, calculated for a
Reference Period ended on the last day of the fiscal quarter ended immediately
preceding such date.
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
Brazilian Pledge Agreement, 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 and the International Facility Loans.
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 if no such Notes 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 increased or reduced from time to time in
accordance with the terms and provisions of this Credit Agreement. At the
Closing Date, prior to the drawdown of any International Facility Loans, the
Maximum DM Amount shall be the DM Equivalent of $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
<PAGE> 24
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Date, prior to the drawdown of any International Facility Loans, the Maximum
Sterling Amount shall be the Sterling Equivalent of $15,000,000.
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 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.
Obligations. All indebtedness, obligations and liabilities of any of
TransTechnology and its Subsidiaries to any of the Lenders and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any of
the Notes, Letter of Credit Applications, Letters of Credit, 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.
Original Credit Agreement. See the preamble to this Credit Agreement.
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 Agent, pursuant to which TransTechnology
guaranties to the Lenders and the Agent the payment and performance of the
Obligations of GmbH and Limited, as amended and in effect from time to time.
<PAGE> 25
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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 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 Agent and in form and
substance satisfactory to the Lenders and the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 10.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Placing Date. The date upon which TransTechnology shall have completed
the placing of at least $80,000,000 in aggregate of Subordinated Debt.
Pricing Grid. See the definition of "Applicable Margin".
Projections. See Section 8.4.3.
Rate Setting Period. See the definition of "Applicable Margin".
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by TransTechnology or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
Reference Bank. BankBoston.
Reference Period. A period of four (4) consecutive fiscal quarters.
Reimbursement Obligation. TransTechnology's obligation to reimburse the
Agent, the Issuing Bank and the Lenders on account of any drawing under any
Letter of Credit as provided in Section 5.2.
Rental Obligations. All present or future obligations of
TransTechnology or any of its Subsidiaries under any rental agreements or leases
of real or personal property, other than (i) obligations that can be terminated
by the giving of notice
<PAGE> 26
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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 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, the amount
set forth on 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.
Revolving Credit Commitment Percentage. With respect to each Lender,
the percentage set forth on Schedule 1 hereto as such Lender's percentage of the
aggregate Revolving Credit Commitments of all of the Lenders.
Revolving Credit Loan Maturity Date. July 24, 2003.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to TransTechnology pursuant to Section 2.
Revolving Credit Loan Request. See Section 2.6.
Revolving Credit Note Record. A Record with respect to a Revolving
Credit Note.
Revolving Credit Notes. See Section 2.4.
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 Agent, as amended
and in effect from time to time.
<PAGE> 27
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Security Documents. The Guaranties, the Security Agreements, the
Mortgages, the Patent Assignments, the Trademark Assignments, the Copyright
Mortgages, the German Security Documents, the English Security Documents, the
Collateral Assignments of Acquisition Agreements, and the Stock Pledge
Agreements, and any other documents or instruments from time to time securing
any of the Obligations or evidencing such security.
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 sterling. 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.
<PAGE> 28
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Sterling Loan. Any International Facility Loan which is denominated in
pounds Sterling.
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 Agent on the other hand with respect to each of the 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 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 as of June 30, 1995, made by
each Domestic Subsidiary in favor of the Lenders and the Agent, pursuant to
which each Domestic Subsidiary guaranties to the Lenders and the 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 Agent.
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 Agent
may require, any such reinsurance to be with direct access endorsements) in such
amount as may be determined by the Agent insuring the priority of the Mortgage
of such Mortgaged Property and that TransTechnology or one of its Subsidiaries
holds marketable fee simple title to such Mortgaged Property, subject only to
the encumbrances permitted by such Mortgage and which shall not contain
exceptions for mechanics liens or persons in occupancy (except as may be
permitted by such Mortgage), shall not insure over any matter except to the
extent that any such affirmative insurance is acceptable to the Agent in its
sole discretion, and shall contain such endorsements and affirmative insurance
as the Agent in its discretion may require.
Total DM Facility Usage. See Section 3.1.
<PAGE> 29
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Total Revolving Credit Commitment. The sum of the Revolving Credit
Commitments of the Banks, as in effect from time to time, being $125,000,000 on
the Closing Date.
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
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 Agent and in form and substance satisfactory to the Lenders and the Agent.
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,
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 Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
TransTechnology does not reimburse the Agent and the 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.
<PAGE> 30
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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.
(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 Agent given in accordance with Section 2.6, such sums in
Dollars as are requested by TransTechnology up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Lender's Revolving Credit Commitment minus such Lender's Revolving
Credit Commitment Percentage of the sum of (a) the Maximum Drawing Amount, (b)
all Unpaid Reimbursement
<PAGE> 31
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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 Revolving Credit Commitment
Percentage. Each request for a Revolving Credit Loan hereunder shall constitute
a representation and warranty by TransTechnology that the conditions set forth
in Section 12 and Section 13, in the case of the initial Revolving Credit Loans
to be made on the Closing Date, and Section 13, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
2.2. REVOLVING CREDIT COMMITMENT FEE.
TransTechnology agrees to pay to the Agent for the accounts of the
Lenders in accordance with their respective Revolving Credit 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 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.
TransTechnology shall have the right at any time and from time to time
upon five (5) Business Days prior written notice to the Agent to reduce by
$1,000,000 or an integral multiple thereof or terminate entirely the Total
Revolving Credit Commitment, whereupon the Revolving Credit Commitments of the
Lenders shall be reduced pro rata in accordance with their respective Revolving
Credit Commitment Percentages of the amount specified in such notice or, as the
case may be, terminated. Promptly after receiving any notice of TransTechnology
delivered pursuant to this Section 2.3, the Agent will notify the Lenders of the
substance thereof. Upon the effective date of any such reduction or termination,
TransTechnology shall pay to the Agent for the respective accounts of the
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
<PAGE> 32
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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
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
(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 Agent written notice in the form of
Exhibit B hereto (or 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
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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 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 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 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 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 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 Agent active upon TransTechnology's
account have actual knowledge. In the event that TransTechnology fails
to provide any such notice with respect to the continuation of any
Eurocurrency Rate Loan as such, then such Eurocurrency Rate Loan shall
be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto. The Agent shall notify the
Lenders promptly when any such automatic conversion contemplated by
this Section 2.7 is scheduled to occur.
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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 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 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 Agent for the respective accounts of the Lenders for application: first,
to any Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans;
third, to the International Facility Loans; and fourth, to provide to the Agent
cash collateral for Reimbursement Obligations as contemplated by Section 5.2(b)
and (c). Each payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the 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.
TransTechnology shall have the right, at its election, to repay the
outstanding amount of the Revolving Credit Loans, as a whole or in part, at any
time without penalty or premium, provided that any full or partial prepayment of
the outstanding amount of any Eurocurrency Rate Loans pursuant to this Section
2.11 may be made only on the last day of the Interest Period relating thereto,
unless all
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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, as such amount may be increased pursuant
to the last sentence of this Section 3.1. Each request for a DM Eurocurrency
Loan, each application to the DM Fronting Bank for a Collateral Instrument, and
each acceptance of a DM Overdraft Advance under this Section 3.1 shall
constitute a representation and warranty by GmbH that the conditions set forth
in Section 12 and Section 13, in the case of the initial DM Facility Loans or
Collateral Instruments (if any) to be made or issued on the Closing Date, and
Section 13, in the case of all other DM Facility Loans or Collateral
Instruments, have been satisfied on the date of such request or acceptance, as
the case may be. In the event that prior to December 31, 1998, TransTechnology
or any of its Subsidiaries shall have completed an Approved Acquisition of a
Target whose principal place of business is located in Germany for an aggregate
purchase price of at least $10,000,000, then the Maximum DM Amount shall be
increased from the DM Equivalent of $10,000,000 to the DM Equivalent of
$20,000,000 with effect from the applicable Acquisition Closing Date.
<PAGE> 36
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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, as such amount may be increased
pursuant to the last sentence of Section 3.1, 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 Section
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 $15,000,000. 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 $15,000,000, 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 in respect of any outstanding Counter
Indemnities, and third, to prepay any Sterling Eurocurrency Loans then
outstanding.
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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
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such notice shall specify (a) the principal amount of the Loan requested, (b)
the proposed Drawdown Date of such Loan, (c) the Interest Period for such Loan
and (d) the Type of such Loan. Each International Facility Loan Request for a DM
Eurocurrency Loan shall be irrevocable and binding on GmbH and shall obligate
GmbH to accept the DM Eurocurrency Loan requested on the proposed Drawdown Date
therefor. Each such International Facility Loan Request shall be in a minimum
aggregate amount of the DM Equivalent of $100,000 or an integral multiple
thereof.
3.7. REQUESTS FOR STERLING EUROCURRENCY LOANS.
Limited shall give to the 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
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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 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
sterling 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
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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 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
Agent for the accounts of the Lenders in accordance with their respective
Revolving Credit 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 (as such amount may have been
increased pursuant to the last sentence of Section 3.1) 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 Agent for the accounts of the Lenders in accordance with their respective
Revolving Credit 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. MANDATORY PREPAYMENT OF LOANS.
4.1. MANDATORY PREPAYMENTS FROM ASSET SALES OR NEW DEBT.
In the event that any member of the TransTechnology Group shall either
(a) incur any Indebtedness after the Closing Date which is either permitted
pursuant to
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Section 10.1(f) or is incurred in an amount and on terms and conditions
previously agreed in writing by the Agent, or (b) sell any of its assets (other
than inventory sold in the ordinary course of business) or group of related
assets, whether by sale of such assets or sale of the stock of any member of the
TransTechnology Group, where such asset sale is either permitted pursuant to
Section 10.5.2 or is previously consented to in writing by the Agent and/or the
Majority Lenders, as applicable, then as soon as practicable and in any event
within thirty (30) days after the receipt by any member of the TransTechnology
Group of the Net Cash Proceeds of such new Indebtedness or such asset sale, as
the case may be, TransTechnology shall, or shall procure that a Subsidiary of
TransTechnology shall, prepay the Loans in an amount equal to (i) 50% of the Net
Cash Proceeds of such new Indebtedness, or (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
$1,000,000.
4.2. MANDATORY PREPAYMENTS FROM NEW EQUITY.
In the event that any member of the TransTechnology Group shall after
the Closing Date sell or issue any shares of its stock, options (other than
stock options awarded to employees and directors pursuant to incentive
compensation plans operated by members of the TransTechnology Group) or warrants
for the purchase of its stock or other equity or equity instruments, then as
soon as practicable and in any event within thirty (30) days after the sale of
such new equity, TransTechnology shall prepay the Loans in an amount equal to at
least fifty percent (50%) of the Net Cash Proceeds to the TransTechnology Group
of such sale or issuance of new equity.
4.3. APPLICATION OF PROCEEDS.
All mandatory prepayments of the Loans pursuant to Sections 4.1 -
4.2 shall be applied first to repayment of Unpaid Reimbursement Obligations,
second to repayment of Revolving Credit Loans which are Base Rate Loans, third
to repayment of International Facility Loans which are Base Rate Loans, fourth
to provide cash collateral for Reimbursement Obligations and cash cover with
respect to Counter Indemnities, fifth to repayment of Revolving Credit Loans
which are Eurocurrency Rate Loans, and sixth to repayment of International
Facility Loans which are Eurocurrency Rate Loans.
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
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renew for the account of TransTechnology one or more standby or
documentary letters of credit (individually, a "Letter of Credit"), in
such form as may be requested from time to time by TransTechnology and
agreed to by the Issuing Bank; provided, however, that, after giving
effect to such request, (a) the sum of the aggregate Maximum Drawing
Amount and all Unpaid Reimbursement Obligations shall not exceed
$5,000,000 at any one time, and (b) the 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 the extent of such Lender's Revolving Credit Commitment
Percentage, to reimburse the Issuing Bank or the Agent, as the case may
be, on demand for the amount of each draft paid by the Issuing Bank or
the Agent under each Letter of Credit to the extent that such amount is
not reimbursed by TransTechnology pursuant to Section 5.2 (such
agreement for a 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 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
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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.
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 Agent, for the account of the Issuing Bank or
(as the case may be), the 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 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 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 Agent and the Issuing Bank as cash collateral for
all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office (for the
account of the Issuing Bank or (as the case may be) the Agent or the 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 Agent (for the account of the Issuing Bank or (as the case may
be) the Agent or the Lenders) on
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demand at the rate specified in Section 6.11 for overdue principal on the
Revolving Credit Loans.
5.3. LETTER OF CREDIT PAYMENTS.
If any draft shall be presented or other demand for payment shall be
made under any Letter of Credit, the Issuing Bank shall notify TransTechnology
of the date and amount of the draft presented or demand for payment and of the
date and time when it expects to pay such draft or honor such demand for
payment. If TransTechnology fails to make payment to the Agent as provided in
Section 5.2 on or before the date that such draft is paid or other payment is
made by the Issuing Bank, the Issuing Bank may at any time thereafter notify the
Agent and the 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 Revolving Credit
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (i) the average, computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by the
Issuing Bank for federal funds acquired by the Issuing Bank during each day
included in such period, times (ii) the amount equal to such Lender's Revolving
Credit Commitment Percentage of such Unpaid Reimbursement Obligation, times
(iii) a fraction, the numerator of which is the number of days that elapse from
and including the date the Issuing Bank paid the draft presented for honor or
otherwise made payment to the date on which such Lender's Revolving Credit
Commitment Percentage of such Unpaid Reimbursement Obligation shall become
immediately available to the Issuing Bank, and the denominator of which is 360.
The responsibility of the Issuing Bank to TransTechnology and to the Agent and
the 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 Agent, any
Lender or any beneficiary of a Letter of Credit. TransTechnology further agrees
with the Issuing Bank, the Agent and the Lenders that the Issuing Bank, the
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
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Credit or any such transferee. The Issuing Bank, the 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 Agent or any Lender under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon TransTechnology and shall not result
in any liability on the part of the Issuing Bank, the Agent or any 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 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 Revolving Credit 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.
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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 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 AND STRUCTURING FEES. 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 (a) to the Agent for the pro rata accounts of
the Lenders a closing fee in the amount agreed in the Fee Letter and (b) to the
Arranger, for the Arranger's own account, a structuring fee in the amount of the
structuring fee agreed in the Fee Letter.
6.2. AGENT'S FEE. The Borrowers jointly and severally (but, in the case
of GmbH, subject to Section 30 of the GmbH Act of Germany) agree to pay to the
Agent annually in advance, for the Agent's own account, on each anniversary of
the Closing Date, an Agent's fee in the amount agreed in the Fee Letter.
6.3. PAYMENT PROVISIONS.
6.3.1. CURRENCY OF ACCOUNT. Dollars are the currency of
account and payment for each and every sum at any time due from the
Borrowers hereunder, provided that:
(i) each repayment of a Loan or a part thereof shall
be made in the currency in which such Loan is denominated at
the time of that repayment;
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(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;
(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 Agent for the account of the Lenders in the proportion of the
Lenders' respective Revolving Credit Commitment Percentages; and
(b) as to interest due with respect to Revolving Credit Loans,
to the Agent for the account of the Lenders in the proportion of the
Lenders' respective Revolving Credit 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.
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6.3.4. TIME OF PAYMENT. On each date on which this Credit
Agreement requires an amount to be paid by any of the Borrowers or any
of the Lenders hereunder, such Borrower or, as the case may be, such
Lender shall make the same available to the Agent, the DM Fronting Bank
or the Sterling Fronting Bank, as the case may be, to such account as
the 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
which is made for the account of a Person other than the Agent shall be
made in time to enable the Agent to make available such other Person's
portion thereof for value the same day.
6.3.5. PAYMENTS BY AGENT. Where a sum is to be paid hereunder
to the Agent for the account of another Person, the Agent shall not be
obliged to make the same available to that other Person until the Agent
has been able to establish to its satisfaction that it has actually
received such sum, but if the Agent does so and it proves to be the
case that the Agent has not actually received the sum it paid out, then
the Person to whom such sum was so made available shall on request
refund the same to the Agent, together with an amount sufficient to
reimburse the Agent for any amount it may have been required to pay out
by way of interest on moneys borrowed to fund the sum in question
during the period beginning on the due date for payment thereof and
ending on the date on which it receives the same.
6.3.6. NO OFFSET, ETC. All payments by the Borrowers hereunder
and under any of the other Loan Documents shall be made without setoff
or counterclaim and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless any of the Borrowers is compelled by law to make such deduction
or withholding. If any such obligation is imposed upon a Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, such Borrower will make such deduction or withholding,
will pay the full amount deducted or withheld to the applicable
authority, and will also pay to the Agent, for the account of the
Lenders or (as the case may be), the Issuing Bank, the applicable
Fronting Bank or Banks or the Agent, on the date on which such amount
is due and payable hereunder or under such other Loan Document, such
additional amount as shall be necessary to enable the Lenders, the
Issuing Bank, the applicable Fronting Bank or Banks or the 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 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 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.
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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 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 Agent or any of the Lenders of such outstanding
amount, the 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 Agent shall determine or be
notified by the Majority Lenders, with respect to any Revolving Credit 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 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
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 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 Agent or, as the
case may be, the 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 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
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maintain Eurocurrency Rate Loans, such Lender, if so affected, shall forthwith
give notice of such circumstances to TransTechnology, the Agent and the other
Lenders, and such Fronting Bank, if so affected, shall forthwith give notice of
such circumstances to the Borrowers and the Agent. Thereupon (i) the commitment
of such Lender or Fronting Bank to make Eurocurrency Rate Loans or convert Loans
of another Type to Eurocurrency Rate Loans shall forthwith be suspended, and
(ii) such Lender's or Fronting Bank's Loans then outstanding as Eurocurrency
Rate Loans, if any, shall be converted automatically to Base Rate Loans on the
last day of each Interest Period applicable to such Eurocurrency Rate Loans or
within such earlier period as may be required by law. The Borrowers hereby
jointly and severally agree promptly to pay the Agent for the account of such
Lender or Fronting Bank upon demand by such Lender or Fronting Bank, any
additional amounts necessary to compensate such Lender or Fronting Bank for any
costs incurred by such Lender or Fronting Bank in making any conversion in
accordance with this Section 6.6, including any interest or fees payable by such
Lender or Fronting Bank to lenders of funds obtained by it in order to make or
maintain its Eurocurrency Rate Loans hereunder.
6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Agent by any central 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 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 Agent, or bank
franchise taxes), but including any tax or withholding applicable to
any payment to be made by a Fronting Bank to the Agent pursuant to
Section 6.3.2(a), or by any Lender to the 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 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,
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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 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 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 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 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 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 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, Agent
or Issuing Bank such additional amounts as will be sufficient to compensate such
Lender, Fronting Bank, 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 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 Agent or
any corporation controlling such Lender, or the Agent with any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) of any such entity regarding capital adequacy, has the effect of
reducing the return on such Lender's, or the
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Agent's commitment with respect to any Loans or Letters of Credit to a level
below that which such Lender or the Agent could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or the
Agent's then existing policies with respect to capital adequacy and assuming
full utilization of such entity's capital) by any amount deemed by such Lender
or (as the case may be) the Agent to be material, then such Lender or the Agent
may notify the Borrowers of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate,
TransTechnology agrees to pay such Lender or (as the case may be) the Agent for
the amount of such reduction in the return on capital as and when such reduction
is determined upon presentation by such Lender or (as the case may be) the Agent
of a certificate in accordance with Section 6.9 hereof. Each Lender and the
Agent shall allocate such cost increases among its customers in good faith and
on an equitable basis.
6.9. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to 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 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).
<PAGE> 53
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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 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 Agent for the account of each Fronting Bank, on demand made
by such Fronting Bank through the Agent:
(i) such Lender's Revolving Credit Commitment
Percentage of each amount which is expressed to be payable by
any of the Borrowers to or for the account of 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,
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and agrees that neither the Fronting Banks nor the Agent shall be
obliged to make any demand on or take any proceedings against any of
the Borrowers or any other person before making demand on such Lender
hereunder.
(b) Each Lender irrevocably and unconditionally undertakes to
pay to the Agent for the account of each Fronting Bank on demand made
by such Fronting Bank through the Agent at any time after an Event of
Default has occurred and is continuing and has not been waived, its
Revolving Credit Commitment Percentage of 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 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 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 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).
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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 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. Not less than once each month the
Agent will notify each of the Lenders as to such Lender's balance of
all Fronted Loans outstanding at such 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 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 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. All of the Obligations shall be secured by
a perfected first priority security interest (subject only to Permitted Liens
entitled to
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priority under applicable law) in all of the assets of TransTechnology, whether
now owned or hereafter acquired, pursuant to the terms of the Security Documents
to which TransTechnology is a party. The Obligations of GmbH shall be secured by
a security interest (subject only to Permitted Liens entitled to priority under
applicable law) in all of the assets of GmbH 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. The Obligations shall
also be guaranteed pursuant to the terms of the Guaranties. The obligations of
each of the Guarantors shall be in turn secured by a perfected first priority
security interest (subject only to Permitted Liens entitled to priority under
applicable law) in all of the assets of each such Guarantor, whether now owned
or hereafter acquired, pursuant to the terms of the Security Documents to which
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 Charge Over Shares from TTSO,
Inc., 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 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 Agent or, as
the case may be, a Fronting Bank acting on behalf of the 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 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 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 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.
Notwithstanding 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
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construed in any way as a guarantee of, and no pledge, lien, security interest,
charge, mortgage or other 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 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.
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 1, 1998) of the annual operating
budgets of TransTechnology and its Subsidiaries on a consolidated
basis, balance sheets and cash flow statements for the 1999 to 2003
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.
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8.5. NO MATERIAL CHANGES, ETC.
(a) Since the Balance Sheet Date there has occurred no materially
adverse change in the financial condition or business of TransTechnology or any
of its Subsidiaries or any material assets of TransTechnology or any of its
Subsidiaries as shown on or reflected in the consolidated balance sheet of
TransTechnology and its Subsidiaries as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of TransTechnology or any of its Subsidiaries or any
material assets of TransTechnology or any of its Subsidiaries. Since the Balance
Sheet Date, TransTechnology has not made any Distribution except for its regular
quarterly dividend of $407,683 paid on June 1, 1998.
(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
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has or is expected, in the judgment of the Borrowers' officers, to have any
materially adverse effect on the business of any of the Borrowers or their
Subsidiaries.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Borrowers nor any of their Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, act, statute, license, rule, regulation or other law, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of any of the Borrowers or their Subsidiaries.
8.10. TAX STATUS. Except as disclosed on Schedule 8.10 hereto, each of
the Borrowers and its Subsidiaries (i) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject, (ii) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Borrowers know of no basis for any
such claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the
Borrowers nor any of their Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor
are any of the Borrowers or their Subsidiaries an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940.
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 Agent's security interests in and charges over the
Collateral. The Collateral and the Agent's rights with respect to the Collateral
are not subject to
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any material setoff, claims, withholdings or other defenses. The Borrowers or
their Subsidiaries, as specified in the Security Documents, are the owners of
the Collateral free from any lien, security interest, encumbrance and any other
claim or demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which any of the Borrowers or their Subsidiaries or any officer,
director or employee of such Borrower or Subsidiary makes payments in the
ordinary course of business upon terms no less favorable than such Borrowers,
Subsidiaries, officers, directors or employees could obtain from third parties,
none of the officers, directors, or employees of any of the Borrowers or their
Subsidiaries is presently a party to any transaction with any of the Borrowers
or their Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of any Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. TransTechnology has heretofore delivered to the Agent the
most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, Part 6 of
ERISA). TransTechnology or an ERISA Affiliate, as appropriate, may
terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
TransTechnology or such ERISA Affiliate without liability to any
Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of Section 302(f) of ERISA, or otherwise, has been
timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which
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have been paid) has been incurred by TransTechnology or any ERISA
Affiliate with respect to any Guaranteed Pension Plan and there has not
been any ERISA Reportable Event, or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan
by the PBGC. Based on the latest valuation of each Guaranteed Pension
Plan (which in each case occurred within twelve months of the date of
this representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all
such Guaranteed Pension Plans within the meaning of Section 4001 of
ERISA did not exceed the aggregate value of the assets of all such
Guaranteed Pension Plans, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in
excess of benefit liabilities.
8.16.4. MULTIEMPLOYER PLANS. Other than (a) the Electronics
Local 431 Pension Fund relating to employees of 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 Original 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, or
providing credit support for the purchase of, during the underwriting or
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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
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 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 Agent, where notices, presentations and demands to or upon
TransTechnology or such Subsidiary in respect of the Loan Documents to which
TransTechnology or such Subsidiary is a party may be given or made.
(b) GmbH will maintain its chief executive office in Konigstein,
Germany, or at such other place in Germany as GmbH shall designate upon written
notice to the Agent 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.
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(c) Limited will maintain its registered office in Bingley, Yorkshire,
or at such other place in England as Limited shall designate upon written notice
to the 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.
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 Agent, together with a written statement from such
accountants to the effect that they have read a copy of this Credit
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default, or, if such accountants shall have obtained knowledge of
any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Lenders for failure to obtain
knowledge of any Default or Event of Default;
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(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 C 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 Agent or
any Lender may reasonably request.
9.5. NOTICES.
9.5.1. DEFAULTS. Each of the Borrowers will promptly notify
the Agent and each of the Lenders in writing of the occurrence of any
Default or Event of Default. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any
other note, evidence of indebtedness, indenture or other obligation to
which or with respect to which any of the Borrowers or their
Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, each of the Borrowers shall forthwith give written
notice thereof to the Agent and each of the Lenders, describing the
notice or action and the nature of the claimed default.
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9.5.2. ENVIRONMENTAL EVENTS. Each of the Borrowers will
promptly give notice to the Agent and each of the Lenders (i) of any
violation of any Environmental Law that any of the Borrowers or their
Subsidiaries reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially
affect the assets, liabilities, financial conditions or operations of
any of the Borrowers or their Subsidiaries, or the Agent's mortgages,
deeds of trust or security interests pursuant to the Security
Documents.
9.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. Each of the
Borrowers will, immediately upon becoming aware thereof, notify the
Agent and each of the Lenders in writing of any setoff, claims
(including, with respect to the Real Estate, environmental claims),
withholdings or other defenses to which any of the Collateral, or the
Agent's rights with respect to the Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. Each of the
Borrowers will, and will cause each of its Subsidiaries to, give notice
to the Agent and each of the Lenders in writing within fifteen (15)
days of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting any of the
Borrowers or their Subsidiaries or to which any of the Borrowers or
their Subsidiaries is or becomes a party involving an uninsured claim
against any of the Borrowers or their Subsidiaries that could
reasonably be expected to have a materially adverse effect on any of
the Borrowers or their Subsidiaries and stating the nature and status
of such litigation or proceedings. Each of the Borrowers will, and will
cause each of its Subsidiaries to, give notice to the Agent and each of
the Lenders, in writing, in form and detail satisfactory to the Agent,
within ten (10) days of any judgment not covered by insurance, final or
otherwise, against such Borrower or any of its Subsidiaries in an
amount in excess of $250,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. Each of the
Borrowers will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, rights and franchises and
those of its Subsidiaries. Each of the Borrowers (i) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(ii) will cause to be made all necessary 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
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nothing in this Section 9.6 shall prevent any Borrower from discontinuing the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of such Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of any of the Borrowers and
their Subsidiaries on a consolidated basis.
9.7. INSURANCE.
Each of the Borrowers will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and contingencies as shall
be in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms, in
such forms and for such periods as may be reasonable and prudent and in
accordance with the terms of the Security Agreements, including provisions
naming the Agent as additional loss payee and providing for a minimum thirty
(30) days' notice to the Agent prior to cancellation. Each of the Borrowers
will, and will cause each of its Subsidiaries to, maintain insurance on the
Mortgaged Properties in accordance with the terms of the Mortgages. Upon
reasonable request from the Agent, the Borrowers shall furnish the Agent from
time to time with information concerning the Borrowers' and their Subsidiaries'
insurance, including (when requested) copies of the certificates of insurance
evidencing such insurance.
9.8. TAXES. Each of the Borrowers will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if such contesting Borrower or Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and provided further that each of the
Borrowers and its Subsidiaries will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose any
lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.9.1. GENERAL. Each of the Borrowers shall permit the
Lenders, through the Agent or any of the Lenders' other designated
representatives, to visit and inspect any of the properties of such
Borrower and any of its Subsidiaries, to examine the books of account
of such Borrower and its Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts
of such Borrower and its Subsidiaries with, and to be advised as to the
same by, its and their officers, all at such reasonable times and
intervals as the Agent or any Lender may reasonably request. Upon the
request of the Agent, TransTechnology will
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obtain and deliver to the Agent a report of an independent collateral
auditor satisfactory to the Agent (which may be affiliated with one of
the Lenders) setting forth such information regarding the Collateral as
the 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 Agent, will obtain and deliver to the
Agent appraisal reports in form and substance and from appraisers
satisfactory to the Agent, stating (i) the then current fair market,
orderly liquidation and forced liquidation values of all or any portion
of the equipment or real estate owned by such Borrower or any of its
Subsidiaries and (ii) the then current business value of such Borrower
and its Subsidiaries. All such appraisals shall be conducted and made
at the expense of the Borrower obtaining and delivering such appraisal
reports.
9.9.2. ENVIRONMENTAL ASSESSMENTS. Whether or not an Event of
Default shall have occurred, the Agent may, from time to time, in its
discretion for the purpose of assessing and ensuring the value of any
Mortgaged Property, obtain one or more environmental assessments or
audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved
by the Agent to evaluate or confirm (i) whether any Hazardous Materials
are present in the soil or water at such Mortgaged Property and (ii)
whether the use and operation of such Mortgaged Property complies with
all Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Mortgaged Property
including any and all storage areas, storage tanks, drains, dry wells
and leaching areas, and the taking of soil samples, surface water
samples and ground water samples, as well as such other investigations
or analyses as the Agent deems appropriate. All such environmental
assessments shall be conducted at the expense of TransTechnology.
9.9.3. COMMUNICATIONS WITH ACCOUNTANTS. Each of the Borrowers
authorizes the Agent and, if accompanied by the Agent, the Lenders to
communicate directly with such Borrower's independent certified public
accountants, provided that TransTechnology shall have received advance
notice of any such communications, and authorizes such accountants to
disclose to the Agent and the Lenders any and all financial statements
and other supporting financial documents and schedules including copies
of any management letter with respect to the business, financial
condition and other affairs of such Borrower or any of its
Subsidiaries. At the request of the Agent, each of the Borrowers shall
deliver a letter addressed to such accountants instructing them to
comply with the provisions of this Section 9.9.3.
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
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instruments by which it or any of its properties may be bound and (iv) all
applicable decrees, orders, and judgments. If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that any of the Borrowers
or their Subsidiaries may fulfill any of its obligations hereunder or any of the
other Loan Documents to which such Borrower or Subsidiary is a party, such
Borrower will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
such Borrower or Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Lenders with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. TransTechnology will (i) promptly upon
filing the same with the United States Department of Labor or Internal Revenue
Service, upon request of the Agent, furnish to the Agent a copy of the most
recent actuarial statement required to be submitted under Section 103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in respect of
each Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish
to the Agent any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under Sections 4041A,
4202, 4219, 4242, or 4245 of ERISA. Each of the Borrowers and each of their
Subsidiaries shall comply with all applicable pension, retirement funding or
employee benefit legislation in any jurisdiction.
9.12. USE OF PROCEEDS. The proceeds of the Loans shall be used to
refinance certain Indebtedness of the Borrowers under the Original 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 Agent or the Majority Lenders,
cause such Subsidiary to, forthwith deliver to the Agent a fully executed
mortgage or deed of trust over such real estate, in form and substance
satisfactory to the Agent, together with title insurance policies, surveys,
evidences of insurance with the Agent named as loss payee and additional
insured, legal opinions and other documents and certificates with respect to
such real estate as was required for Real Estate of such Borrower or Subsidiary
as of the Closing Date. Each of the Borrowers further agrees that, following the
taking of such actions with respect to such real estate, the Agent shall have
for the benefit of the Lenders and the Agent a valid and enforceable first
priority mortgage or deed of trust over such real estate, free and clear of all
defects and encumbrances except for Permitted Liens.
9.14. BANK ACCOUNTS. Each of the Borrowers will, and will cause its
Subsidiaries to, together with the employees, agents and other Persons acting on
behalf of such Borrower or Subsidiary, receive and hold in trust for the Agent
and the Lenders all payments constituting proceeds of accounts receivable or
other
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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, 1998, TransTechnology will maintain interest rate protection
arrangements on terms and conditions satisfactory to the Agent with respect to a
principal amount of at least $50,000,000 for a period of three (3) years from
the date of implementation of such arrangements; provided that if prior to
December 31, 1998, TransTechnology shall have issued at least $50,000,000 of
fixed rate 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 Agent and
execute such further instruments and documents as the Lenders or the Agent shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Credit Agreement and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Issuing Bank has any
obligations to issue, extend or renew any Letters of Credit:
10.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers will not, and will
not permit any of their Subsidiaries to, create, incur, assume, guarantee, or be
or remain liable, contingently or otherwise, with respect to, any Indebtedness
other than:
(a) Indebtedness to the Lenders and the Agent arising under
any of the Loan Documents;
(b) current liabilities of any of the Borrowers or their
Subsidiaries incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 9.8;
(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
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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 $125,000,000 in aggregate
principal amount at any 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 the acquisition
after the date hereof of any real or personal property by any of the
Borrowers or their Subsidiaries, provided that the aggregate principal
amount of such Indebtedness of TransTechnology and its Subsidiaries
shall not exceed the aggregate amount of $5,000,000 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 Agent and be
in form and substance satisfactory to the Agent.
10.2. RESTRICTIONS ON LIENS. The Borrowers will not, and will not
permit any of their Subsidiaries to, (i) create or incur or suffer to be created
or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (v) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrowers and their
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:
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(a) liens in favor of a Borrower on all or part of the assets
of Subsidiaries of such Borrower securing Indebtedness owing by such
Subsidiaries to such Borrower;
(b) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
other than Mortgaged Properties to secure claims for labor, material or
supplies in respect of obligations not overdue or delinquent;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties other than Mortgaged Properties in
respect of judgments or awards, the Indebtedness with respect to which
is permitted by Section 10.1(d);
(e) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties other than Mortgaged
Properties, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue or delinquent;
(f) encumbrances on Real Estate other than the Mortgaged
Property consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities
in the title thereto, landlord's or lessor's liens under leases to
which a Borrower or a Subsidiary of a Borrower is a party, and other
minor liens or encumbrances none of which in the opinion of the
Borrowers interferes materially with the use of the property affected
in the ordinary conduct of the business of the Borrowers and their
Subsidiaries, which defects do not individually or in the aggregate
have a materially adverse effect on the business of any Borrower
individually or of TransTechnology and its Subsidiaries on a
consolidated basis;
(g) liens existing on the date hereof and listed on Schedule
10.2 hereto;
(h) 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 and amount
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
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(j) liens in favor of the Agent for the benefit of the Lenders
and the Agent under the Loan Documents.
10.3. RESTRICTIONS ON INVESTMENTS. The Borrowers will not, and will not
permit any of their Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America, the Federal Republic of Germany or the United
Kingdom that mature within one (1) year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000 or, with respect to Subsidiaries of
TransTechnology located outside the United States, deposit accounts
with local banks having total assets in excess of $1,000,000,000 or the
local currency equivalent thereof;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if
rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
Schedule 10.3 hereto;
(e) Investments with respect to Indebtedness permitted by
Section 10.1(j) so long as such entities remain Subsidiaries of
TransTechnology;
(f) Investments consisting of the 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 Agent to provide to
the Agent, for the benefit of the
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Lenders and the Agent, a first priority perfected security interest in all of
such Investments free of all encumbrances other than Permitted Liens.
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 make Distributions with respect to each fiscal quarter
commencing on or after April 1, 1998, within ninety (90) days following the end
of such fiscal quarter, provided that the aggregate amount of all Distributions
declared and/or paid pursuant to this Section 10.4 with respect to each
Reference Period ending after the date hereof, shall not exceed twenty-five
percent (25%) of Consolidated Net Income for such Reference Period.
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;
(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 Agent or the Lenders or in
or over which the 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;
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(b) the disposition of the assets listed in Schedule
10.5.2, provided that (i) such disposition is for
consideration equal to or greater than the fair market value
of such assets, as determined by the management of the selling
member of the TransTechnology Group in its reasonable
discretion and (ii) the proceeds of any such disposition shall
be paid to the Agent for the account of the Lenders, to be
applied against the Loans in accordance with Section 4.3; and
(c) the disposition of the assets identified on the
most recent balance sheet of TransTechnology and its
Subsidiaries as belonging to or employed in operations
identified in such balance sheet as discontinued operations of
the TransTechnology Group, provided that the proceeds of any
such disposition shall be paid to the Agent for the account of
the Lenders, to be applied against the Loans in accordance
with Section 4.3;
provided, however, that in the event of any disposition of assets specifically
permitted pursuant to this Section 10.5.2, the Agent shall be required, upon the
request of any of the Borrowers, to release any security interest in the Agent's
favor on any such assets, and the 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 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 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
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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
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.
10.10. BANK ACCOUNTS. TransTechnology will not, and will not permit any
of its Subsidiaries to, (i) establish any bank accounts other than those listed
on Schedule 8.20 without the Agent's prior written consent, (ii) violate
directly or indirectly any bank agency or lock box agreement in favor of the
Agent for the benefit of the Lenders and the Agent with respect to such account,
or (iii) deposit into any of the payroll accounts listed on Schedule 8.20 any
amounts in excess of amounts necessary to pay current payroll obligations from
such accounts.
10.11. OPERATING LEASES. The Borrowers will not, and will not permit
any of their Subsidiaries to, create, incur, assume, guarantee or remain liable
for, contingently or otherwise, any Rental Obligations with respect to Operating
Leases in excess of an aggregate amount of $4,500,000 scheduled to become due
and payable in any fiscal year.
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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
Agent or any of the Lenders, without the prior written consent of the 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 on or before September 30, 1999, to Consolidated Total
Interest Expense for such Reference Period to be less than 3.25:1, and will not
permit the ration of Consolidated EBITDA for any Reference Period ending after
September 30, 1999, to Consolidated Total Interest Expense for such Reference
Period to be less than 3.50:1.
11.2. DEBT TO CAPITAL RATIO. TransTechnology will not permit Funded
Indebtedness, at any time, as a percentage of the sum of Funded Indebtedness and
Total Shareholders' Equity at such time, to exceed 60%.
11.3. LEVERAGE RATIO. TransTechnology will not permit the Leverage
Ratio at any time to exceed 3.75:1.
11.4. MINIMUM NET WORTH. TransTechnology will not permit Consolidated
Net Worth at any time to be less than $97,000,000, as such amount may be
increased at the end of each fiscal quarter (commencing with the fiscal quarter
ending on or around December 31, 1998), for the fiscal quarter thereafter, by
the addition of seventy-five percent (75%) of Consolidated Net Income earned
after September 30, 1998.
11.5. CAPITAL EXPENDITURES. TransTechnology will not make, or permit
any Subsidiary of TransTechnology to make, Capital Expenditures in any fiscal
year that exceed in the aggregate for such fiscal year the amount set forth for
such fiscal year in the chart below:
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<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
Ending on March 31, 1999 $11,800,000
Ending on March 31, 2000 $12,800,000
Ending on March 31, 2001 $14,800,000
Ending on March 31, 2002 $15,800,000
and thereafter
</TABLE>
provided that, if during any fiscal year 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. For the purposes of this Section 11.5, Capital
Expenditures shall not include (a) any amounts in respect of leases in effect on
the Closing Date and classified at such time as Operating Leases, which shall
have been reclassified as Capitalized Leases subsequent to the Closing Date, or
(b) any amounts classified in the Projections on the Closing Date as goodwill
with respect to Aerospace Rivet Manufacturers Corporation, a Subsidiary of
TransTechnology, which shall have been reclassified so as to fall within the
definition of Capital Expenditures subsequent to the Closing Date.
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 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.
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12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by TransTechnology and each of its
Subsidiaries of this Credit Agreement and the other Loan Documents to which it
is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Lenders shall have been provided to each of
the Lenders.
12.4. INCUMBENCY CERTIFICATE. Each of the Lenders shall have received
from TransTechnology and each of its Subsidiaries an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of
TransTechnology or such Subsidiary, and giving the name and bearing a specimen
signature of each individual who shall be authorized: (i) to sign, in the name
and on behalf of each of TransTechnology 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 Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Agent to protect
and preserve such security interests shall have been duly effected. The Agent
shall have received evidence thereof in form and substance satisfactory to the
Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
have received from each of TransTechnology and its Subsidiaries a completed and
fully executed Perfection Certificate and the results of UCC searches or
searches of any other relevant register of charges or commercial register with
respect to the Collateral, indicating no liens other than Permitted Liens and
otherwise in form and substance satisfactory to the Agent.
12.7. SURVEYS. The Agent shall have received a Survey of each Mortgaged
Property as to which a survey has been conducted on or prior to the date hereof.
12.8. TITLE INSURANCE. The Agent shall have received a Title Policy
covering each Mortgaged Property located in the United States (or commitments to
issue such policies, with all conditions to issuance of the Title Policy deleted
by an authorized agent of the Title Insurance Company) together with proof of
payment of all fees and premiums for such policies, from the Title Insurance
Company and in amounts satisfactory to the Agent, insuring the interest of the
Agent and each of the Lenders as mortgagee under the Mortgages.
12.9. LANDLORD CONSENTS. TransTechnology and its Subsidiaries shall
have delivered to the Agent all consents required for the Agent to receive, as
part of the Security Documents, a collateral assignment of each material
leasehold of personal property, together in each case with such estoppel
certificates as the Agent may request.
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12.10. CERTIFICATES OF INSURANCE. The Agent shall have received (i) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (ii) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).
12.11. BANK AGENCY AGREEMENTS. The Agent shall have received an
agreement, in form and substance satisfactory to the Agent, from each bank at
which TransTechnology or any of its Subsidiaries maintains depository accounts
(including bank agency or lock box agreements) concerning the Agent's interest
for the benefit of the Lenders and the Agent in such accounts.
12.12. HAZARDOUS WASTE ASSESSMENTS. The Agent shall have received
hazardous waste site assessments from environmental engineers or other
documentation in form and substance satisfactory to the Agent, covering all
Mortgaged Property and all other real property in respect of which
TransTechnology or any of its Subsidiaries may have material liability, whether
contingent or otherwise, for dumping or disposal of Hazardous Substances.
12.13. 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.
12.14. OPINIONS OF COUNSEL. Each of the Lenders and the Agent shall
have received a favorable legal opinion addressed to the Lenders and the Agent,
dated as of the Closing Date, in form and substance satisfactory to the Lenders
and the Agent, from:
(a) 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) Eversheds, solicitors to Limited; and
(d) if requested by the Agent such other local counsel to
TransTechnology in any jurisdiction where any Collateral (including but
not limited to the Mortgaged Property) is located.
12.15. PAYMENT OF FEES. TransTechnology shall have paid to the Agent
the closing fee pursuant to Section 6.1 and shall have paid to the Arranger the
structuring fee pursuant to Section 6.1.
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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 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 Agent, TransTechnology shall have delivered to the Agent a
certificate of TransTechnology signed by an authorized officer of
TransTechnology to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make such Loan pursuant
to the provisions of this Credit Agreement, or to participate in the issuance,
extension or renewal of such Letter of Credit or in the reasonable opinion of
the Issuing Bank would make it illegal for the Issuing Bank to issue, extend or
renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System or any other applicable regulatory or supervisory body.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents,
the Acquisition Documents and all other documents incident thereto shall be
satisfactory in substance and in form to the Lenders and to the Agent and the
Agent's Special Counsel, and the Lenders, the Agent and such counsel shall have
received all information and such counterpart originals or certified or other
copies of such documents as the Agent may reasonably request.
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14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) any of the Borrowers shall fail to pay any principal of
the Loans or any Reimbursement Obligation when the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) any of the Borrowers or their Subsidiaries shall fail to
pay any interest on the Loans, the commitment fee, any Letter of Credit
Fee, the Agent's fee, the fronting fee, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due
and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) any of the Borrowers or their Subsidiaries shall fail to
comply with any of its covenants contained in Section 9, 10 or 11 or
any of the covenants contained in any of the Mortgages or in the
Debenture;
(d) any of the Borrowers or their Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
Section 14.1 or those which by their terms expressly exclude any grace
period for any non-compliance therewith) for fifteen (15) days after
written notice of such failure has been given to TransTechnology by the
Agent;
(e) any representation or warranty of or any of the Borrowers
or their Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) any of the Borrowers or their Subsidiaries shall fail to
pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or in respect
of any Capitalized Leases for such period of time as would permit
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate
the maturity thereof;
(g) any of the Borrowers or their Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay
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or generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of such Borrower or Subsidiary or of
any substantial part of the assets of such Borrower or Subsidiary or
shall commence any case or other proceeding relating to any of the
Borrowers or their Subsidiaries under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in
effect, or shall take any action to authorize or in furtherance of any
of the foregoing, or if any such petition or application shall be filed
or any such case or other proceeding shall be commenced against or any
of the Borrowers or their Subsidiaries and any of the 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 $1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Agent's security interests,
mortgages or liens in a substantial portion of the Collateral shall
cease to be perfected, or shall cease to have the priority contemplated
by the Security Documents, in each case otherwise than in accordance
with the terms thereof or with the express prior written agreement,
consent or approval of the Lenders (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
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be expected to result in liability of TransTechnology or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $250,000 and such event in the circumstances
occurring reasonably could constitute grounds for the termination of
such Guaranteed Pension Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan; or a trustee shall have been appointed by
the United States District Court to administer such Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
(l) any of the Borrowers or their Subsidiaries shall be
enjoined, restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting any material
part of its 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 $1,000,000;
(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 25% or more of the outstanding shares of common stock of
TransTechnology; or, during any period of twelve consecutive calendar
months, individuals who were directors of TransTechnology on the first
day of such period shall cease to constitute a majority of the board of
directors of TransTechnology;
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then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Lenders shall, by notice in writing to
the Borrowers declare all amounts owing with respect to this Credit Agreement,
the Loans, the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by each of the Borrowers; provided that
in the event of any Event of Default specified in Section 14.1(g) or 14.1(h),
all such amounts shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any Lender.
14.2. TERMINATION OF 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 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 Agent or the Majority
Lenders shall have accelerated the maturity of the Loans pursuant to
Section 14.1, each Lender, if owed any amount with respect to the Loans or the
Reimbursement Obligations, may, with the consent of the Majority Lenders but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Lender are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Lender. No remedy herein conferred upon any
Lender or the Agent or the holder of any Note or purchaser of any Letter of
Credit Participation is intended to be exclusive of any other remedy herein or
in any of the other Loan Documents and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or under any of
the other Loan Documents or now or hereafter existing at law or in equity or by
statute or any other provision of law.
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14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Lender, as the case may be, receives any monies in connection with
the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent
of all or any of the rights, remedies, powers and privileges of the
Agent under this Credit Agreement or any of the other Loan Documents or
in respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such
monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Lenders may determine; provided, however,
that distributions in respect of such obligations shall be made (i)
pari passu among Obligations with respect to the Agent's fee payable
pursuant to Section 6.2 and all other Obligations and (ii) Obligations
owing to the Lenders with respect to each type of Obligation such as
interest, principal, fees and expenses, shall be made among the Lenders
pro rata; and provided, further, that the Agent may in its discretion
make proper allowance to take into account any Obligations not then due
and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Agent of all of the Obligations, to the payment of any obligations
required to be paid pursuant to Section 9-504(1)(c) of the Uniform
Commercial Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Lenders to any of the Borrowers and any securities or other property of the
Borrowers in the possession of such Lender may be applied to or set off by such
Lender against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrowers to such Lender. Each of the Lenders
agrees with each other Lender that (i) if an amount to be set off is to be
applied to Indebtedness of a Borrower to such Lender, other than Indebtedness
evidenced by the Notes held by
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such Lender or constituting Reimbursement Obligations owed to such Lender, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Notes held by such Lender or constituting
Reimbursement Obligations owed to such Lender, and (ii) if such Lender shall
receive from any of the Borrowers, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes held by, or constituting Reimbursement Obligations owed to, such
Lender by proceedings against any of the Borrowers at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by, or Reimbursement Obligations owed to, such Lender any
amount in excess of its ratable portion of the payments received by all of the
Lenders with respect to the Notes held by, and Reimbursement Obligations owed
to, all of the Lenders, such Lender will make such disposition and arrangements
with the other Lenders with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Lender receiving in respect of the Notes held by it or
Reimbursement Obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; provided that if all or any part of such excess payment
is thereafter recovered from such Lender, such disposition and arrangements
shall be rescinded and the amount restored to the extent of such recovery, but
without interest.
16. THE AGENT.
16.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of
each of the Lenders and to exercise all such powers as are hereunder
and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been
assumed by the Agent.
(b) The relationship between the Agent and each of the Lenders
is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention,
the independent contractual relationship between the Agent and each of
the Lenders. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless
a "representative" of the Lenders, as that term is defined in Article 1
of the Uniform Commercial Code, for purposes of actions for the benefit
of the Lenders and the Agent with respect to all collateral security
and guaranties contemplated by the Loan Documents. Such actions include
the designation
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of the Agent as "secured party", "mortgagee" or the like on all
financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust
in collateral security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Lenders and the
Agent.
16.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrowers. Without limiting the foregoing, the
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 Agent's direction, any or all of the Agent's
rights and duties under this Credit Agreement and the other Loan Documents, and
the 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 Agent's direction, any or all of the 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 this Section 16 and Section 17 to the same extent, and subject to
the same limitations, as the Agent, for so long as such Fronting Bank or other
financial institution acts in such capacity.
16.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrowers or any of their
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes or to inspect
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any of the properties, books or records of the Borrowers or any of their
Subsidiaries. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by any of the Borrowers or any holder
of any of the Notes shall have been duly authorized or is true, accurate and
complete. The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Lenders,
with respect to the credit worthiness or financial conditions of the Borrowers
or any of their Subsidiaries. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO AGENT. A payment by any of the Borrowers
to the Agent hereunder or any of the other Loan Documents for the
account of any Lender shall constitute a payment to such Lender. The
Agent agrees promptly to distribute to each Lender such Lender's pro
rata share of payments received by the Agent for the account of the
Lenders except as otherwise expressly provided herein or in any of the
other Loan Documents.
16.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Notes or under any of the other Loan Documents
might involve it in liability, it may refrain from making distribution
until its right to make distribution shall have been adjudicated by a
court of competent jurisdiction. If a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is
to be repaid, each Person to whom any such distribution shall have been
made shall either repay to the Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such
manner and to such Persons as shall be determined by such court.
16.5.3. DELINQUENT LENDERS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Lender that fails (i) to make available to the Agent its
pro rata share of any Loan or to purchase any Letter of Credit
Participation, (ii) to make payment on the due date therefor of any
amount due to 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 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
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Reimbursement Obligations, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of,
their respective pro rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. The Delinquent Lender hereby authorizes the
Agent to distribute such payments to the nondelinquent Lenders in
proportion to their respective pro rata shares of all outstanding Loans
and Unpaid Reimbursement Obligations. A Delinquent Lender shall be
deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Loans and
Unpaid Reimbursement Obligations of the nondelinquent Lenders, the
Lenders' respective pro rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
16.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
16.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrowers as
required by Section 17), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Notes, or any of the other Loan
Documents or the transactions contemplated or evidenced hereby or thereby, or
the Agent's actions taken hereunder or thereunder, except to the extent that any
of the same shall be directly caused by the Agent's willful misconduct or gross
negligence.
16.8. AGENT AS LENDER. In its individual capacity, BankBoston shall
have the same obligations and the same rights, powers and privileges in respect
to 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 the Agent.
16.9. RESIGNATION OF AGENT. The Agent may resign at any time by giving
sixty (60) days prior written notice thereof to the Lenders and TransTechnology.
Upon any such resignation, the Majority Lenders shall have the right to appoint
a successor Agent. Unless a Default or Event of Default shall have occurred and
be continuing, such successor Agent shall be reasonably acceptable to
TransTechnology. If no successor Agent shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a financial institution having a rating of not less than A or its
equivalent by Standard & Poor's Corporation. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become
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vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
17. EXPENSES.
The Borrowers jointly and severally (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 Agent or any of
the Lenders (other than taxes based upon the Agent's or any Lender's net income)
on or with respect to the transactions contemplated by this Credit Agreement
(the Borrowers hereby agreeing to indemnify the Agent and each Lender with
respect thereto), (iii) the reasonable fees, expenses and disbursements of the
Agent's Special Counsel or any local counsel to the Agent incurred in connection
with the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (iv) the
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums, asset and/or collateral examiners' and commercial finance examiners'
fees and surveyor, engineering and appraisal charges, (v) any fees, costs,
expenses and bank charges, including bank charges for returned checks, incurred
by the Agent in establishing, maintaining or handling agency accounts, lock box
accounts and other accounts for the collection of any of the Collateral; (vi)
all reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, which attorneys may be employees of any Lender or the
Agent, and reasonable consulting, accounting, appraisal, investment banking and
similar professional fees and charges) incurred by any Lender or the Agent in
connection with (A) the enforcement of or preservation of rights under any of
the Loan Documents against any of the Borrowers or their Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(B) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Lender's or the Agent's relationship with
any of the Borrowers or their Subsidiaries and (vii) all reasonable fees,
expenses and disbursements of any Lender or the Agent incurred in connection
with UCC searches, searches of registers of charges and commercial or companies
registers, UCC filings, mortgage recordings or other filings on recordings of
security documents evidencing the Agent's lien on the Collateral. The covenants
of this Section 17 shall survive payment or satisfaction of all other
Obligations.
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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 Agent and the Lenders from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby including, without limitation, (i) any actual or proposed
use by any of the Borrowers or their Subsidiaries of the proceeds of any of the
Loans or Letters of Credit, (ii) the reversal or withdrawal of any provisional
credits granted by the Agent or any Lender upon the transfer of funds from bank
agency or lock box accounts or in connection with the provisional honoring of
checks or other items, (iii) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of any of the Borrowers or
their Subsidiaries comprised in the Collateral, (iv) any of the Borrowers or
their Subsidiaries entering into or performing this Credit Agreement or any of
the other Loan Documents or (v) with respect to the Borrowers and their
Subsidiaries and their respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the preparation
therefor, the Lenders and the Agent shall be entitled to select their own
counsel and, in addition to the foregoing indemnity, the Borrowers jointly and
severally agree to pay promptly the reasonable fees and expenses of such
counsel. If, and to the extent that the obligations of the Borrowers under this
Section 18 are unenforceable for any reason, the Borrowers hereby jointly and
severally agree to make the maximum contribution to the payment in satisfaction
of such obligations which is permissible under applicable law. The covenants
contained in this Section 18 shall survive payment or satisfaction in full of
all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of any of the Borrowers or their Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Lenders and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by any of the Lenders of any of the Loans and
the issuance, extension or renewal of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or any amount due under this Credit Agreement or the Notes or any of
the other Loan Documents remains outstanding or any Lender has any obligation to
make any Loans or the Issuing Bank has any obligation to issue, extend or renew
any Letter of Credit, and
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for such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate or other paper delivered
to any Lender or the Agent at any time by or on behalf of TransTechnology or any
of its Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by
TransTechnology or such Subsidiary hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT. 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 Revolving Credit Commitment Percentage and Revolving Credit
Commitment and the same portion of the Revolving Credit Loans at the time owing
to it, the Revolving Credit Notes held by it and the same portion of its
participating interest in the risk relating to any Letters of Credit or Fronted
Loans); provided that (i) each of the 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 shall
be required for any assignment to a Lender or an Affiliate 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 shall be in an amount that is at least
$10,000,000 or a greater multiple of $5,000,000, and (iv) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit D hereto (an "Assignment and Acceptance"), together with any
Revolving Credit Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in any such Assignment and Acceptance, which effective date shall be at least
five (5) Business Days after the execution thereof, (i) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder, and (ii) the
assigning Bank shall, to the extent provided in such assignment and upon payment
to the Agent of the registration fee referred to in Section 20.3, be released
from its obligations under this Credit Agreement.
20.2. 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
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Documents or any other instrument or document furnished pursuant hereto
or the attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of TransTechnology and its Subsidiaries or any other Person primarily
or secondarily liable in respect of any of the Obligations, or the
performance or observance by any of the Borrowers and their
Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under
this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Lender, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Lender;
(h) such assignee 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 Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the
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recordation of (a) the names and addresses of the Lenders, and (b) the Revolving
Credit Commitment Percentages and the principal amounts of the Revolving Credit
Loans 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 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 the original Lender, the assigning Lender agrees
to pay to the 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 Agent shall (i) record the information contained therein in
the Register, and (ii) give prompt notice thereof to TransTechnology and the
Lenders (other than the assigning Lender). Within five (5) Business Days after
receipt of such notice, TransTechnology, at its own expense, shall execute and
deliver to the Agent 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
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 Agent, within five (5) days of
issuance of such new Notes pursuant to this Section 20.4, TransTechnology shall
deliver an opinion of counsel, which may be the general counsel of
TransTechnology, addressed to the recipients of the new Notes and the Agent,
relating to the due authorization, execution and delivery of such new Notes and
the legality, validity and binding effect thereof, in form and substance
satisfactory to the recipients of the new Notes, the Agent and the Agent's
Special Counsel. The surrendered Notes shall be cancelled and returned to
TransTechnology.
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
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such Lender as it relates to such participant, reduce the amount of any
commitment fees or Letter of Credit Fees to which such participant is entitled
or extend any regularly scheduled payment date for principal or interest.
20.6. DISCLOSURE. The Borrowers agree that in addition to disclosures
made in accordance with standard and customary banking practices any Lender may
disclose information obtained by such Lender pursuant to this Credit Agreement
to assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH TRANSTECHNOLOGY.
If any assignee Lender is an Affiliate of TransTechnology, then any
such assignee Lender shall have no right to vote as a Lender hereunder or under
any of the other Loan Documents for purposes of granting consents or waivers or
for purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to Section
14.1 or Section 14.2, and the determination of the Majority Lenders shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Lender's interest in any of the Loans. If any
Lender sells a participating interest in any of the Loans or Reimbursement
Obligations to a participant, and such participant is TransTechnology or an
Affiliate of TransTechnology, then such transferor Lender shall promptly notify
the Agent of the sale of such participation. A transferor Lender shall have no
right to vote as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to Section 14.1 or Section 14.2 to the
extent that such participation is beneficially owned by TransTechnology or any
Affiliate of TransTechnology, and the determination of the Majority Lenders
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 Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. If the
Reference Bank transfers all of its interest, rights and obligations under this
Credit Agreement, the Agent shall, in consultation with TransTechnology and with
the consent of
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TransTechnology and the Majority Lenders, appoint another Lender to act as the
Reference Bank hereunder, and in the absence of such consent the 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 Eurodollar Rate Loans under the loan facilities set forth herein prior to
completion of the 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 Agent, at 100 Federal Street, Boston,
Massachusetts 02110, USA, Attention: Maura C. Wadlinger, Vice
President, or such other address for notice as the Agent shall last
have furnished in writing to the Person giving the notice;
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(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 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.
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24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
26. WAIVER OF JURY TRIAL.
Each of the Borrowers hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Credit Agreement, the Notes or any of the other Loan Documents, any rights
or obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, each of the Borrowers hereby waives
any right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Each of the Borrowers
(i) certifies that no representative, agent or attorney of any Lender or the
Agent has represented, expressly or otherwise, that such Lender or the Agent
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that each of the Agent and the Lenders has been induced to
enter into this Credit Agreement, the other Loan Documents to which it is a
party by, among other things, the waivers and certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
27.1. VOTING PROCEDURES.
(a) Except as set forth in clauses (b) - (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
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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
Revolving Credit 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 any revolving credit commitment fee payable
hereunder or permit any subordination of the principal or interest on any such
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 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 Agent, no amendment, consent or waiver shall affect the
right or duties of the Agent, including without limitation the amount of any
Agent's fees payable hereunder or the provisions of Section 16.
(e) 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 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 Agent, other than as specifically permitted by this
Agreement or in the other Loan Documents, without the prior unanimous written
consent of the
<PAGE> 102
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Lenders for such release, provided, however, that any other release of
Collateral may be agreed to by the Agent alone, unless specifically prohibited
by this Agreement or any of the other Loan Agreements.
(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 Agent, the Fronting Banks and the Lenders (with respect to any
amendment to Section 6.12.2) or the Agent and the Lenders (with respect to any
amendment of Section 16), provided that no such amendment shall impose any
obligation on the Borrowers.
27.3. COURSE OF DEALING. No course of dealing or delay or omission on
the part of the Agent or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
any of the Borrowers shall entitle any of the Borrowers to other or further
notice or demand in similar or other circumstances.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
29.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY.
TransTechnology 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 Agent and each Lender any information delivered to
such Section 20 Subsidiary by TransTechnology or any of its Subsidiaries, and
(b) the Agent and each Lender to share with such Section 20 Subsidiary any
information delivered to the 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
<PAGE> 103
-96-
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 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 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 Agent, (d) to bank examiners or any other regulatory
authority having jurisdiction over any of the Lenders or the Agent, (e) to the
Agent, any Lender or any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Lenders, the 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.
29.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Lenders and the 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 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 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 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 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 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
<PAGE> 104
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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. ORIGINAL CREDIT AGREEMENT SUPERSEDED. This Credit Agreement shall
on the Closing Date amend and restate the Original 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 Original Credit Agreement shall
be evidenced by the Credit Agreement and the other Loan Documents, as defined
herein, and the Loans as defined in the Original Credit Agreement, collectively,
shall be converted to the Loans as defined herein.
30.2. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All interest and
fees and expenses, if any, owing or accruing under or in respect of the Original
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
Original Credit Agreement, as if the Original Credit Agreement were still in
effect. Commencing on the Closing Date, the commitment fee shall be payable by
the Borrowers to the Agent for the account of the Lenders in accordance with
Section 2.2.
<PAGE> 105
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, Chief Financial
Officer and Treasurer
TRANSTECHNOLOGY SEEGER-ORBIS GMBH
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
BANKBOSTON, N.A., individually and as
Agent, Issuing Bank and Sterling Fronting
Bank
By: /s/ Maura Wadlinger
---------------------------------------
Name: Maura Wadlinger
Title: Vice President
<PAGE> 106
-2-
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank
By: /s/ Florian Korallus
---------------------------------------
Name: Florian Korallus
Title: Vice President
By: /s/ Michael Leitzbach
---------------------------------------
Name: Michael Leitzbach
Title: Assistant Treasurer
ABN AMRO BANK N.V.
By: /s/ Lisa Megeaski
---------------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Michael A. Kowalczuk
---------------------------------------
Name: Michael A. Kowalczuk
Title: Corporate Banking Officer
THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Juan J. Duarte
---------------------------------------
Name: Juan J. Duarte
Title: Vice President
<PAGE> 107
THE BANK OF NEW YORK
By: /s/ Jeffrey S. Witte
---------------------------------------
Name: Jeffrey S. Witte
Title: Vice President
SUMMIT BANK
By: /s/ Bruce A. Gray
---------------------------------------
Name: Bruce A. Gray
Title: Vice President
Large Corporate Group
Summit Bank
<PAGE> 1
Exhibit 10.9
AMENDMENT AGREEMENT NO. 1
dated as of August 21, 1998
to that certain
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT AGREEMENT NO. 1 (this "Amendment"), dated as of August
21, 1998, is by and among TRANSTECHNOLOGY CORPORATION ("TransTechnology"),
TRANSTECHNOLOGY SEEGER-ORBIS GMBH ("GmbH"), ANDERTON INTERNATIONAL LIMITED
("Limited" and, together with TransTechnology and GmbH, the "Borrowers"), the
Lenders listed on Schedule 1 to the Credit Agreement (as defined below),
BANKBOSTON, N.A., acting through its London Branch, as Sterling Fronting Bank,
BHF-BANK AKTIENGESELLSCHAFT, as DM Fronting Bank, BANKBOSTON, N.A., as Issuing
Bank, and BANKBOSTON, N.A., as Agent for the Lenders, the Fronting Banks and the
Issuing Bank (in such capacity, the "Agent"). Capitalized terms used herein
unless otherwise defined shall have the respective meanings set forth in the
Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Amended and Restated Credit Agreement dated as of June 30, 1995, and
amended and restated as of July 24, 1998 (as so amended and restated, the
"Credit Agreement");
WHEREAS, the Borrowers have requested certain amendments to the Credit
Agreement and upon the terms and conditions hereinafter set forth, the Agent and
the Lenders have agreed to such amendments; and
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto hereby agree as follows:
Section 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended with effect from the Effective Date (as defined in Section 6 of
this Amendment) as follows:
(a) Section 8.17 of the Credit Agreement ("Use of Proceeds") is hereby
amended by deleting such section in its entirety and substituting therefor the
following new Section 8.17:
"8.17. USE OF PROCEEDS. The proceeds of the Loans shall be used to
refinance certain Indebtedness of the Borrowers under the Original Credit
Agreement, to finance Approved Acquisitions, for working capital and general
corporate purposes
<PAGE> 2
2
of the Borrowers, and to finance certain repurchases of TransTechnology's
capital stock to the extent permitted under Section 10.4. TransTechnology will
obtain Letters of Credit solely for working capital and general corporate
purposes. Except for Loans the proceeds of which are used to finance repurchases
of TransTechnology's capital stock to the extent permitted under Section
10.4(b), 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 Borrowers or any Subsidiary or other Affiliate of any of the
Borrowers."
(b) Section 9.12 of the Credit Agreement ("Use of Proceeds") is hereby
amended by deleting such section in its entirety and substituting therefor the
following new Section 9.12:
"9.12. USE OF PROCEEDS. The proceeds of the Loans shall be
used to refinance certain Indebtedness of the Borrowers under the
Original Credit Agreement, to finance Approved Acquisitions, for
working capital and general corporate purposes of the Borrowers and to
finance certain repurchases of TransTechnology's capital stock to the
extent permitted under Section 10.4(b). TransTechnology will obtain
Letters of Credit solely for working capital and general corporate
purposes."
(c) Section 10.4 of the Credit Agreement ("Distributions") is hereby
amended by deleting such section in its entirety and substituting therefor the
following new Section 10.4:
"10.4. DISTRIBUTIONS. TransTechnology will not make, or permit
any of its Subsidiaries to make, any Distributions except that, so long
as no Default or Event of Default has occurred and is continuing or
would result therefrom, (a) TransTechnology may make Distributions on
outstanding shares of its capital stock with respect to each fiscal
quarter commencing on or after April 1, 1998, within ninety (90) days
following the end of such fiscal quarter, in an aggregate amount of all
Distributions declared and/or paid pursuant to this Section 10.4(a)
with respect to each Reference Period ending after the date hereof not
exceeding twenty-five percent (25%) of Consolidated Net Income for such
Reference Period, and (b) in addition to making Distributions permitted
under Section 10.4(a),
<PAGE> 3
3
TransTechnology may repurchase shares of its capital stock in an
aggregate amount not to exceed at any time $5,000,000."
Section 2. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be conditioned upon the satisfaction of the following conditions
precedent:
Section 2.1. DELIVERY OF AMENDMENT. The Agent shall have received
copies of this Amendment executed and delivered by each of the Borrowers, each
of the Guarantors, and the Majority Lenders.
Section 2.2. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
Section 2.3. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default.
Section 2.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
Section 3. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the
Lenders as follows:
(a) The representations and warranties of such Borrower and of each
Guarantor contained in the Credit Agreement and the other Loan Documents to
which such Borrower or Guarantor, as the case may be, is a party were true and
correct in all material respects when made and continue to be true and correct
in all material respects on the date hereof, except that the financial
statements referred to in the representations and warranties contained in the
Credit Agreement shall be the financial statements of TransTechnology and its
Subsidiaries most recently delivered to the Agent, and except as such
representations and warranties are affected by the transactions contemplated
hereby;
<PAGE> 4
4
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval, consent of, or filing with, any governmental agency or authority,
or any other person, association or entity, which bears on the validity of this
Amendment and which is required by law or any regulation or rule of any agency
or authority, or other person, association or entity, (iii) do not violate any
provisions of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which such Borrower is named, or any provision of
the charter documents or by-laws of such Borrower, (iv) do not result in any
breach of or constitute a default under any agreement or instrument to which
such Borrower is a party or to which it or any of its properties are bound,
including without limitation any indenture, loan or loan agreement, lease, debt
instrument or mortgage, except for such breaches and defaults which would not
have a material adverse effect on such Borrower and its Subsidiaries taken as a
whole, and (v) do not result in or require the creation or imposition of any
mortgage, deed of trust, pledge or encumbrance of any nature upon any of the
assets or properties of such Borrower; and
(c) This Amendment and the Credit Agreement as amended hereby
constitute the legal, valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
provided that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors, and (ii) enforcement may be
subject to general principles of equity, and the availability of the remedies of
specific performance and injunctive relief may be subject to the discretion of
the court before which any proceeding for such remedies may be brought.
Section 4. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
Section 5. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
<PAGE> 5
5
Section 6. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall be
deemed to be effective as of the date hereof (the "Effective Date").
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
Agreement No. 1 as a sealed instrument as of the date first set forth above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President, Secretary
and General Counsel
TRANSTECHNOLOGY SEEGER-ORBIS GMBH
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
By: /s/ Sven-Uwe Wolber
---------------------------------------
Name: Sven-Uwe Wolber
Title: Managing Director
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
<PAGE> 6
6
BANKBOSTON, N.A., individually and as
Agent, Issuing Bank and Sterling Fronting
Bank
By: /s/ J. Nicholas Cole
---------------------------------------
Name: J. Nicholas Cole
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank
By: /s/ Florian Korallus
---------------------------------------
Name: Florian Korallus
Title: Vice President
By: /s/ Beate Ortel
---------------------------------------
Name: Beate Ortel
Title: Assistant Treasurer
ABN AMRO BANK N.V.
By: /s/ Lisa Megeaski
---------------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Donald Sutton
---------------------------------------
Name: Donald Sutton
Title: Vice President
<PAGE> 7
7
THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Juan J. Duarte
---------------------------------------
Name: Juan J. Duarte
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Steven Castellucci
---------------------------------------
Name: Steven Castellucci
Title: Vice President
SUMMIT BANK
By:
---------------------------------------
Name:
Title:
<PAGE> 8
8
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY ACQUISITION
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
PALNUT FASTENERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
INDUSTRIAL RETAINING RING
COMPANY
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
RETAINERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 9
9
RANCHO TRANSTECHNOLOGY
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SYSTEMS
& SERVICES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
ELECTRONIC CONNECTIONS AND
ASSEMBLIES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SSP INDUSTRIES
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 10
10
SSP INTERNATIONAL SALES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TCR CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
AEROSPACE RIVET
MANUFACTURERS CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 11
11
NORCO, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 12
12
The Guarantors under and as defined in the English Guarantees hereby acknowledge
that they have read and are aware of the provisions of this Amendment and hereby
reaffirm their absolute and unconditional guarantee of the Obligations referred
to in the English Guarantees, as such English Guarantees may be amended in
connection with this Amendment.
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Lennart Jemsby
---------------------------------------
Name: Ulf Lennart Jemsby
Title: Managing Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
ANDERTON (PREDECESSORS)
LIMITED
By: /s/ Ulf Lennart Jemsby
---------------------------------------
Name: Ulf Lennart Jemsby
Title: Managing Director
By: /s/ Daran C. Brown
---------------------------------------
Name: Daran C. Brown
Title: Managing Director
<PAGE> 1
Exhibit 10.10
AMENDMENT AGREEMENT NO. 2
dated as of November 27, 1998
to that certain
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT AGREEMENT NO. 2 (this "Amendment"), dated as of November
27, 1998, is by and among TRANSTECHNOLOGY CORPORATION ("TransTechnology"),
TRANSTECHNOLOGY SEEGER-ORBIS GmbH ("GmbH"), ANDERTON INTERNATIONAL LIMITED
("Limited" and, together with TransTechnology and GmbH, the "Borrowers"), the
Lenders listed on Schedule 1 to the Credit Agreement (as defined below),
BANKBOSTON, N.A., acting through its London Branch, as Sterling Fronting Bank,
BHF-BANK AKTIENGESELLSCHAFT, as DM Fronting Bank, BANKBOSTON, N.A., as Issuing
Bank, and BANKBOSTON, N.A., as Agent for the Lenders, the Fronting Banks and the
Issuing Bank (in such capacity, the "Agent"). Capitalized terms used herein
unless otherwise defined shall have the respective meanings set forth in the
Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Amended and Restated Credit Agreement dated as of June 30, 1995, and
amended and restated as of July 24, 1998, and as further amended by Amendment
Agreement No. 1 dated as of August 21, 1998 (as so amended and restated, the
"Credit Agreement");
WHEREAS, the Borrowers have requested certain amendments to the Credit
Agreement to increase the maximum amount of Revolving Credit Loans available by
$20,000,000 to $145,000,000, and, upon the terms and conditions hereinafter set
forth, the Agent and the Lenders have agreed to such amendments; and
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto hereby agree as follows:
Section 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended with effect from the Effective Date (as defined in SECTION 7 of
this Amendment) as follows:
(a) Schedule 1 to the Credit Agreement is hereby deleted in its
entirety and Schedule 1 attached hereto as Exhibit A is hereby substituted
therefor.
(b) The definition of "DM Base Rate" in SECTION 1.1 of the Credit
Agreement is hereby deleted in its entirety and the following definition is
hereby substituted therefor:
"DM Base Rate. The annual rate of interest announced from time to time
by the DM Fronting Bank as its "prime rate" for loans denominated in
Deutschmarks."
<PAGE> 2
2
Section 2. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be conditioned upon the satisfaction of the following conditions
precedent:
Section 2.1. DELIVERY OF DOCUMENTS. The Borrowers shall have delivered
to the Agent: (a) this Amendment executed and delivered by each of the
Borrowers, the Guarantors, and the Lenders; (b) an Amended and Restated
Revolving Credit Note payable to the order of each Lender that is hereby
increasing its Revolving Credit Commitment in a principal amount equal to such
Lender's Revolving Credit Commitment as set forth on Schedule 1 attached as
Exhibit A hereto; (c) amendments to the Mortgages set forth on Exhibit B hereto
satisfactory in form and substance to the Agent's counsel in order to reflect
the increase in the Total Revolving Credit Commitment contemplated hereby; and
(d) the legal opinion of Gerald C. Harvey, Esq., general counsel for
TransTechnology, dated as of the Effective Date (as defined in SECTION 7 of this
Amendment), and satisfactory in form and substance to the Agent's counsel.
Section 2.2. PAYMENT OF FEES. The Borrowers shall have paid to the
Agent, the Arranger and the Lenders whose Revolving Credit Commitments are being
increased pursuant to the amendment in SECTION 1 hereof, or who are assuming new
Revolving Credit Commitments pursuant thereto, fees in the amounts set forth in
the Fee Letter of even date herewith.
Section 2.3. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
Section 2.4. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default.
Section 2.5. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
Section 3. ASSIGNMENT AND ACCEPTANCE.
(a) For the purposes of the assignments contemplated herein, the
provisions of Section 20.1 of the Credit Agreement are hereby waived and the
parties hereto hereby consent and agree to such assignments.
(b) Each of BankBoston, N.A. and The Bank of New York (collectively,
the "Assignors") hereby sells and assigns to ABN AMRO BANK N.V., The First
National Bank of Chicago and Summit Bank (collectively, the "Assignees") without
recourse to the Assignors, and each Assignee hereby purchases and assumes from
each Assignor, a certain
<PAGE> 3
3
percentage of each such Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below), including, without
limitation, such percentage interest in each Assignor's Commitment as in effect
on the Effective Date (as defined below), and the outstanding amount of the
Loans, owing to each Assignor on the Effective Date (as defined below) and the
Notes held by each Assignor (such interest being hereinafter referred to as the
"Assigned Portion") such that, after giving effect to the assignments
contemplated hereby, the respective Commitments and Revolving Credit Commitment
Percentage of each Assignor and the respective Commitments and Revolving Credit
Commitment Percentage of each Assignee (after giving effect to the increase of
the aggregate amount of the Total Revolving Credit Commitment contemplated by
this Amendment) shall be as set forth on Schedule 1 attached hereto.
Notwithstanding any term or provision of Section 20 of the Credit Agreement to
the contrary, the execution and delivery of this Amendment by each Assignor and
each Assignee shall constitute an Assignment and Acceptance delivered in
accordance with the Credit Agreement and shall be effective in respect of the
assignments contemplated hereby.
(c) Each Assignor (i) represents and warrants (as to itself only and
not as to the other Assignors) that, as of the Effective Date (as defined
below), its Commitment and Revolving Credit Commitment Percentage is 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, any
of 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 adverse claim
or encumbrance created by it; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or the Guarantors 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 or the Guarantors 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) requests that in
connection with the assignments set forth herein the Borrowers exchange the
Revolving Credit Notes for new Revolving Credit Notes, each dated as of the
Effective Date (as defined below) and payable to the order of each Assignee in
the principal amount of the Commitment set forth opposite such Assignee's name
on Schedule 1 to the Credit Agreement, as amended hereby, and each such new note
shall be deemed to be a "Revolving Credit Note" under the Credit Agreement.
(d) Each Assignee (i) represents and warrants (as to itself only and
not as to any other Assignee) that it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the financial
statements referred to in Section 9.4 of the Credit Agreement and such other
documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Amendment, that it is an Eligible
Assignee under the Credit Agreement and that 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 to render the same the legal,
valid and binding obligation of each such 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)
<PAGE> 4
4
agrees that it will, independently and without reliance upon any Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents; and (iii) appoints and authorizes the 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 Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, and agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement and the other Loan Documents are required to
be performed by it as a Lender.
(e) Upon the effectiveness of the assignment contemplated hereby, each
Assignor shall return to TransTechnology its Revolving Credit Note, marked
"Cancelled".
Section 4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Lenders as follows:
(a) The representations and warranties of such Borrower and of each
Guarantor contained in the Credit Agreement and the other Loan Documents to
which such Borrower or Guarantor, as the case may be, is a party were true and
correct in all material respects when made and continue to be true and correct
in all material respects on the date hereof, except that the financial
statements referred to in the representations and warranties contained in the
Credit Agreement shall be the financial statements of TransTechnology and its
Subsidiaries most recently delivered to the Agent, and except as such
representations and warranties are affected by the transactions contemplated
hereby;
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval or consent of, or filing with, any governmental agency or
authority, or any other person, association or entity, which bears on the
validity or enforceability of this Amendment and which is required by law or any
regulation or rule of any agency or authority, or other person, association or
entity, (iii) do not violate any provisions of any order, writ, judgment,
injunction, decree, determination or award presently in effect in which such
Borrower is named, or any provision of the charter documents or by-laws of such
Borrower, (iv) do not result in any breach of or constitute a default under any
agreement or instrument to which such Borrower is a party or to which it or any
of its properties are bound, including without limitation any indenture, credit
or loan agreement, lease, debt instrument or mortgage, except for such breaches
and defaults which would not have a material adverse effect on such Borrower and
its Subsidiaries taken as a whole, and (v) do not result in or require the
creation or imposition of any mortgage, deed of trust, pledge or encumbrance of
any nature upon any of the assets or properties of such Borrower; and
(c) This Amendment and the Credit Agreement as amended hereby
constitute the legal, valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
provided that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors, and (ii) enforcement may be
subject to general principles of equity, and the availability of the remedies of
specific
<PAGE> 5
5
performance and injunctive relief may be subject to the discretion of the court
before which any proceeding for such remedies may be brought.
Section 5. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
Section 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
Section 7. EFFECTIVE Date. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall be
deemed to be effective as of the date hereof (the "Effective Date").
Remainder of page intentionally left blank.
<PAGE> 6
6
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment Agreement
No. 2 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, Chief Financial
Officer and Treasurer
TRANSTECHNOLOGY SEEGER-ORBIS
GMBH
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
BANKBOSTON, N.A., individually and as
Agent, Issuing Bank and Sterling
Fronting Bank
By: /s/ Maura C. Wadlinger
---------------------------------------
Name: Maura C. Wadlinger
Title: Vice President
<PAGE> 7
7
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank
By: /s/ Matthias Landskron
---------------------------------------
Name: Matthias Landskron
Title: Vice President
By: /s/ Beate Ortel
---------------------------------------
Name: Beate Ortel
Title: Assistant Treasurer
ABN AMRO BANK N.V.
By: /s/ Lisa Megeaski
---------------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Donald Sutton
---------------------------------------
Name: Donald Sutton
Title: Vice President
THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Juan J. Duarte
---------------------------------------
Name: Juan J. Duarte
Title: Vice President
<PAGE> 8
8
THE BANK OF NEW YORK
By: /s/ Steven P. Castellucci
---------------------------------------
Name: Steven P. Castellucci
Title: Vice President
SUMMIT BANK
By: /s/ Bruce A. Gray
---------------------------------------
Name: Bruce A. Gray
Title: Vice President
Large Corporate Group
Summit Bank
<PAGE> 9
9
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY ACQUISITION
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
PALNUT FASTENERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
INDUSTRIAL RETAINING RING
COMPANY
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
RETAINERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 10
10
RANCHO TRANSTECHNOLOGY
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SYSTEMS &
SERVICES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
ELECTRONIC CONNECTIONS AND
ASSEMBLIES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SSP INDUSTRIES
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 11
11
SSP INTERNATIONAL SALES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TCR CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
AEROSPACE RIVET
MANUFACTURERS CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 12
12
NORCO, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 13
13
The Guarantors under and as defined in the English Guarantees hereby acknowledge
that they have read and are aware of the provisions of this Amendment and hereby
reaffirm their absolute and unconditional guarantee of the Obligations referred
to in the English Guarantees, as such English Guarantees may be amended in
connection with this Amendment.
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
ANDERTON (PREDECESSORS)
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Daran Brown
---------------------------------------
Name: Daran Brown
Title: Managing Director
<PAGE> 14
EXHIBIT A
SCHEDULE 1
<TABLE>
<CAPTION>
BANK REVOLVING CREDIT REVOLVING CREDIT COMMITMENT
(INCLUDING EURODOLLAR LENDING OFFICE COMMITMENT PERCENTAGE
UNLESS OTHERWISE STATED)
<S> <C> <C>
BANKBOSTON, N.A. $44,000,000.00 30.344828%
100 Federal Street
Boston, MA 02110
Attn: Maura C. Wadlinger
Phone: (617) 434-6998
Fax: (617) 434-1955
ABN AMRO BANK N.V. $30,000,000.00 20.689655%
500 Park Avenue - 2nd Floor
New York, NY 10022
Attn: Lisa Megeaski
Phone: (212) 446-4398
Fax: (212) 446-4237
THE FIRST NATIONAL BANK OF CHICAGO $30,000,000.00 20.689655%
153 West 51st Street - Mail Suite 4000
New York, NY 10019
Attn: Randall Faust
Phone: (212) 373-1276
Fax: (212) 373-1404
THE BANK OF NEW YORK $23,000,000.00 15.862069%
385 Rifle Camp Road
West Paterson, NJ 07424
Attn: Stephen Castellucci
Phone: (973) 357-7450
Fax: (973) 357-7705
SUMMIT BANK $18,000,000.00 12.413793%
750 Walnut Avenue
Cranford, NJ 07016
Attn: Bruce Gray
Phone: (908) 709-5340
Fax: (908) 709-6433
TOTAL $145,000,000.00 100.0%
</TABLE>
<PAGE> 15
EXHIBIT B
1. First Amendment to Open-End Mortgage (Open-End Mortgage Deed and
Security Agreement) - Norco, Inc.'s Connecticut property
2. Second Amendment to Open-End Mortgage, Assignment of Leases and
Security Agreement - TransTechnology Corporation's Pennsylvania
property
3. Second Amendment to First Mortgage, Assignment of Leases and Security
Agreement - TransTechnology Corporation's Mountainside, New Jersey
property
4. Second Amendment to First Mortgage, Assignment of Leases and Security
Agreement - TransTechnology Corporation's Union, New Jersey property
5. Second Amendment to First Mortgage, Assignment of Leases and Security
Agreement - Retainers, Inc.'s New Jersey property
<PAGE> 1
Exhibit 10.11
AMENDMENT AGREEMENT NO. 3
dated as of December 23, 1998
to that certain
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT AGREEMENT NO. 3 (this "Amendment"), dated as of December
23, 1998, is by and among TRANSTECHNOLOGY CORPORATION ("TransTechnology"),
TRANSTECHNOLOGY SEEGER-ORBIS GmbH ("GmbH"), ANDERTON INTERNATIONAL LIMITED
("Limited" and, together with TransTechnology and GmbH, the "Borrowers"), the
Lenders listed on Schedule 1 to the Credit Agreement (as defined below),
BANKBOSTON, N.A., acting through its London Branch, as Sterling Fronting Bank,
BHF-BANK AKTIENGESELLSCHAFT, as DM Fronting Bank, BANKBOSTON, N.A., as Issuing
Bank, and BANKBOSTON, N.A., as Agent for the Lenders, the Fronting Banks and the
Issuing Bank (in such capacity, the "Agent"). Capitalized terms used herein
unless otherwise defined shall have the respective meanings set forth in the
Credit Agreement.
WHEREAS, the Borrowers, the Lenders and the Agent are parties to that
certain Amended and Restated Credit Agreement dated as of June 30, 1995, and
amended and restated as of July 24, 1998, and as further amended by Amendment
Agreement No. 1 dated as of August 21, 1998, and as further amended by Amendment
Agreement No. 2 dated as of November 27, 1998 (as so amended and restated, the
"Credit Agreement");
WHEREAS, the Borrowers have requested certain amendments to the Credit
Agreement to extend the time permitted to enter into interest rate protection
arrangements satisfactory to the Agent, and, upon the terms and conditions
hereinafter set forth, the Agent and the Lenders have agreed to such amendments;
and
WHEREAS, the Lenders, the Agent and the Borrowers have agreed to amend
the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto hereby agree as follows:
Section 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is
hereby amended with effect from the Effective Date (as defined in SECTION 6 of
this Amendment) as follows:
(a) INTEREST RATE PROTECTION. SECTION 9.15 of the Credit Agreement is
hereby amended by deleting the phrase "December 31, 1998" wherever such phrase
appears in said Section 9.15 and substituting in lieu thereof the phrase "April
30, 1999".
Section 2. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be conditioned upon the satisfaction of the following conditions
precedent:
Section 2.1. DELIVERY OF DOCUMENTS. This Amendment shall have been
executed and delivered by each of the Borrowers, the Guarantors, and the
Majority Lenders to the Agent.
<PAGE> 2
-2-
Section 2.2. LEGALITY OF TRANSACTION. No change in applicable law shall
have occurred as a consequence of which it shall have become and continue to be
unlawful on the date this Amendment is to become effective (a) for the Agent or
any Lender to perform any of its obligations under any of the Loan Documents or
(b) for any of the Borrowers to perform any of its agreements or obligations
under any of the Loan Documents.
Section 2.3. PERFORMANCE. Each of the Borrowers shall have duly and
properly performed, complied with and observed in all material respects its
covenants, agreements and obligations contained in the Loan Documents required
to be performed, complied with or observed by it on or prior to the date this
Amendment is to become effective. No event shall have occurred on or prior to
the date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective which
constitutes a Default or Event of Default.
Section 2.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and
other proceedings in connection with the transactions contemplated by this
Amendment and all instruments and documents incidental thereto shall be in form
and substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of all such
instruments and documents as the Agent shall have reasonably requested.
Section 3. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Lenders as follows:
(a) The representations and warranties of such Borrower and of each
Guarantor contained in the Credit Agreement and the other Loan Documents to
which such Borrower or Guarantor, as the case may be, is a party were true and
correct in all material respects when made and continue to be true and correct
in all material respects on the date hereof, except that the financial
statements referred to in the representations and warranties contained in the
Credit Agreement shall be the financial statements of TransTechnology and its
Subsidiaries most recently delivered to the Agent, and except as such
representations and warranties are affected by the transactions contemplated
hereby;
(b) The execution, delivery and performance by such Borrower of this
Amendment and the consummation of the transactions contemplated hereby: (i) are
within the corporate powers of such Borrower and have been duly authorized by
all necessary corporate action on the part of such Borrower, (ii) do not require
any approval or consent of, or filing with, any governmental agency or
authority, or any other person, association or entity, which bears on the
validity or enforceability of this Amendment and which is required by law or any
regulation or rule of any agency or authority, or other person, association or
entity, (iii) do not violate any provisions of any order, writ, judgment,
injunction, decree, determination or award presently in effect in which such
Borrower is named, or any provision of the charter documents or by-laws of such
Borrower, (iv) do not result in any breach of or constitute a default under any
agreement or instrument to which such Borrower is a party or to which it or any
of its properties are bound, including without limitation any indenture, credit
or loan agreement, lease, debt instrument or mortgage, except for such breaches
and defaults which would not have a material adverse effect on such Borrower and
its Subsidiaries taken as a whole, and (v) do not result in or require the
creation or imposition of any mortgage, deed of trust, pledge or encumbrance of
any nature upon any of the assets or properties of such Borrower; and
<PAGE> 3
-3-
(c) This Amendment and the Credit Agreement as amended hereby
constitute the legal, valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
provided that (i) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors, and (ii) enforcement may be
subject to general principles of equity, and the availability of the remedies of
specific performance and injunctive relief may be subject to the discretion of
the court before which any proceeding for such remedies may be brought.
Section 4. NO OTHER AMENDMENTS. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect.
Section 5. EXECUTiON IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
Section 6. EFFECTIVE DATE. Subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, this Amendment shall be
deemed to be effective as of the date hereof (the "Effective Date").
Remainder of page intentionally left blank.
<PAGE> 4
-4-
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment Agreement
No. 3 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, Chief Financial
Officer and Treasurer
TRANSTECHNOLOGY SEEGER-ORBIS
GMBH
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Managing Director
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
BANKBOSTON, N.A., individually and
as Agent, Issuing Bank and Sterling
Fronting Bank
By: /s/ Maura Wadlinger
---------------------------------------
Name: Maura Wadlinger
Title: Vice President
<PAGE> 5
-5-
BHF-BANK AKTIENGESELLSCHAFT,
as DM Fronting Bank
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
---------------------------------------
Title:
ABN AMRO BANK N.V.
By: /s/ Lisa Megeaski
---------------------------------------
Name: Lisa Megeaski
Title: Vice President
By: /s/ Michael A. Kowalczuk
---------------------------------------
Name: Michael A. Kowalczuk
Title: Assistant Vice President
THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Juan J. Duarte
---------------------------------------
Name: Juan J. Duarte
Title: Vice President
<PAGE> 6
-6-
THE BANK OF NEW YORK
By: /s/ Steven P. Castellucci
---------------------------------------
Name: Steven P. Castellucci
Title: Vice President
SUMMIT BANK
By:
---------------------------------------
Name:
Title:
<PAGE> 7
-7-
The Guarantors under (and as defined in) the Subsidiary Guaranty hereby
acknowledge that they have read and are aware of the provisions of this
Amendment and hereby reaffirm their absolute and unconditional guaranty of the
Borrowers' payment and performance of their obligations to the Lenders and the
Agent under the Credit Agreement as amended hereby.
TRANSTECHNOLOGY ACQUISITION
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
PALNUT FASTENERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
INDUSTRIAL RETAINING RING
COMPANY
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
RETAINERS, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 8
-8-
RANCHO TRANSTECHNOLOGY
CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SYSTEMS &
SERVICES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
ELECTRONIC CONNECTIONS
AND ASSEMBLIES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SSP INDUSTRIES
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 9
-9-
SSP INTERNATIONAL SALES, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TRANSTECHNOLOGY SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
SEEGER INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
TCR CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
AEROSPACE RIVET
MANUFACTURERS CORPORATION
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 10
-10-
NORCO, INC.
By: /s/ Gerald C. Harvey
---------------------------------------
Name: Gerald C. Harvey
Title: Vice President and Secretary
<PAGE> 11
-11-
The Guarantors under and as defined in the English Guarantees hereby acknowledge
that they have read and are aware of the provisions of this Amendment and hereby
reaffirm their absolute and unconditional guarantee of the Obligations referred
to in the English Guarantees, as such English Guarantees may be amended in
connection with this Amendment.
ANDERTON INTERNATIONAL
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Michael J. Berthelot
---------------------------------------
Name: Michael J. Berthelot
Title: Director
ANDERTON (PREDECESSORS)
LIMITED
By: /s/ Ulf Jemsby
---------------------------------------
Name: Ulf Jemsby
Title: Director
By: /s/ Daran Brown
---------------------------------------
Name: Daran Brown
Title: Managing Director
<PAGE> 1
Exhibit 10.22
CONSULTING AGREEMENT
with
John Dalton
This Agreement is made as of the 4th day of May, 1999, between
TransTechnology Corporation, a Delaware corporation (the "Corporation") and John
Dalton ("Consultant") pursuant to which the Corporation agrees to engage
Consultant's services upon the terms and conditions set out below.
NOW, THEREFORE, the parties agree as follows:
1. Engagement. The Corporation hereby engages Consultant, and
Consultant hereby accepts this engagement, to act as an advisor to the
Corporation commencing on the date hereof and continuing until the termination
of this Agreement in accordance with Paragraph 4 hereof. Consultant acknowledges
that the Corporation has relied upon Consultant's representations with respect
to his training, skills and experience, and his legal ability to perform this
Agreement, as the basis for entering into this Agreement.
2. Duties. Consultant agrees that from and after the date hereof, from
time to time as requested by the Corporation, he shall furnish advice and
recommendations with respect to matters and or areas within the scope of his
experience and expertise and as specifically communicated from time to time by
the Corporation to Consultant. Subject to the provisions of Paragraph 3 hereof,
when furnishing such services Consultant shall confer with officers and
employees of the Corporation as may be designated from time to time by the
Corporation with respect to particular problems presented; shall give reasonable
study to the same; and shall furnish his recommendations with respect thereto.
The Corporation shall provide Consultant with such assistance as shall be
reasonably necessary for the performance of the Consultant's functions assigned
by the Corporation to Consultant from time to time.
3. Performance. In the performance of his responsibilities, Consultant:
(a) Shall devote such time as shall be necessary to carry out
diligently and in good faith his duties under this Agreement but not have any
fixed working hours or be required to maintain an office at the Corporation or
at any other specific location;
(b) Shall not be required to work full-time for the
Corporation during the period of this Agreement or to work nights or holidays;
(c ) Shall determine the manner in which the services
contemplated by this Agreement shall be carried out.
4. Term. This Agreement shall commence May 1, 1999 and shall expire
April 30, 2000, provided that this Agreement may be extended upon the mutual
written agreement of the parties. This Agreement may be terminated by the
Corporation at any time upon thirty (30) days' notice in the event of the
failure of the Consultant substantially to perform the responsibilities
contemplated by Paragraph 3 of this Agreement. This Agreement shall immediately
terminate upon the death or disability of Consultant.
1
<PAGE> 2
5. Compensation; Reimbursement; No Fringe Benefits.
(a) In consideration for the consulting services rendered by
the Consultant pursuant to this Agreement, Consultant shall be paid during the
term of this Agreement the sum of $50,000 payable in twelve equal monthly
installments due on the 1st of each month.
(b) Consultant shall receive reimbursement for reasonable and
substantiated travel and out-of-pocket expenses related to consultation rendered
hereunder provided that in all cases such expenses shall have received prior
written approval from an officer of the Corporation and are incurred in
accordance with the "Employee Business and Travel Expense" policy of the
Corporation as in effect from time to time.
(c ) Consultant shall not be entitled to receive any fringe
benefits provided by the Corporation, including without limitation
hospitalization/medical coverage and shall not qualify as an employee of the
Corporation for purposes of workmen's compensation.
6. Confidentiality. During the term of this Agreement and thereafter,
Consultant shall keep confidential and refrain from using for the benefit of
Consultant or of any party other than the Corporation, or disclosing to others,
any and all proprietary and/or confidential information owned, held or used by
the Corporation, including without limitation, know-how regarding the design and
production of any of the products of the Corporation, the customer base and
details of relations between the Corporation and its customers, strategic
planning of the Corporation and its marketing strategies in use or under
consideration.
7. No Conflict. Consultant represents and warrants that (a) Consultant
is free to render the services contemplated by this Agreement to the
Corporation, (b) such services do not and will not conflict with any agreement
to which the Consultant is a party or any other obligation by which Consultant
is bound, (c) all services hereunder shall be rendered in a manner which
complies with applicable laws and regulations, and (d) at no time will
Consultant use for the benefit of the Corporation or disclose to the Corporation
any information which he has received from a third party and as to which he is
bound by a continuing obligation of confidentiality.
8. Independent Contractor. It is the intention of the parties that
Consultant shall have the status of an independent contractor. As such
Consultant shall be responsible for (a) the proper and timely payment of all
taxes due on compensation paid pursuant to this Agreement and (b) expenses
incurred in his business and not reimbursable pursuant to Paragraph 5 above.
Consultant shall have no authority to enter into any agreement on behalf of the
Corporation or otherwise to bind the Corporation in any way.
9. Assignment of Rights. Consultant hereby transfers and conveys to the
Corporation all right, title and interest in any documented concept, product
and/or process, patentable, copyrightable or otherwise proprietary in nature,
conceived or otherwise developed by Consultant in the performance of this
Agreement. Consultant shall cooperate with the Corporation, including by
executing all such documents requested by the Corporation, to enable the
Corporation to patent, copyright or otherwise perfect the Corporation's right,
title and interest in any such concept, product and/or process, the costs for
same to be borne by the Corporation. Consultant acknowledges that all materials
developed by Consultant in the performance of his services under this Agreement,
regardless of the medium in which set out or stored, and including without
2
<PAGE> 3
limitation documents, calculations, drawings, notes, models and samples, shall
be the property of the Corporation, whether or not delivered to the Corporation,
and shall, together with any materials furnished to Consultant by the
Corporation, be delivered to the Corporation upon request, and, in any event,
upon termination of this Agreement.
10. Miscellaneous.
10.1 All notices required to be given hereunder shall be in
writing and shall be deemed given when mailed, postage prepaid, registered or
certified mail, return receipt requested, addressed to Corporation at its
principal office and addressed to Consultant at the address set out in Schedule
A or such other address as Consultant may designate by notice given pursuant to
this Paragraph 10.1.
10.2 The construction and performance of this Agreement shall
be governed by the laws of the State of New Jersey. Consultant acknowledges that
the Corporation shall be entitled to injunctive relief in the event of the
breach or threatened breach of any provision of Paragraph 6, Confidentiality,
and/or Paragraph 9, Assignment of Rights.
10.3 This Agreement shall be binding upon and shall inure to
the benefit of the Corporation and Consultant. Consultant shall not assign all
or any portion of this Agreement, or delegate to a third party any obligation
relating to the performance of the services contemplated by this Agreement,
except upon the specific written consent of an officer of the Corporation.
10.4 This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge Is sought.
10.5 Consultant shall submit a report within five working days
of the end of each quarter detailing consulting activities conducted on behalf
of the Corporation including without limitation meeting reports and
correspondence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TRANSTECHNOLOGY CORPORATION
By /s/ Michael J. Berthelot
----------------------------------------
Michael J. Berthelot
Chairman of the Board, President
and Chief Executive Officer
/s/ John Dalton
----------------------------------------
John Dalton
3
<PAGE> 1
Exhibit 10.23
TRANSTECHNOLOGY CORPORATION
FY'99-01 INCENTIVE COMPENSATION PLAN - DEV PLAN
(APPROVED: 4/16/98)
The goal of the 1999-2001 Incentive Compensation Plan is to directly align the
focus and remuneration of the divisional and corporate management with that of
the shareholders. This means that long term growth in the value of the business,
in addition to short term profit increases, will be key considerations in
awarding bonuses. That is not to say, however, that short term achievements
should not be considered for the payment of bonuses or that the time frame of
paying out such 'shareholder Value" based bonuses should be excessively long.
Individuals receiving bonuses should have the criteria used in determining and
measuring those bonuses fall within events which they can control and/or
influence. Individuals, and individual business units, should be rewarded for
their performance and should not be penalized for the failure of another unit,
yet at the same time, at another level, it is important to recognize that we are
all in this together. Incentive Compensation should be adequately high to
motivate the best managers, yet not become an obstacle in the minds of
shareholders that management is receiving a disproportionate award. Each of
these considerations is addressed and included in this plan. The 1999-01 plan
reflects the input of the corporate officers and staff, division presidents, and
the Incentive and Compensation Committee of the Board of Directors.
THE OBJECTIVE OF THE 1999-2001 DEV PLAN ("THE DEV PLAN") IS TO RECOGNIZE AND
REWARD MEMBERS OF THE TTC MANAGEMENT TEAM, AT DEEPER LEVELS THAN PREVIOUS PLANS,
FOR INCREASES IN THE VALUE OF THE ENTITY (AS DETERMINED BY THE MARKETS AND AS
SHARED WITH THE SHAREHOLDERS) OVER THE LONGER TERM. These goals are consistent
with the guidelines and objectives of the incentive compensation program as
established by the Board of Directors.
THE FY99-01 DEV PLAN DIFFERS LITTLE FROM THE FY96-98 DEV PLAN, WITH THREE MAJOR
EXCEPTIONS. FIRST, PARTICIPATION IN THE FY99-01 DEV PLAN HAS BEEN EXPANDED TO
INCLUDE DIVISION PRESIDENT DIRECT REPORTS, WHO WERE NOT INCLUDED IN THE PRIOR
PLAN. SECOND, STOCK OPTIONS WILL BE AWARDED TO ALL PARTICIPANTS IN THE FY99-01
DEV PLAN. STOCK OPTIONS WERE NOT CONSIDERED PART OF THE PRIOR DEV PLAN. AS A
RESULT, THE NUMBER OF PARTICIPANTS IN THE DEV BONUS POOL WILL RISE TO 80 FROM
FY98'S 29. EVEN MORE IMPORTANTLY, THE NUMBER OF TTC EMPLOYEES RECEIVING STOCK
OPTIONS WILL INCREASE FROM 11 IN FY98 TO 80 STARTING IN FY99. WE BELIEVE THAT
THIS EXPANDED POOL OF PARTICIPANTS IN THE DEV AND OPTION PLANS WILL FURTHER
INCREASE FOCUS ON INCREASING SHAREHOLDER VALUE. THIRD, THE MEASUREMENT PERIOD,
WHICH HAD BEEN THE TEN TRADING DAYS FOLLOWING THE RELEASE OF FISCAL YEAR END
EARNINGS, HAS BEEN LENGTHENED TO INCLUDE THE ENTIRE FOURTH QUARTER OF THE FISCAL
YEAR THROUGH THE TEN DAYS FOLLOWING THE RELEASE OF FISCAL YEAR END EARNINGS.
THIS LENGTHENED PERIOD IS EXPECTED TO REMOVE THE VOLATILITY ASSOCIATED WITH SUCH
A NARROW MEASUREMENT PERIOD.
<PAGE> 2
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 2
DIVISIONAL DEV BONUS POOLS
The DEV Bonus is based upon the relative contribution of each division to
increased shareholder value over a three year period as determined by the market
place. This component, in essence, determines a value for each operating
division based upon its Earnings before interest and taxes ("EBIT") and TTC's
Price Earnings multiple ("PE"). This PE is independently established in the
stock market and is a reflection of the value placed upon TTC by investors. The
increase in value of the entity over the three year term of the Plan (DELTA
ENTERPRISE VALUE, OR "DEV") would be determined and, to the extent that DEV
exceeded a hurdle rate of return, established by the Board and commensurate with
the long term financial goals of TTC, then 1.0% of that excess increase in value
would be earned by the Division President AND 1% WOULD BE EARNED BY THE DIVISION
PRESIDENT'S DIRECT REPORTS IN THE AGGREGATE. THESE AMOUNTS WOULD BE PAID in cash
AND THROUGH THE INCREASE IN VALUE OF STOCK OPTIONS AWARDED AS PART OF THIS DEV
PLAN, at the end of the measurement period (generally, 3/31/01 or upon a
triggering event as provided on page 6 below).
The '99-01 Plan therefore provides participants the opportunity to realize a
bonus not only by increasing annual earnings and achieving annual operating,
financial, and personal goals, but also for achieving an increase in the value
of the company as a whole as expressed by a higher PE ratio. The correlation
with the PE ratio ties this portion of the bonus directly to real, long term
increases in shareholder value. However, out of fairness to the individual
divisions, in order to avoid a "penalty" as a result of a bear market, or the
failure of another business unit, a floor PE, equal to that at the beginning of
the initial measurement period for "Enterprise Value", i.e., that at 3/31/98,
would be established. The ending DEV then would be determined using a PE not
lower than the floor PE as established at the beginning of the '99-01 Plan.
ENTERPRISE VALUE of a division will be determined by multiplying the division's
OPERATING INCOME by the EBIT multiple. OPERATING INCOME will be that determined
upon the completion of the year end certified audit. Local third party debt will
be subtracted in arriving at net enterprise value, at the beginning and end of
the measurement period.
The base year EBIT multiple is derived using TTC's PE ratio based upon the
average closing price for the PERIOD COMMENCING ON 1/1/98 AND ENDING ten days
following the release of the current fiscal year end earnings (MAY 13, 1998)
(THE "MEASUREMENT PERIOD") divided by the per share income from continuing
operations for that fiscal year ($2.11). The resultant PE ratio is then
multiplied by TTC's ratio of Net Income from
<PAGE> 3
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 3
continuing operations to EBIT in order to obtain the base EBIT multiple . For
the actual measurement period of FY"98 earnings, the PE was 13.545 times. For
FY'98 net income from continuing operations was $11.99 million and EBIT was
$20.153 million, yielding a ratio of 0.595%. Multiplying this ratio times the PE
of 13.545 yields a base EBIT multiple of 8.0593.
For plan years following the establishment of the base EBIT multiple, each
year's respective PE ratio will be compared to the base year's PE ratio, and the
relative percentage of current year PE to base year PE will then be multiplied
times the Base year EBIT multiple, yielding a current year EBIT multiple. For
example, at the conclusion of the MEASUREMENT period following the end of Fiscal
1999, the PE ratio was actually determined to be ___. The ratio of ___ to the
base PE of ___ is ___%. The EBIT multiple to be used in determining Enterprise
Value at the end of the FY'99 measurement period is ___% of ___, or ___.
The DEV Hurdle Rate has been established at 15% by the Board of Directors. This
rate is established to represent the overall return an investor would seek at
the beginning of the three year measurement period, AND REPRESENTS OUR TARGETED
ROI GOAL. To the extent that the actual realized return only meets that
expectation, no DEV bonus would be paid, as the increase in shareholder value
would not be considered "above average" or "outstanding", the criteria for
earning a bonus. However, to the extent that the hurdle was exceeded, then an
increase in shareholder value beyond the expectations of the market has been
deemed delivered, and participants in the plan will truly have earned a bonus
based upon delivering increases in shareholder value. The DEV bonus payout has
been established at 2% of the excess of the DEV required using the compounded
hurdle rate. The "target" Enterprise Value will be determined in June, 1998. An
annual statement of "Interim" Enterprise Value will be circulated amongst the
divisions at the end of FY'99 and FY'00 in order to communicate progress towards
the DEV goal and to provide measurement points in the event of certain events.
UNDER THE FY99-01 DEV PLAN, STOCK OPTIONS WILL BE GRANTED TO ALL DEV
PARTICIPANTS. AT TARGET, IT IS ESTIMATED THAT THESE OPTIONS WILL PROVIDE 45% OF
THE DEV's VALUE. IN ORDER TO RETAIN CERTAIN ATTRIBUTES OF THE OPTIONS, THEY WILL
BE AWARDED IN THE FOLLOWING MANNER.
AT 4/16/98 APPROXIMATELY 60,000 OPTIONS WILL BE AWARDED TO ALL OF THE
PARTICIPANTS IN THE PLAN. THIS AMOUNT REPRESENTS 1/3 OF THE AGGREGATE
180,000 SHARES WHICH WILL BE ALLOCATED TO THE PLAN (BASED UPON THE
CURRENT NUMBER OF
<PAGE> 4
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 4
DIVISION WITHIN TTC - ACQUISITIONS WOULD REQUIRE ADDITIONAL SHARES TO
BE ALLOCATED). THESE 4/1/98 OPTIONS ARE FULLY EARNED BY THE
INDIVIDUALS, THE EXERCISE PRICE IS CERTAIN (THAT OF THE MARKET CLOSE ON
THE DAY PRIOR TO AWARD), THE NUMBER OF SHARES IS FIXED AND CERTAIN, AND
THE VESTING SCHEDULE (3 YEARS FROM THE GRANT DATE) IS ESTABLISHED.
ALTHOUGH THESE WILL BE DEFINED AS COMPENSATORY OPTIONS, THE
COMPENSATION AMOUNT WILL BE ZERO (DIFFERENCE BETWEEN THE EXERCISE PRICE
AND THE STOCK PRICE ON THE AWARD DATE). ALL FUTURE APPRECIATION IN THE
OPTION VALUE WILL ACCRUE TO THE PARTICIPANT AND WILL NOT BE REFLECTED
AS COMPENSATION ON TT's BOOKS. IT WILL BE TTC's INTENTION TO HAVE THESE
OPTIONS QUALIFIED AS INCENTIVE STOCK OPTIONS UNDER THE INTERNAL REVENUE
CODE TO THE EXTENT POSSIBLE.
AT 6/1/99 EVERY DIVISION WILL GO THROUGH A DEV VALUATION USING THE
AVERAGE PE FOR THE PERIOD 1/1/99 - 6/1/99 TO DETERMINE THE VALUE OF THE
DIVISION, WITH THE BEGINNING PE AS A FLOOR. FOR THOSE DIVISIONS THAT
ACHIEVE A 15% INCREASE IN VALUE OVER THE BEGINNING VALUATION,
ADDITIONAL OPTIONS WILL BE GRANTED, WITH THE EXERCISE PRICE EQUAL TO
THE STOCK PRICE CLOSE ON THE DAY PRIOR TO GRANT. THESE OPTIONS WILL
VEST IN TWO YEARS. LIKE THE OPTIONS IN 1998, THESE WILL BE COMPENSATORY
OPTIONS BUT NO COMPENSATION EXPENSE WILL BE RECOGNIZED AND THEY WILL BE
SUBJECT TO NO FURTHER CONDITIONS OTHER THAN VESTING AS NOTED IN THE
PREVIOUS SENTENCE. THE NUMBER OF OPTIONS GRANTED PER DIVISION WILL BE
THE SAME AS THAT GRANTED AT 4/16/98, HOWEVER, THE ALLOCATION OF THE
AWARD AMONGST THE PARTICIPANTS WITHIN EACH DIVISION MAY BE CHANGED BY
THE DIVISION PRESIDENT. SIMILARLY, THE INCENTIVE AND COMPENSATION
COMMITTEE MAY, AT ITS DISCRETION, AWARD ADDITIONAL OPTIONS TO DIVISIONS
WHICH MET THE 15% HURDLE WHICH WOULD OTHERWISE NOT HAVE BEEN AWARDED
BECAUSE OTHER DIVISIONS FAILED TO ACHIEVE THE HURDLE, SO LONG AS THE
TOTAL AMOUNT OF 60,000 OPTIONS SHARES PER YEAR ARE NOT EXCEEDED.
AT 6/1/00, EVERY DIVISION WILL ONCE AGAIN GO THROUGH A DEV VALUATION
USING THE PE FOR THE PERIOD 1/1/00 - 6/1/00 TO DETERMINE THE VALUE OF
THE DIVISION, WITH THE BEGINNING PE AS A FLOOR. FOR THOSE DIVISIONS
THAT ACHIEVE A 15% INCREASE IN VALUE, COMPOUNDED FOR TWO YEARS, OVER
THE BEGINNING VALUATION, ADDITIONAL OPTIONS WILL BE GRANTED, WITH THE
EXERCISE PRICE EQUAL TO THE CLOSING STOCK PRICE ON THE DAY PRIOR TO
GRANT. THESE OPTIONS WILL VEST IN ONE YEAR. THE NUMBER OF OPTIONS
GRANTED PER DIVISION WILL BE THE SAME AS THAT GRANTED AT 4/16/98,
HOWEVER, THE ALLOCATION OF THE AWARD AMONGST THE PARTICIPANTS WITHIN
EACH DIVISION MAY BE CHANGED BY THE DIVISION PRESIDENT. SIMILARLY, THE
<PAGE> 5
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 5
INCENTIVE AND COMPENSATION COMMITTEE MAY, AT ITS DISCRETION, AWARD
ADDITIONAL OPTIONS TO DIVISIONS WHICH MET THE 15% HURDLE WHICH WOULD
OTHERWISE NOT HAVE BEEN AWARDED BECAUSE OTHER DIVISIONS FAILED TO
ACHIEVE THE HURDLE, SO LONG AS THE TOTAL AMOUNT OF 60,000 OPTIONS
SHARES PER YEAR ARE NOT EXCEEDED. LIKE THE OPTIONS IN 1998 AND 1999,
THESE WILL BE COMPENSATORY OPTIONS BUT NO COMPENSATION EXPENSE WILL BE
RECOGNIZED. AT THIS POINT, ALL 180,000 OPTION SHARES MAY HAVE BEEN
AWARDED.
AT 6/1/01, FOLLOWING THE RELEASE OF THE FY01 EARNINGS AND THE
CALCULATION OF THE OVERALL INCREASE IN DEV FOR THE COMPANY AND EACH
DIVISION, THE ACTUAL DEV BONUS AWARD WILL BE CALCULATED ON A DIVISION
BY DIVISION BASIS.
IN THE INSTANCE WHERE A DEV BONUS HAS BEEN EARNED OVER THE THREE YEAR
PERIOD, THE AMOUNT OF THE BONUS PER PARTICIPANT WILL BE DETERMINED AND
THE VALUE OF THE STOCK OPTIONS AWARDED THEM UNDER THIS PROGRAM WILL BE
SUBTRACTED FROM THAT AMOUNT, YIELDING THE AMOUNT OF THE DEV TO BE PAID
IN CASH. A CASH PAYMENT WILL BE MADE IN JUNE, 2001 FOR THIS AMOUNT, IN
ACCORDANCE WITH OUR PAST POLICY. AS SHAREHOLDER APPROVAL IS NOT BEING
SOUGHT FOR THIS BONUS PLAN, THE TIMING OF THE PAYMENT COULD BE AFFECTED
BY THE $1 MILLION LIMIT ON DEDUCTIBLE COMPENSATION, AS DISCUSSED MORE
FULLY BELOW.
IN THE INSTANCE WHERE INADEQUATE SHARES ARE AVAILABLE UNDER THE
COMPANY'S LONG TERM INCENTIVE PLAN, THEN NO OPTIONS WILL BE AWARDED
THAT EXCEED THAT AMOUNT, HOWEVER, THE RESULT WILL BE, AT THE CONCLUSION
OF THE PLAN, THAT A HIGHER CASH PAYOUT WILL BE MADE.
IN THOSE CASES WHERE NO DEV IS EARNED, ALL OPTIONS PREVIOUSLY AWARDED
WILL HAVE BECOME FULLY VESTED. ANY ANNUAL CASH BONUS EARNED IN FY01 BY
PARTICIPANTS WHO HAD RECEIVED OPTIONS UNDER THIS PROGRAM IN PRIOR
YEARS, AND WHO HAD NOT EARNED THE DEV BONUS, WILL BE REDUCED BY THE
AMOUNT OF APPRECIATION IN VALUE OF THE OPTIONS SO GRANTED.
BECAUSE CASH PAYMENTS REQUIRED UNDER THE FY99-01 DEV PLAN WILL BE
CHARGED AGAINST EPS, IT IS IMPORTANT THAT QUARTERLY ACCRUALS FOR THE
DEV BE MADE. THE CORPORATE OFFICE HAS ISSUED INSTRUCTIONS AT THE TIME
OF PREPARING TACTICAL PLANS AND QUARTERLY REVIEWS AS TO THE AMOUNT TO
BE ACCRUED BY EACH DIVISION FOR THE DEV, BASED UPON THEIR RESPECTIVE
THREE YEAR FORECASTS AND CERTAIN ASSUMPTIONS.
<PAGE> 6
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 6
BASED UPON A FINANCIAL ANALYSIS, IF EVERY DIVISION EARNED THE DEV AT 3/31/01, IF
WE HIT ALL OF OUR FINANCIAL GOALS, AND IF OUR STOCK PRICE TRACKED OUR OPERATING
RESULTS AT THE SAME PE (13) OVER THE THREE YEARS, THEN THE OPTION PORTION OF THE
DEV WILL BE 44%, OR $4.6 MILLION, AND THE CASH PORTION WILL BE $5.9 MILLION, OR
56%. THE MORE SLOWLY THE STOCK PRICE MOVES TOWARDS THE TARGET PRICE OF $72 PER
SHARE, THE GREATER THE PORTION OF THE DEV REALIZED IN OPTIONS, AND THE LOWER THE
CASH PORTION AND THE RESULTANT EARNINGS CHARGE. AT TARGET, THIS DEV PLAN WOULD
PAY OUT $10 MILLION TO PARTICIPANTS IN STOCK AND CASH, AND RESULT IN EARNINGS
CHARGES AGGREGATING $.53 PER SHARE OVER THE THREE YEAR PERIOD. AT TARGET, OVER
$300 MILLION OF VALUE WILL HAVE BEEN CREATED AND EARNINGS PER SHARE FOR THE
THREE YEARS WOULD AGGREGATE $12.50 PER SHARE. THE DEV BONUS PAYOUT THEN WOULD
EQUAL LESS THAN 3% OF THE VALUE CREATED AND 4% OF AGGREGATE EPS OVER THE PERIOD.
There is no ceiling or cap placed upon the bonuses to be paid. The DEV PE floor
ratio would be established as previously noted .
IN THE EVENT OF THE SALE OF A DIVISION, the final Enterprise Value will be the
selling price of the Division and the DEV bonus will be calculated on the
difference between the final Enterprise Value and the Base Enterprise value.
EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH, IN THE EVENT OF A CHANGE IN CONTROL,
as defined in the Long Term Incentive Plan approved by the shareholders, the
Enterprise Value would be calculated using the EBIT multiplier based on a PE
derived from the average closing price of TT stock for the ten trading days
immediately preceding the change in control and the EPS from the most recent
fiscal year ended prior to the change in control or the trailing four fiscal
quarters, whichever is greater, (adjusted for actual shares outstanding prior to
the change in control).
IN THE EVENT OF A CHANGE IN CONTROL RESULTING FROM THE SALE OF ALL OR
SUBSTANTIALLY ALL THE ASSETS OF OR MERGER WITH TRANSTECHNOLOGY, the final
Enterprise Value will be calculated using the PE ratio which results from the
transaction's selling price per share of TTC stock against the most recent
fiscal year end earnings data.
IN THE EVENT OF TERMINATION OF EMPLOYMENT, DEATH, OR DISABILITY, bonus
calculation rules will be applied as are currently done for longevity, however,
the final DEV bonus for such participants will be calculated using the PE ratio
and EPS at the end of the current fiscal
<PAGE> 7
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 7
year as if it were the final year of the Plan. In the event of termination for
cause, all benefits which might be payable under the DEV plan are forfeited.
Upon the end of the measurement period (the earlier of 3/31/01 or a Change in
Control) ANY CASH PAYMENT REQUIRED FROM the bonus pool under the resultant DEV
calculation will be paid out in either one or two installments, as hereinafter
provided, upon the determination of the Incentives and Compensation Committee of
the Board of Directors (the "Committee"). In the event the measurement period
ends on 3/31/01, upon a determination to pay the bonus in one installment, THE
CASH PORTION OF THE DEV bonus shall be paid on a date determined by the
Committee, but not later than 6/30/01. Upon a determination to pay THE CASH
PORTION OF the bonus in two installments, the first installment shall be paid on
a date determined by the Committee, but not later than 6/30/01, and the second
installment shall be paid no later than 4/10/02. In the event the measurement
period ends upon a Change in Control, upon a determination of the Committee to
pay THE CASH PORTION OF the bonus in one installment, the bonus will be paid
within ten days of the Change in Control. If paid in two installments, the first
installment will be paid within ten days of the Change in Control and the second
installment will be paid within ten days of the close of the Corporation's
fiscal year in which the first installment was paid.
For purposes of this plan, a GROUP DIRECTOR will be treated as a President of
the entire group with any bonus calculated based upon the operations of the
group on a consolidated basis. PRESIDENTS OF BUSINESS UNITS WITHIN A GROUP will
be treated as Division Presidents. In a case where a Group President also acts
as a Division President, in recognition of the fact that the second in charge at
the local operation in essence performs the role of a local Division President,
the Group President shall designate the person to be treated, for purposes of
this Plan, as Division President. In no instance may a Group President receive a
bonus as Group President and Division President.
<PAGE> 8
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 8
CORPORATE OFFICE DEV POOLS
For purposes of this plan, if at any time a Corporate Officer assumes a position
making him or her eligible for consideration under the Divisional Bonus Pools,
during such time he or she shall not participate in any Corporate Bonus Pool.
The Corporate Office will have two DEV pools which will be based upon changes in
Enterprise Value using the PE ratio calculated using the same methods as that
for the Divisions applied to Net income (after tax) from continuing operations
for the period. In the event that TTC has increased its equity capital
outstanding, either by the sale of additional shares of stock or by using stock
in an acquisition, the amount of net proceeds received from said stock offering,
or value assigned thereto in an acquisition, will be subtracted from the
increased Enterprise Value in determining the DEV. There would be no adjustment
to an EBIT multiplier for the Corporate Office pool. Payout procedures, stock
option grants and timing of payments are the same as that used in the Divisions.
The DEV component of the Corporate Office pool will be paid in cash upon the
conclusion of the FY'01 year end audit and the measurement period following the
release of the audited earnings or otherwise in accordance with the payout
procedures outlined in the Division DEV Bonus Plan. In the event of a Change in
Control, as defined in the Long Term Incentive Compensation Plan, payment will
be made within ten days of the Change in Control occurring.
The Corporate Office DEV bonus pools WILL BE ESTABLISHED AT 2.5% AND .5% FOR
CORPORATE OFFICERS AND CORPORATE STAFF, RESPECTIVELY, of the excess DEV over the
15% hurdle rate.
The DEV bonus will be allocated to corporate officers as reflected below:
<TABLE>
<S> <C>
CEO 28.00%
COO 17.50%
CFO 13.50%
General Counsel 7.50%
Ass't Secretary 3.00%
</TABLE>
<PAGE> 9
INCENTIVE COMPENSATION PLAN 1999-01
AS APPROVED BY THE BOARD OF DIRECTORS APRIL 16, 1998
PAGE 9
<TABLE>
<S> <C>
Pres - Dom. Ind. Prod. 12.00%
Future Officer Positions 18.50%
-----
Total 100%
</TABLE>
ALLOCATIONS OF OPTIONS AND CASH DEV PERCENTAGES TO MEMBERS OF THE CORPORATE
STAFF WILL BE BASED UPON A SCHEDULE PREPARED AT THE BEGINNING OF THE FY99-01
PLAN (4/16/98). OPTION GRANTS MAY BE MODIFIED ACROSS PARTICIPANTS FROM YEAR TO
YEAR SIMILAR TO THE PROCEDURE IN EFFECT FOR DIVISIONS, AND, LIKEWISE, THE
INCENTIVE AND COMPENSATION COMMITTEE MAY, IN ITS DISCRETION, AWARD ADDITIONAL
"UNEARNED" OPTIONS TO CORPORATE POOL PARTICIPANTS.
<PAGE> 1
Exhibit 10.25
TRANSTECHNOLOGY CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
This Agreement dated as of _________________ (the "Agreement") between
TransTechnology Corporation, a Delaware corporation (the "Company"),
and_________________________________________________________________________
("Optionee").
WHEREAS, pursuant to the TransTechnology Corporation 1998 Non-Employee
Directors" Stock Option Plan (the "Plan"), the Board of Directors and
shareholders have authorized the granting to Optionee of options to purchase
shares of common stock ($0.01 par value, per share) of the Company (the
'shares") upon the terms and conditions hereinafter stated.
NOW, THEREFORE, in consideration of the covenants herein set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. Shares and Price. The Company grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein
stated and the terms and conditions of the Plan,
__________________ Shares, at the purchase price of $______
per share (the "Options"). The purchase price is payable in
accordance with Paragraph 5 hereof.
2. Term of Option. The Options shall expire five (5) years from
the date hereof.
3. Exercisability. The Options shall be exercisable beginning on
the first anniversary of the date hereof; provided, however,
that during each of the three years beginning June 17, 1999
and ending June 16, 2002, the Optionee shall not be permitted
to acquire more than 5,000 Shares through the exercise of the
Options and/or any other options granted during the Initial
Term (from June 1, 1998 through June 16, 2001), with the
exception of Options granted under Section 5.5 of the Plan.
4. Partial Exercise. Subject to the provisions hereof, the
Options may be exercised in whole or in part in accordance
with Paragraph 5 hereof at any time after becoming
exercisable, but not later than the date the Options expire.
5. Exercise and Payment of Purchase Price. The Options may only
be exercised by delivery to the Company of a written notice of
exercise, in form acceptable to the Company, stating the
number of Shares then being purchased hereunder and a check
made payable to the Company, or cash, in the amount of the
purchase price of such Shares. At the discretion of the Board
of Directors, the Options may be exercised with Shares of the
Company owned by the Optionee at the time of exercise or
issuable to the Optionee upon exercise of the Options, in
either case with such Shares having a market value equal to
the product of the purchase price at the date of exercise and
the number of Shares with respect to which such Options are
thereby exercised.
6. Termination of Service as a Director. If Optionee ceases to be
a director of the Company for any reason other than his death,
Optionee shall have the right to
<PAGE> 2
exercise the Options to the extent, but only to the extent,
that the Options were exercisable and had not previously been
exercised at the date of such termination of service, until
the first to occur of: (i) the date that is 90 days from the
date of such termination or (ii) the date the Options expire
pursuant to Paragraph 2 hereof.
7. Death of Optionee and No Assignment. The Options shall not be
assignable or transferable except by will or by the laws of
descent and distribution and shall be exercisable during the
Optionee's lifetime only by the Optionee. In the event of the
Optionee's death, the permitted successors to the Optionee's
rights hereunder may exercise the Options, to the extent, but
only to the extent, that the Optionee was entitled to exercise
the Options at the date of Optionee's death, until the first
to occur of (i) the date that is one year from the date of the
Optionee's death, or (ii) the date such Options expire
pursuant to Paragraph 2 hereof.
8. Change of Control. In the event of a Change of Control, as
defined in the Plan, (except if the Board of Directors of the
Company provides otherwise prior to the Change of Control as
permitted under the Plan), the Options shall become
immediately exercisable; provided, however, that in no event
shall the Options become exercisable prior to the date that is
six months from the date hereof.
9. No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares covered by the Options
until the date of the issuance of stock certificates
representing the Shares acquired pursuant to the exercise of
the Options. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such
stock certificates are issued pursuant to the exercise of the
Options.
10. Modification and Termination. The rights of Optionee are
subject to modification and termination in certain events as
provided in the Plan.
11. Shares Purchased for Investment. Optionee represents and
agrees that if Optionee exercises the Options in whole or in
part, Optionee shall acquire the Shares upon such exercise for
the purpose of investment and not with a view to their resale
or distribution. The Company reserves the right to include a
legend on each certificate representing shares subject to the
Options, stating in effect that such Shares have not been
registered under the Securities Act of 1933 (the "Act"), as
amended, and may not be transferred without registration under
the Act or an exemption therefrom.
12. This Agreement Subject to Plan. Optionee acknowledges that
Optionee has read and understands the Plan. This Agreement is
made pursuant to the provisions of the Plan, and is intended,
and shall be interpreted in a manner, to comply therewith. Any
provision hereof inconsistent with the Plan shall be
superseded and governed by the Plan. The provisions of the
Plan are incorporated herein by this reference.
13. Governing Law. To the extent not preempted by Federal law,
this Agreement shall be construed in accordance with and shall
be governed by the laws of the State of Delaware.
14. Notices. Any notices or other communication required or
permitted hereunder shall be sufficiently given if delivered
personally or sent by registered or certified mail,
<PAGE> 3
postage prepaid, to the Company at its corporate headquarters,
and to the Optionee at the last address maintained for such
person in the records of the Company, or to such other address
as shall be furnished in writing by either party to the other
party, and shall be deemed to have been given as of the date
so delivered or deposited in the United States mail, as the
case may be.
IN WITNESS WHEREOF, the parties hereto have executed the Agreement effective as
of the date first written above.
TRANSTECHNOLOGY CORPORATION
("Company")
____________________________________________
Michael J. Berthelot
Chairman, President and
Chief Executive Officer
("Optionee")
____________________________________________
Optionee Name
Grant Number: _______
<PAGE> 1
Exhibit 13
[GRAPHIC OMITTED]
Annual Report
Fiscal Year Ended March 31, 1999
[LOGO]TransTechnology
corporation
engineered products for global partners(TM)
<PAGE> 2
TABLE OF CONTENTS:
1 Selected Financial Data
2 Letter to Shareholders
4 Domestic and International Industrial Products
6 Aerospace Products
8 Financial Information
[The following tables were depicted as bar graphs in the printed material.]
<TABLE>
<CAPTION>
Net Sales
($ in Millions)
-----------------------------------------------------
<S> <C> <C> <C> <C>
1995 1996 1997 1998 1999
101.1 158.0 178.7 204.0 228.0
<CAPTION>
Income From Continuing Operations
($ in Millions)
-----------------------------------------------------
<S> <C> <C> <C> <C>
1995 1996 1997 1998 1999
7.4 8.5 9.7 12.0 14.6
<CAPTION>
Diluted Income Per Share From Continuing Operations
(in Dollars)
-----------------------------------------------------
<S> <C> <C> <C> <C>
1995 1996 1997 1998 1999
1.44 1.66 1.87 2.11 2.30
<CAPTION>
Capital Expenditures
($ in Millions)
-----------------------------------------------------
<S> <C> <C> <C> <C>
1995 1996 1997 1998 1999
5.0 6.5 5.5 8.7 14.8
</TABLE>
[The following tables were depicted as pie charts in the printed material.]
<TABLE>
<CAPTION>
1999 Net Fastener Sales Allocation by Market Type
-------------------------------------------------
<S> <C>
Aerospace 2%
Consumer/Durables 3%
Industrial Machinery 11%
Heavy Truck OEM 24%
Automotive OEM 26%
Distribution 34%
<CAPTION>
1999 Net Sales Allocation by Market Type
----------------------------------------
<S> <C>
Aerospace 22%
Consumer/Durables 3%
Industrial Machinery 9%
Heavy Truck OEM 19%
Automotive OEM 20%
Distribution 27%
</TABLE>
On cover: Retaining rings as they enter plating process.
<PAGE> 3
Selected Financial Data
The following table provides selected financial data with respect to the
consolidated statements of operations of the Company for the five fiscal years
ended March 31, 1999, and the consolidated balance sheets of the Company at the
end of each such year.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA Years ended March 31,
(In thousands, except per share amounts 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 228,006 $ 203,928 $ 178,684 $ 158,024 $ 101,122
- -------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 24,294 20,153 16,620 14,300 10,842
Provision for income taxes 9,704 8,162 6,898 5,792 3,457
- -------------------------------------------------------------------------------------------------------------------
Income from continuing operations 14,590 11,991 9,722 8,508 7,385
Loss from discontinued operations -- (924) (934) (1,134) (4,852)
- -------------------------------------------------------------------------------------------------------------------
Income before extraordinary charge 14,590 11,067 8,788 7,374 2,533
Extraordinary charge for refinancing of debt (781) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Net income $ 13,809 $ 11,067 $ 8,788 $ 7,374 $ 2,533
- -------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Basic:
Income from continuing operations $ 2.33 $ 2.17 $ 1.92 $ 1.67 $ 1.45
Loss from discontinued operations -- (0.17) (0.18) (0.22) (0.95)
Extraordinary charge for refinancing
of debt (0.12) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Net income per share $ 2.21 $ 2.00 $ 1.74 $ 1.45 $ 0.50
- -------------------------------------------------------------------------------------------------------------------
Diluted:
Income from continuing operations $ 2.30 $ 2.11 $ 1.87 $ 1.66 $ 1.44
Loss from discontinued operations -- (0.16) (0.18) (0.22) (0.95)
Extraordinary charge for refinancing
of debt (0.12) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Net income per share $ 2.18 $ 1.95 $ 1.69 $ 1.44 $ 0.49
- -------------------------------------------------------------------------------------------------------------------
Dividends declared and paid per share $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.255
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 279,720 $ 236,073 $ 199,136 $ 199,367 $ 129,396
Long-term debt $ 102,463 $ 51,350 $ 67,516 $ 72,565 $ 37,021
Stockholders' equity $ 123,710 $ 115,832 $ 77,444 $ 72,470 $ 64,502
Book value per share $ 20.25 $ 18.47 $ 15.40 $ 14.21 $ 12.72
Shares outstanding at year-end 6,108 6,272 5,028 5,099 5,070
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
MARKET AND DIVIDEND DATA
<TABLE>
<CAPTION>
Market Price
---------------------------------------------------
Quarter Ended High Low Dividends
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1997 $ 22-7/8 $ 19-7/8 $ .065
September 30, 1997 26-11/16 22-3/4 .065
December 31, 1997 28-5/16 26 .065
March 31, 1998 30-5/16 25-1/2 .065
- -------------------------------------------------------------------------------------------------------------------
June 30, 1998 30-5/8 25-9/16 .065
September 30, 1998 27-1/8 20-1/4 .065
December 31, 1998 23-11/16 18-9/16 .065
March 31, 1999 20-3/4 16-1/2 .065
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
1999 ANNUAL REPORT 1
<PAGE> 4
Fellow Shareholders:
[PHOTO OMITTED]
Michael J. Berthelot
We are pleased to report that the fiscal year ended March 31, 1999, was the
seventh consecutive year of growth for our company, with sales up 12% and income
and earnings per share before an extraordinary item up 32% and 18% respectively.
The year began with a flurry of activity. In June we added a new product
to our line of specialty fasteners with the acquisition of Aerospace Rivet
Manufacturers Corporation, a Los Angeles- based manufacturer of rivets and bolts
for use in the aerospace industry. In July, we acquired NORCO Inc. of
Ridgefield, Connecticut, the world's leading maker of rods used to hold open
aircraft engine nacelles during inspection and maintenance. Each of these
acquisitions made a contribution to 1999's results, and we expect them to grow
and prosper even more in the future.
At the end of the second quarter, uncertainty in the economic cycle led us
to cut back employment levels, eliminate non-essential spending, and reduce
inventory and working capital. Those programs continued through the fourth
quarter. Since the beginning of the third quarter our headcount is down 10% and,
since the beginning of the fourth quarter, we have lowered our inventory $5.6
million. We believe the continuance of these measures will help prepare us for
any further downside changes in the economy and will increase cash generation.
Our focus on lower operating costs and higher operating efficiencies makes our
fastener segment one of the most profitable in the field, with fiscal 1999
operating and EBITDA (earnings before interest, taxes, depreciation and
amortization) margins of 14.8% and 19.7%, respectively. In a field of eight
publicly traded companies reporting segment results for fasteners for calendar
1998, our fiscal 1999 EBITDA margin ranked second.
The 1999 fiscal year was a challenging one. On the downside, the U.S.
manufacturing economy was weak for the first three quarters of our fiscal year,
and economic chaos reigned in Brazil for most of the year. England slid into
recession for the better part of the year and Germany's growth slowed to a crawl
as the year drew to an end. On the upside, three more of our facilities became
QS 9000 quality certified, and two achieved ISO14001 environmental
certification. We placed new presidents at four of our divisions. We completed
the largest capital spending program in the company's history. We surveyed every
one of our over 1,750 employees as to their quality of work life, and sampled
the top 20 customers at each of our divisions as to customer satisfaction.
Programs to capitalize on opportunities were implemented following each survey.
At year end, our financial results, while satisfying in one regard, left us with
the knowledge that we can do much better.
Our charge for fiscal 2000 is to capitalize on the opportunities in those
divisions which are improving efficiencies and gaining market share while
driving out costs. Our primary objective is to improve the operating results of
our domestic retaining ring division, which has been a drag on our results for
the past two fiscal years. Combined with uncertainty as to the economies of
Germany and Great Britain, the domestic retaining ring business is our biggest
risk for fiscal 2000.
2 TRANSTECHNOLOGY CORPORATION
<PAGE> 5
Our commitment to achieving our stated goals by the year 2001 remains
strong. Progress was made toward our goals of $500 million in revenues (up 12%
in fiscal 1999); number one or two market positions in our product lines
(NORCO's addition gave us another number one market share position); a 7% net
income margin (up to 6.4% before an extraordinary item in 1999 from 1998's
5.4%); 15% annual increases in EPS (up 18% on 11% more shares in 1999); 35% debt
to total capitalization (at 45% on March 31, 1999, from a 49% peak following the
acquisitions); and a dividend not higher than 25% of income (at $.26, 12%). As
we get nearer to fiscal 2001, it is clear that some of these may truly be
stretch goals. We believe, however, that they remain achievable.
We are, of course, disappointed by the disconnect between the price of our
company's shares and the intrinsic value of our company. Value is related to the
fundamental, long-term cash- generation capacity of a business. The price of a
share, however, is dependent upon many things, including net inflows of funds
into mutual funds and alternative investments. As painful as we find the decline
in our share price to be, we in management cannot obsess with the day-to-day
price of our shares; to a large degree, it is out of our control. We can,
however, focus our efforts on increasing the value of our business, by
increasing sales, by increasing profitability, and by increasing the return on
our invested capital. Increasing shareholder value is our main endeavor, and it
is value which is our driver, not the daily price quote. We are firm in our
belief that the market price of our shares and the value of our business will
realign themselves.
We are pleased to welcome John H. Dalton, former Secretary of the Navy, to
our Board of Directors. He will be a valuable source of guidance and support to
us in the future.
I cannot quantify the pride and gratitude I feel in being permitted to
lead this company. Every one of our 1,750 employees around the world contributes
every day to our results. As I travel and meet them, and see what they do, I
cannot help but be impressed with their knowledge, commitment, and desire to do
their best. I thank each of them for their support and hard work this past year.
Our Board of Directors continues to provide the best possible counsel and
guidance, and I find it an irreplaceable source of advice and information. I
thank the members of our Board for their commitment this past year. And most
importantly, I thank you, the shareholders, who have placed your trust,
confidence, and resources in our hands. We appreciate your support, and look
forward to continued growth in the future.
/s/ Michael J. Berthelot
Michael J. Berthelot
Chairman, President and
Chief Executive Officer
[The following table was depicted as a pie chart in the printed material.]
<TABLE>
<CAPTION>
1999 Net Sales
Domestic vs. International Operations
-------------------------------------
<S> <C>
International 25%
Domestic 75%
</TABLE>
1999 ANNUAL REPORT 3
<PAGE> 6
Domestic and International
Industrial Products
TransTechnology Corporation derives almost 80% of its revenues from the
manufacture and sale of specialty fasteners, and is the seventh largest fastener
manufacturer in the United States. Operating in small niches, the company has
some of the most well known brand names in the world and is an acknowledged
market leader in each of its product lines. The company's specialty fastener
products are used in various industries, ranging from automotive and heavy truck
manufacturing to computer disk drives, toys, cameras, appliances and plumbing
applications. Specialty fastener products are distributed through in-house sales
forces, distributors, and manufacturers' representatives around the world.
Through increased engineering and marketing resources, the company continues to
search for unique applications for its products in new industries around the
globe.
The Palnut Company Single and
multi-thread fasteners for
automotive and industrial
applications
[GRAPHIC OMITTED]
RETAINING RINGS
TransTechnology is the world's largest manufacturer of retaining rings, with
operations in the United States, Germany, England, and Brazil selling products
under the brand names "Seeger" (Germany and Brazil), "Anderton" (United
Kingdom), and "Waldes/IRR" (United States). Retaining rings are highly
engineered, usually to a customer's exacting specifications, and are used in
transmissions, drive trains, steering and braking systems on automobiles,
trucks, and off-road equipment. They also find application in industrial
equipment, computers, photographic equipment, marine applications, and almost
any situation where axial retention of mechanical parts on shafts or in bores is
required.
Breeze Industrial Products
V-Band clamp for OEM
applications
[GRAPHIC OMITTED]
STAINLESS STEEL HOSE CLAMPS
TransTechnology, through its Breeze Industrial Products and Pebra divisions,
manufactures the most comprehensive line of worm-drive and T-Bolt/V-Band clamps
in the world. Breeze(R) and Pebra stainless steel clamps are well known for
their quality and engineering. Breeze(R) T-Bolt and Constant-Torque(R) clamp
products are used in diesel engine, heavy truck, marine and off-road equipment
applications throughout the world. Breeze(R) is a certified supplier to
Caterpillar, Paccar, and many other heavy equipment manufacturers. Breeze(R)
"Aero-Seal(R)", "Euro-Seal(R)" and "Power-Seal(R)" clamps are supplied through
major distributors to the industrial, hardware, automotive, marine and retail
markets for use in repair, maintenance and overhaul applications, and are used
by many manufacturers of industrial and consumer products. Pebra brand clamps
are supplied to both the European heavy truck and equipment markets and to
industrial product manufacturers.
4 TRANSTECHNOLOGY CORPORATION
<PAGE> 7
[GRAPHIC OMITTED]
TCR
Shift rail for manual
transmissions
[GRAPHIC OMITTED]
ASSEMBLY FASTENERS
TransTechnology's Palnut division is one of the leading manufacturers of
assembly fasteners in the United States, supplying Palnut(R) highly engineered
fastening devices to the automotive, toy, appliance and electronics industries.
Products include lock nuts, push-nuts, u-nuts, and a variety of single and
multi-threaded stainless and high-carbon steel fasteners. Palnut products are
sold worldwide directly to original equipment manufacturers (OEM) as well as
through industrial distributors.
EXTERNALLY THREADED AND SPECIALTY MACHINED PRODUCTS
TCR Corporation, designs and manufactures sophisticated externally threaded
fastening devices and custom industrial components, combining its expertise in
cold forging and machining technologies. TCR products are used by industrial
customers worldwide, with key market groups including the automotive, hydraulic
and recreational product industries.
TransTechnology's Aerospace Rivet Manufacturers Corporation (ARM), acquired in
1998, produces premium solid rivets and threaded fasteners for the aerospace
industry. Materials used in these fasteners include aluminum alloys, monel,
titanium, A-286, stainless steel, and other specialty alloys. All of ARM's
products are manufactured for the aerospace industry and meet quality approvals
for Boeing D1-9000 and Mil-I-45208.
ARM
Solid rivets and threaded fasteners
for aerospace applications
[GRAPHIC OMITTED]
1999 ANNUAL REPORT 5
<PAGE> 8
[PHOTO OMITTED]
Norco hold open rods
on Boeing-B777
<PAGE> 9
Aerospace Products
TransTechnology's Breeze-Eastern division is the world's leading designer and
manufacturer of sophisticated helicopter rescue hoists, cargo winches and cargo
hook systems. These complex, highly engineered systems add significantly to the
versatility of an aircraft for a relatively small cost. The equipment is used
the world over by military and civilian agencies to save lives, complete
missions, and transport cargo. Most helicopter manufacturers today, including
Agusta, Bell, Boeing, Eurocopter, MD Helicopters, Sikorsky and GKN-Westland
specify Breeze-Eastern's systems as standard equipment on their aircraft because
of Breeze-Eastern's record for performance, safety, reliability, durability, and
service. Innovation and new product development remain an important focus at
Breeze-Eastern, one reason why its products will be found on the new V-22 Osprey
tiltrotor vertical take-off and landing aircraft due into full production in
1999 for the U.S. Marine Corps, the Sikorsky UH-60Q Blackhawk MEDEVAC helicopter
for the U.S. Army, the EHI Cormorant Search and Rescue helicopter for the
Canadian National Defense Forces and the Agusta A-109 (Power) utility
helicopter. Breeze-Eastern also designs and manufactures handling systems for
weapons platforms and motion control actuation systems for civilian and military
aircraft.
Norco Inc., acquired in 1998, is the global leader in the design and manufacture
of mechanical components and systems such as hold open rods, quick
connect/disconnect locking systems, helicopter blade restraint systems, latch
assemblies, safety locks, and application-specific mechanical systems. Its power
transmission line of products include rollnuts, rollnut longspan assemblies,
ball reversers, ball oscillators, FlenNut assemblies and other
application-specific linear motion assemblies.
During the company's successful history of servicing the commercial and
defense aviation industry, Norco has forged special relationships with several
original equipment manufacturers. These relationships enable Norco to work in
collaboration with its customers not only during the early design stage, but
also throughout the life-cycle of each manufacturing program.
The Company's aircraft building customers, include Airbus, Boeing,
McDonnell Douglas (now Boeing), Lockheed Martin and Northrop Grumman. Norco also
sells to aircraft system suppliers such as BF Goodrich Aerospace Structures
(cowlings), Short Brothers plc. (nacelles), and GKN-Westland Aerospace
Structures (composite doors on the Airbus A-340, CRJ700 and C27J).
1999 ANNUAL REPORT 7
<PAGE> 10
Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31,
ASSETS 1999 1998
=======================================================================================================================
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,255 $ 2,960
Accounts receivable (net of allowance for doubtful accounts of
$240 and $556 in 1999 and 1998, respectively) 36,323 33,244
Notes and other receivables 658 5,086
Inventories 58,668 53,985
Prepaid expenses and other current assets 1,702 1,022
Deferred income taxes 1,295 2,773
- -----------------------------------------------------------------------------------------------------------------------
Total current assets 100,901 99,070
- -----------------------------------------------------------------------------------------------------------------------
PROPERTY:
Land 12,564 11,002
Buildings 21,654 19,747
Machinery and equipment 67,381 54,315
Furniture and fixtures 9,075 7,381
Leasehold improvements 727 536
- -----------------------------------------------------------------------------------------------------------------------
Total 111,401 92,981
Less accumulated depreciation and amortization 35,017 29,295
- -----------------------------------------------------------------------------------------------------------------------
Property - net 76,384 63,686
- -----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Notes receivable 3,694 7,181
Costs in excess of net assets of acquired businesses (net of
accumulated amortization of $7,002 and $5,115 in 1999 and
1998, respectively) 76,731 45,094
Other 22,010 21,042
- -----------------------------------------------------------------------------------------------------------------------
Total other assets 102,435 73,317
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 279,720 $ 236,073
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
=======================================================================================================================
CURRENT LIABILITIES:
Current portion of long-term debt $ 46 $ 12,137
Accounts payable - trade 14,247 14,694
Accrued compensation 6,161 9,764
Accrued income taxes 765 332
Other current liabilities 8,588 11,154
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 29,807 48,081
- -----------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS 102,463 51,350
- -----------------------------------------------------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES 23,740 20,810
- -----------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)
- -----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock - authorized, 300,000 shares; none issued
Common stock - authorized, 14,700,000 shares of $.01 par value; issued,
6,653,855 and 6,564,079 shares in 1999 and 1998, respectively 67 66
Additional paid-in capital 77,246 75,959
Retained earnings 58,721 46,537
Accumulated other comprehensive loss (3,021) (2,495)
Unearned compensation (239) (236)
- ----------------------------------------------------------------------------------------------------------------------
132,774 119,831
Less treasury stock, at cost - 546,213 and 292,054 shares in 1999 and 1998, respectively (9,064) (3,999)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 123,710 115,832
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 279,720 $ 236,073
=======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
8 TransTechnology Corporation
<PAGE> 11
Statements of Consolidated Operations
(In thousands, except share data)
<TABLE>
<CAPTION>
Years ended March 31,
1999 1998 1997
=====================================================================================================
<S> <C> <C> <C>
Net sales $ 228,006 $ 203,928 $ 178,684
Cost of sales 156,090 137,820 122,480
- -----------------------------------------------------------------------------------------------------
Gross profit 71,916 66,108 56,204
General, administrative and selling expenses 46,552 40,187 35,309
Interest expense 6,938 7,228 6,797
Interest income (412) (1,020) (1,202)
Other income - net (6,362) (440) (1,320)
Allowance for possible loss on notes receivable 906 -- --
- -----------------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes 24,294 20,153 16,620
Provision for income taxes 9,704 8,162 6,898
- -----------------------------------------------------------------------------------------------------
Income from continuing operations 14,590 11,991 9,722
Loss from disposal of discontinued operations
(net of applicable tax benefits of $1,301
and $663 for 1998 and 1997, respectively) -- (924) (934)
- -----------------------------------------------------------------------------------------------------
Income before extraordinary charge 14,590 11,067 8,788
Extraordinary charge for refinancing of debt (net of
applicable tax benefit of $532) (781) -- --
- -----------------------------------------------------------------------------------------------------
Net income $ 13,809 $ 11,067 $ 8,788
- -----------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Basic:
Income from continuing operations $ 2.33 $ 2.17 $ 1.92
Loss from disposal of discontinued operations -- (0.17) (0.18)
Extraordinary charge for refinancing of debt (0.12) -- --
- -----------------------------------------------------------------------------------------------------
Net income per share $ 2.21 $ 2.00 $ 1.74
- -----------------------------------------------------------------------------------------------------
Diluted:
Income from continuing operations $ 2.30 $ 2.11 $ 1.87
Loss from disposal of discontinued operations -- (0.16) (0.18)
Extraordinary charge for refinancing of debt (0.12) -- --
- -----------------------------------------------------------------------------------------------------
Net income per share $ 2.18 $ 1.95 $ 1.69
- -----------------------------------------------------------------------------------------------------
Weighted - average basic shares outstanding 6,249,000 5,520,000 5,064,000
Weighted - average diluted shares outstanding 6,341,000 5,689,000 5,196,000
</TABLE>
See notes to consolidated financial statements.
1999 ANNUAL REPORT 9
<PAGE> 12
Statements of Consolidated Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Years ended March 31,
1999 1998 1997
=============================================================================================================
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 13,809 $ 11,067 $ 8,788
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary charge for refinancing of debt 781 -- --
Gain on sale of marketable securities (1,082) -- --
Depreciation and amortization 10,802 9,054 7,406
Provision for losses on accounts and notes receivable 803 537 139
(Gain) loss on sale or disposal of fixed assets and discontinued
businesses (28) 1,087 64
Changes in assets and liabilities - excluding the effects of
acquisitions and dispositions:
Decrease (increase) in accounts receivable 1,073 (2,732) (620)
Decrease (increase) in inventories 2,266 (2,685) 191
Decrease (increase) in other assets 1,888 (3,330) (191)
(Decrease) increase in accounts payable (2,604) 1,770 (3,650)
(Decrease) increase in accrued compensation (3,603) 2,989 553
Increase (decrease) in income taxes payable 686 (1,300) 242
(Decrease) increase in other liabilities (6,115) 2,751) 1,385
- -------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 18,676 19,208 14,307
- -------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Business acquisitions (43,901) (34,774) (3,602)
Capital expenditures (14,759) (8,745) (5,477)
Proceeds from sale of fixed assets and discontinued businesses 502 2,144 2,705
Proceeds from sale of marketable securities 2,024 -- --
Decrease in notes and other receivables 3,128 1,954 1,119
- -------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (53,006) (39,421) (5,255)
- -------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term borrowings 159,089 68,400 40,105
Payments on long-term debt (119,942) (78,336) (45,273)
Proceeds from issuance of stock under stock option plan 1,157 2,213 365
Stock offering proceeds -- 26,908 --
Proceeds from foreign exchange contracts -- 2,036 --
Treasury stock purchases (4,926) -- (1,625)
Dividends paid (1,625) (1,467) (1,318)
- -------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 33,753 19,754 (7,746)
- -------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (128) (121) (128)
(Decrease) increase in cash and cash equivalents (705) (580) 1,178
Cash and cash equivalents at beginning of year 2,960 3,540 2,362
- -------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 2,255 $ 2,960 $ 3,540
- -------------------------------------------------------------------------------------------------------------
Supplemental information:
Interest payments $ 7,130 $ 7,647 $ 6,708
Income tax payments $ 5,177 $ 5,988 $ 3,810
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
10 TRANSTECHNOLOGY CORPORATION
<PAGE> 13
Statements of Consolidated Stockholders' Equity
(In thousands, except share data)
<TABLE>
<CAPTION>
Accumulated
Years ended Common Stock Treasury Stock Additional Other Total
March 31, 1999, --------------- --------------- Paid-In Retained Comprehensive Unearned Comprehensive
1998 and 1997 Shares Amount Shares Amount Capital Earnings Income (loss) Compensation Income
- ---------------------------------------------------------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1996 5,276,463 $53 (177,500) $(2,155) $46,188 $ 29,467 $ (774) $(309)
Net income -- -- -- -- -- 8,788 -- -- $ 8,788
Other comprehensive income:
Currency translation
adjustment (net of taxes
of $753) -- -- -- -- -- -- (1,061) -- (1,061)
Unrealized investment
holding losses (net of
taxes of $201) -- -- -- -- -- -- (283) -- (283)
Cash dividends ($.26 per
share) -- -- -- -- -- (1,318) -- -- --
Purchase of treasury stock -- -- (100,000) (1,625) -- -- -- -- --
Issuance of stock under
stock option plan 30,381 -- -- -- 365 -- -- -- --
Issuance of stock under
bonus plan 10,127 -- (11,737) (159) 192 -- -- 75 --
- ---------------------------------------------------------------------------------------------------------------------- -------------
BALANCE, MARCH 31, 1997 5,316,971 53 (289,237) (3,939) 46,745 36,937 (2,118) (234) $ 7,444
========
Net income -- -- -- -- -- 11,067 -- $ 11,067
Other comprehensive income:
Currency translation
adjustment (net of taxes
of $331) -- -- -- -- -- -- (487) -- (487)
Unrealized investment
holding gains (net of
taxes of $75) -- -- -- -- -- -- 110 -- 110
Cash dividends ($.26 per
share) -- -- -- -- -- (1,467) -- -- --
Public sale of common stock,
net of expenses 1,063,900 11 -- -- 26,897 -- -- -- --
Issuance of stock under
stock option plan 178,416 2 -- -- 2,211 -- -- -- --
Issuance of stock under
bonus plan 4,792 -- (2,817) (60) 106 -- -- (2) --
- ---------------------------------------------------------------------------------------------------------------------- -------------
BALANCE, MARCH 31, 1998 6,564,079 66 (292,054) (3,999) 75,959 46,537 (2,495) (236) $ 10,690
=============
Net income -- -- -- -- -- 13,809 -- -- $ 13,809
Other comprehensive income:
Currency translation
adjustment (net of taxes
of $467) -- -- -- -- -- -- (701) -- (701)
Unrealized investment
holding gains (net of
taxes of $117) -- -- -- -- -- -- 175 -- 175
Cash dividends ($.26 per
share) -- -- -- -- -- (1,625) -- -- --
Purchase of treasury stock -- -- (248,700) (4,926) -- -- -- -- --
Issuance of stock under
stock option plan 84,714 1 -- -- 1,156 -- -- -- --
Issuance of stock under
bonus plan 5,062 -- (5,459) (139) 131 -- -- (3) --
- ---------------------------------------------------------------------------------------------------------------------- -------------
BALANCE, MARCH 31, 1999 6,653,855 $ 67 (546,213) $(9,064) $77,246 $ 58,721 $(3,021) $ (239) $ 13,283
====================================================================================================================== =============
</TABLE>
See notes to consolidated financial statements.
1999 ANNUAL REPORT 11
<PAGE> 14
Notes to Consolidated Financial Statements.
1. SUMMARY OF ACCOUNTING PRINCIPLES
Business - TransTechnology Corporation (the "Company") develops, manufactures
and sells a wide range of products in two industry segments, Specialty Fastener
Products and Aerospace Products. The Company has manufacturing facilities
located in the United States, Germany, the United Kingdom and Brazil. The
Specialty Fastener Products Segment produces highly engineered precision metal
retaining rings, gear driven band fasteners, circlips, custom cold-formed parts,
rivets and other threaded and non-threaded assembly fasteners primarily for the
automotive, heavy truck, industrial, aerospace and consumer/durables markets and
accounted for approximately 78% of the Company's consolidated 1999 net sales.
Through its Aerospace Products Segment, the Company develops, manufactures,
sells and services a complete line of sophisticated lifting and restraining
products--principally performance critical helicopter rescue hoist and cargo
hook systems, winches and hoists for aircraft and weapons systems and aircraft
engine compartment hold open rods, actuators and other motion control devices.
This segment accounted for approximately 22% of the Company's consolidated 1999
net sales.
Use of Estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in its
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of TransTechnology Corporation and its subsidiaries, all of
which are wholly owned. Intercompany balances and transactions are eliminated in
consolidation. Investments in less than 20% owned companies are accounted for by
the cost method.
Accounting for Contracts - All of the Company's contracts are firm fixed-price.
Sales and cost of sales on such contracts are recorded as deliveries are made.
Accounts receivable from the United States Government represent billed
receivables and substantially all amounts are expected to be collected within
one year. Losses on contracts are recorded as they are identified.
Cash and Cash Equivalents - The Company considers all highly liquid investments
with a maturity at date of acquisition of three months or less to be cash
equivalents.
Inventories - Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. Cost includes material, labor
and manufacturing overhead costs.
Property and Related Depreciation and Amortization - Property is recorded at
cost. Provisions for depreciation are made on a straight-line basis over the
estimated useful lives of depreciable assets ranging from three to thirty years.
Amortization of leasehold improvements is computed on a straight-line basis over
the shorter of the estimated useful lives of the improvements or the terms of
the leases. The Company reviews property and equipment and assets held for sale
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. It has been determined that
no impairment loss needs to be recognized for such assets.
Costs in Excess of Net Assets of Acquired Businesses - The difference between
the purchase price and the fair value of the net assets of acquired businesses
is included in the accompanying Consolidated Balance Sheets under the caption
"Costs in excess of net assets of acquired businesses" and is being amortized
over 40 years. The Company has determined that there is no impairment in value,
since projected future operating results on an undiscounted basis, through the
period such costs in excess of net assets of acquired businesses are being
amortized, are in excess of the recorded asset amount.
12 TRANSTECHNOLOGY CORPORATION
<PAGE> 15
Earnings per Share ("EPS") - The computation of basic EPS is based on the
weighted-average number of common shares outstanding. The computation of diluted
EPS assumes the foregoing and, in addition, the exercise of all stock options
using the treasury stock method.
The components of the denominator for basic earnings per common share and
diluted earnings per common share are reconciled as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Basic earnings per common share:
Weighted-average common
shares outstanding 6,249,000 5,520,000 5,064,000
================================
Diluted earnings per common share:
Weighted-average common
shares outstanding 6,249,000 5,520,000 5,064,000
Stock options 92,000 169,000 132,000
--------------------------------
Denominator for diluted
earnings per common share 6,341,000 5,689,000 5,196,000
================================
</TABLE>
Options to purchase 169,774, shares of common stock at prices between $22.9375
and $27.8750 were outstanding during 1999 but were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common shares. During 1998 and 1997, all
options to purchase common stock were included in the computation of diluted
EPS.
Research, Development and Engineering Costs - Research and development costs and
engineering costs in support of active products, which are charged to expense
when incurred, amounted to $2.4 million, $2.1 million and $2.0 million in 1999,
1998 and 1997, respectively. Included in these amounts were expenditures of $1.2
million, $1.1 million and $0.8 million in 1999, 1998 and 1997, respectively,
which represent costs related to research and development activities.
Foreign Currency Translation - The assets and liabilities of the Company's
international operations, have been translated into U.S. dollars at year-end
exchange rates, with resulting translation gains and losses accumulated as a
separate component of Accumulated Other Comprehensive Income (Loss). Income and
expense items are converted into U.S. dollars at average rates of exchange
prevailing during the year. The Company treated its operation in Brazil as
highly inflationary, where the functional currency was the U.S. dollar until the
end of the third quarter of fiscal 1999. Effective December 28, 1998, the
Brazilian operation ceased to be considered highly inflationary by the Company
and the Brazilian Real is now the functional currency.
Income Taxes - Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax bases.
Investments - On March 1, 1994, the Company received shares of Mace Security
International common stock, valued at $3.4 million, as partial consideration for
the sale of a division. In March 1997, the Company recorded a $2.6 million
pretax charge to continuing operations to write-down the carrying value of these
shares to their current market value as the decline in value of these shares was
determined to be other than temporary. During the fourth quarter of fiscal 1999,
the Company sold all of these shares for $2.0 million and realized a pretax gain
of $1.1 million.
Financial Instruments - The Company does not hold or issue financial instruments
for trading purposes. Amounts to be paid or received under interest rate swap
agreements are recognized as increases or reductions in interest expense in the
periods in which they accrue. The Company enters into off-balance-sheet forward
foreign exchange instruments in order to hedge certain financing and investment
transactions denominated in foreign currencies and purchase commitments and
certain foreign currency denominated long-term debt. Gains and losses on the
investing and financing transactions are included in other income - net. Gains
and losses on the foreign currency purchase commitment transactions are included
in the cost of the underlying purchases.
New Accounting Standards - In June 1998, Statement of Financial Accounting
Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued and is effective for the Company for its fiscal year
ending March 31, 2002. SFAS No. 133 requires that all derivative instruments be
measured at fair value and recognized in the balance sheet as either assets or
liabilities. The Company is currently evaluating the impact this pronouncement
will have on its consolidated financial statements.
Reclassifications - Certain reclassifications have been made to prior years'
financial statements to conform to the 1999 presentation.
1999 ANNUAL REPORT 13
<PAGE> 16
2. DISCONTINUED OPERATIONS
During fiscal 1998 and 1997, the Company recorded after tax costs of $0.9
million in both years for the disposal of previously discontinued and sold
operations. These costs represent adjustments to previous estimates related
primarily to legal and environmental matters.
Included in Other Assets at March 31, 1999 and 1998, were assets held for sale
related to discontinued operations of $5,224 and $5,442, respectively.
3. ACQUISITIONS
On July 28, 1998, the Company acquired all of the outstanding stock of NORCO,
Inc. ("NORCO") for $17.7 million in cash, including direct acquisition costs,
and other contingent consideration. NORCO, located in Ridgefield, Connecticut,
produces aircraft engine compartment hold open rods, actuators and other motion
control devices for the aerospace industry.
On June 29, 1998, the Company acquired all of the outstanding stock of Aerospace
Rivet Manufacturers Corporation ("ARM") for $26.2 million in cash, including
direct acquisition costs, and other contingent consideration. ARM, located in
Santa Fe Springs, California, produces rivets and externally threaded fasteners
for the aerospace industry.
On April 17, 1997, the Company acquired all of the outstanding stock of TCR
Corporation for $32.6 million in cash plus direct acquisition costs, and other
contingent consideration. TCR Corporation, located in Minneapolis, Minnesota,
produces cold forged and other externally threaded fasteners and related
products for the automotive, heavy vehicle, marine and industrial markets.
The following is a summary of the assets acquired and the liabilities assumed
(in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current assets $ 12,723 $ 5,862
Long-term assets 37,944 34,449
Liabilities assumed (6,766) (5,537)
---------------------
Cash paid including acquisition costs $ 43,901 $ 34,774
=====================
</TABLE>
The following summarizes the Company's pro forma information as if the
acquisitions of ARM and NORCO had occurred at the beginning of the periods
presented. The pro forma results give effect to the amortization of goodwill and
additional depreciation and the effects on interest expense and taxes (in
thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net sales $239,142 $236,684
===================
Income from continuing operations $ 14,617 $ 12,789
===================
Net income $ 13,836 $ 11,865
===================
Basic earnings per share $ 2.21 $ 2.15
===================
Diluted earnings per share $ 2.18 $ 2.09
===================
</TABLE>
The above pro forma information does not purport to be indicative of the
financial results which actually would have occurred had the acquisitions been
made at the beginning of the period presented or subsequent to that date.
On June 18, 1996 the Company acquired the Pebra hose clamp business from Pebra
GmbH Paul Braun i.K. for approximately $3.6 million in cash including direct
acquisition costs. Pebra manufactures heavy duty hose clamps primarily for use
in the manufacture of heavy trucks in Europe.
4. INVENTORIES
Inventories at March 31, consisted of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Finished goods $ 23,592 $ 22,515
Work in process 11,403 11,330
Purchased and manufactured parts 23,673 20,140
--------------------
Total $ 58,668 $ 53,985
====================
</TABLE>
14 TRANSTECHNOLOGY CORPORATION
<PAGE> 17
5. INCOME TAXES
The components of total income (loss) from operations (including continuing and
discontinued operations and extraordinary items) before income taxes were (in
thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Domestic $ 23,689 $ 17,068 $ 12,167
Foreign (708) 860 2,856
-------------------------------------------
Total $ 22,981 $ 17,928 $ 15,023
===========================================
</TABLE>
The provision for income taxes is summarized below (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Currently payable:
Federal $ 3,771 $ 4,325 $ 3,549
Foreign -- 77 42
State 587 808 975
-------------------------------------------
4,358 5,210 4,566
Deferred 4,814 1,651 1,669
-------------------------------------------
Total $ 9,172 $ 6,861 $ 6,235
===========================================
</TABLE>
The provision (benefit) for income taxes is allocated between continuing and
discontinued operations and extraordinary items as summarized below (in
thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Continuing $ 9,704 $ 8,162 $ 6,898
Discontinued -- (1,301) (663)
Extraordinary (532) -- --
-------------------------------------------
Total $ 9,172 $ 6,861 $ 6,235
===========================================
</TABLE>
The consolidated effective tax rates for continuing operations differ from the
federal statutory rates as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Statutory federal rate 35.0% 35.0% 35.0%
State income taxes after
federal income tax 4.9 4.8 4.5
Earnings of the foreign
sales corporation (3.4) (2.4) (2.0)
Amortization of purchase
adjustments not deductible
for tax purposes 2.3 1.6 --
Foreign rate differential 1.0 -- 2.4
Other 0.2 1.5 1.6
-------------------------------------------
Consolidated effective tax rate 40.0% 40.5% 41.5%
===========================================
</TABLE>
The following is an analysis of accumulated deferred income taxes (in
thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Assets:
Current:
Inventory $ 309 $ 1,008
Net operating loss carryforward 328 681
Other 658 1,084
---------------------
Total current 1,295 2,773
=====================
Noncurrent:
Environmental 602 852
Accrued liabilities 2,412 1,572
Investment 617 1,062
Net operating loss carryforward 1,411 984
Other 1,715 1,623
---------------------
Total noncurrent 6,757 6,093
---------------------
Total assets $ 8,052 $ 8,866
=====================
Liabilities:
Property $ 11,217 $ 10,145
Other 732 578
---------------------
Total liabilities $ 11,949 $ 10,723
=====================
</TABLE>
Summary of deferred income taxes (in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net current assets $ 1,295 $ 2,773
Net noncurrent liabilities (5,192) (4,630)
---------------------
Total $ (3,897) $ (1,857)
=====================
</TABLE>
1999 ANNUAL REPORT 15
<PAGE> 18
6. LONG-TERM DEBT PAYABLE TO BANKS AND OTHERS
Long-term debt payable to banks and others, including current maturities, at
March 31 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Credit agreement - 6.12% $101,440 $ --
Credit agreement - 7.75% 400 --
Credit agreement - 8.50% -- 2,676
Term loan - 6.85% -- 36,099
Term loan - 9.79% -- 24,000
Other 669 712
-------------------------
102,509 63,487
Less current maturities 46 12,137
-------------------------
Total $102,463 $ 51,350
=========================
</TABLE>
Credit Agreement - Effective July 24, 1998, the Company's credit facility was
increased from $115.0 million to $125.0 million and was amended to eliminate the
Term A and Term B loans, as well as, the asset based lending requirement of the
prior loan agreement. The loan maturity date and all principal payments due were
extended until July 23, 2003, at which time the principal is due in full. The
primary purpose for the increase in the credit facility was to accommodate the
ARM and NORCO acquisitions on June 29, 1998 and July 28, 1998, respectively.
Effective November 27, 1998, the Company's credit facility was amended to
increase the amount available from $125.0 million to $145.0 million in order to
continue to have borrowing capacity for additional acquisition activity.
The credit agreement provides for revolving credit (the "Revolver") for both
domestic and international borrowings, as well as letters of credit. The credit
facility is provided by a group of commercial banks and is secured by all of the
Company's assets.
The amount of the revolving bank credit line commitment available for
international credit is $25.0 million and $5.0 million is available for letters
of credit. As of March 31, 1999, the Company's debt consisted of $80.4 million
of borrowings under the domestic revolving credit line, $21.4 million of
borrowings under the international credit line and $0.7 million of other
borrowings. Outstanding letters of credit under the credit line at March 31,
1999 were $0.1 million.
Interest on the Revolver is tied to the primary bank's prime rate, or at the
Company's option, the London Interbank Offered Rate ("LIBOR"), plus a margin
that varies depending upon the Company's achievement of certain operating and
financial goals. At March 31, 1999, $101.4 million of the Company's outstanding
borrowings utilized LIBOR, of which, $7.7 million and $13.7 million were payable
in Deutsche mark and Pound sterling, respectively. The credit facility requires
the Company to have interest rate protection on a minimum of $50.0 million of
its variable rate debt effective April 30, 1999. Interest rate protection is
generally arranged by means of interest rate swap agreements. The credit
agreement also limits the Company's ability to pay dividends to 25% of net
income and restricts capital expenditures to a range of $11.8 million to $15.8
million annually, and contains other customary financial covenants.
Other - Other long-term debt is comprised principally of an obligation due under
a collateralized borrowing arrangement with a fixed interest rate of 3% due
December 2004 and loans on life insurance policies owned by the Company with a
fixed interest rate of 5%.
<TABLE>
<S> <C>
Debt maturities (in thousands):
2000 $ 46
2001 47
2002 49
2003 50
2004 101,891
Thereafter 426
-----------
Total $ 102,509
===========
</TABLE>
16 TRANSTECHNOLOGY CORPORATION
<PAGE> 19
7. STOCKHOLDERS' EQUITY AND EMPLOYEE/DIRECTOR STOCK OPTIONS
The Company maintains the amended and restated 1992 long-term incentive plan
(the "1992 Plan") and the 1998 non-employee directors stock option plan (the
"1998 Plan").
Under the terms of the 1992 Plan, 800,000 of the Company's common shares may be
granted as stock options or awarded as restricted stock to officers, directors
and certain employees of the Company through September 2002. Option exercise
prices equal the fair market value of the common shares at their grant dates.
Options expire not later than five years after the date of grant. Options
granted to directors and to officers and employees with the annual yearly cash
bonus vest ratably over three years beginning one year after the date of the
grant; options granted to officers and employees awarded as part of a three-year
long-term bonus plan vest at the end of the three-year plan period. Restricted
stock is payable in equivalent number of common shares. The shares are
distributable in a single installment and, with respect to officers and
employees, restrictions lapse ratably over a three-year period from the date of
the award, and with respect to directors, the restrictions lapse after one year.
Under the terms of the 1998 Plan, non-employee directors are entitled to receive
a matching option for each share of the Company's common stock that they
purchase on the open market, with the strike price of the option being the
purchase price of the share, up to a maximum of 5,000 options in any twelve
month period or 15,000 options over a three-year period. Options granted under
the 1998 Plan vest on the first anniversary of the grant, provided that the
optionee may not acquire by exercise of the options more than 5,000 shares in
any one year. Options expire not later than five years after the date of the
grant.
The Company continues to apply the accounting standards set forth in APB No. 25.
However, disclosures are required of pro forma net income and earnings per share
as if the Company had adopted the accounting provisions of SFAS No. 123. Based
on Black-Scholes values, pro forma net income for 1999, 1998 and 1997 would be
$14.0 million, $11.0 million and $8.7 million, respectively; pro forma earnings
per common share for 1999, 1998 and 1997 would be $2.24, $1.93 and $1.73,
respectively.
The following table summarizes stock option activity over the past three years
under the plans:
<TABLE>
<CAPTION>
Weighted-
Average
Number Exercise
of Shares Price
<S> <C> <C>
Outstanding at March 31, 1996 408,596 $ 12.62
Granted 97,000 16.85
Exercised (30,381) 12.04
Canceled or expired (11,001) 12.55
--------
Outstanding at March 31, 1997 464,214 13.54
Granted 96,000 21.07
Exercised (178,416) 12.41
Canceled or expired (8,000) 15.00
--------
Outstanding at March 31, 1998 373,798 15.63
Granted 181,156 26.92
Exercised (84,714) 13.03
Canceled or expired (32,194) 23.81
--------
Outstanding at March 31, 1999 438,046 17.66
========
Options exercisable at March 31, 1997 264,211 12.26
Options exercisable at March 31, 1998 201,130 13.87
Options exercisable at March 31, 1999 197,417 14.74
</TABLE>
In 1999, 1998 and 1997 the Company awarded restricted stock totaling 5,062
shares, 4,792 shares and 10,127 shares, respectively. The weighted-average fair
value of this restricted stock was $25.33, $22.14 and $17.25 in 1999, 1998 and
1997, respectively. The expense recorded in 1999, 1998 and 1997 for restricted
stock was $107,000, $60,000 and $159,000, respectively.
The weighted-average Black-Scholes value per option granted in 1999, 1998 and
1997 was $21.59, $19.75 and $13.55, respectively. The following weighted-average
assumptions were used in the Black-Scholes option pricing model for options
granted in 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Dividend yield 1.4% 1.0% 1.4%
Volatility 24.0% 25.0% 29.0%
Risk-free interest rate 5.5% 6.0% 6.2%
Expected term of options
(in years) 4.0 4.0 4.0
</TABLE>
For options outstanding and exercisable at March 31, 1999, the weighted-average
exercise price ranges and remaining lives were:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- -------------------------------
Number Weighted- Weighted- Number Weighted-
Range of Outstanding Average Average Exercisable Average
Exercise at Remaining Exercise at Exercise
Prices March 31, 1999 Life Price March 31, 1999 Price
<S> <C> <C> <C> <C> <C>
$ 9-14 73,272 1 $ 11.70 66,084 $ 12.97
15-19 132,000 1 16.03 107,666 15.82
20-28 232,774 4 25.25 23,667 21.59
------- ------- ------- -------
438,046 2 $ 17.66 197,417 $ 14.74
======= ======= ======= =======
</TABLE>
1999 ANNUAL REPORT 17
<PAGE> 20
8. EMPLOYEE BENEFIT PLANS
The Company has three defined contribution plans covering substantially all
domestic employees. Contributions are based on certain percentages of an
employee's eligible compensation. Expenses related to these plans were $ 2.5
million, $2.8 million and $2.5 million in 1999, 1998 and 1997, respectively.
The Company provides postretirement benefits to union employees at one of the
Company's divisions. The Company continues to fund these benefits on a
pay-as-you-go basis. In addition, the Company maintains several defined benefit
retirement plans for certain non-U.S. employees. Funding policies are based upon
local statutes.
(In thousands)
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
------------------------------------------------
Year Ended March 31, Year Ended March 31,
------------------------------------------------
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Components of net
periodic benefit cost:
Service cost $ 402 $ 409 $ 374 $ 2 $ 2 $ 3
Interest cost 835 841 868 69 72 79
Expected return on
plan assets (573) (439) (366) -- -- --
Amortization of net gain 43 43 -- -- -- --
------------------------------------------------
Net periodic benefit cost $ 707 $ 854 $ 876 $71 $74 $82
================================================
Weighted-average
assumptions as
of March 31:
Discount rate 6.00% 6.88% 7.63% 7.00% 7.00% 7.50%
Expected return
on plan assets 7.00% 8.00% 8.00% -- -- --
Rate of compensation
increase 3.25% 3.50% 4.25% 4.00% 4.00% 4.00%
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
-------------------------------------------------
Year Ended March 31, Year Ended March 31,
-------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Change in benefit
obligation:
Benefit obligation at
beginning of year $ 12,191 $ 11,485 $ 1,054 $ 1,010
Service cost 402 409 2 2
Interest cost 835 841 69 72
Plan participants'
contributions 136 130 -- --
Amendments -- -- -- 67
Actuarial gain 1,169 413 2 --
Benefits paid (792) (719) (103) (97)
Effect of foreign
exchange (239) (368) -- --
-------------------------------------------------
Benefit obligation at
end of year $ 13,702 $ 12,191 $ 1,024 $ 1,054
=================================================
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
-------------------------------------------------
Year Ended March 31, Year Ended March 31,
-------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Change in plan assets:
Fair value of plan assets
at beginning of year $ 7,116 $ 5,337 $ -- $ --
Actual return on
plan assets 591 1,396 -- --
Employer contribution 313 389 103 97
Plan participants'
contributions 136 130 -- --
Benefits paid (318) (268) (103) (97)
Effect of foreign
exchange (273) 132 -- --
-------------------------------------------------
Fair value of plan assets
at end of year $ 7,565 $ 7,116 $ -- $ --
=================================================
</TABLE>
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
-------------------------------------------------
Year Ended March 31, Year Ended March 31,
-------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Reconciliation of
funded status:
Funded status $ (6,137) $ (5,075) $(1,024) $(1,054)
Unrecognized actuarial
loss (gain) 502 (614) 63 63
Unrecognized prior
service cost 564 628 -- --
-------------------------------------------------
Accrued liability $ (5,071) $ (5,061) $ (961) $ (991)
=================================================
</TABLE>
18 TRANSTECHNOLOGY CORPORATION
<PAGE> 21
The assumed health care cost trend rates used for measurement purposes were
10.0% and 11.0% for 1999 and 1998, respectively, decreasing 0.5% each year to
6.0% in 2007 and beyond, for substantially all participants. Under the Plan the
actuarially determined effect of a one-percentage point change in the assumed
health care cost trend would have the following effects (in thousands):
<TABLE>
<CAPTION>
One One
Percentage Percentage
Point Point
Increase Decrease
<S> <C> <C>
Effect on total of service and
interest cost components $10 $(13)
Effect on accumulated
postretirement benefit obligation 154 (185)
</TABLE>
9. FINANCIAL INSTRUMENTS
Interest Rate Swap Agreements - The Company periodically enters into interest
rate swap agreements to effectively convert all or a portion of its
floating-rate debt to fixed-rate debt in order to reduce the Company's risk to
movements in interest rates. Such agreements involve the exchange of fixed and
floating interest rate payments over the life of the agreement without the
exchange of the underlying principal amounts. Accordingly, the impact of
fluctuations in interest rates on these interest rate swap agreements is fully
offset by the opposite impact on the related debt. Swap agreements are only
entered into with strong creditworthy counterparties. The swap agreements in
effect were as follows:
<TABLE>
<CAPTION>
Notional
Amount Receive Pay
(in thousands) Maturities Rate(1) Rate
<S> <C> <C> <C> <C>
March 31, 1998 $25,000 8/98 5.65% 6.54%
DM9,981 12/98 3.53 4.57
</TABLE>
(1) Based on three-month LIBOR
Foreign Currency Exchange Agreements - The Company enters into forward foreign
currency agreements to hedge foreign currency financing transactions. Realized
and unrealized gains and losses arising from forward currency contracts are
recognized as adjustments to the gains and losses resulting from the underlying
hedged transactions.
In addition, the Company enters into forward currency contracts to hedge certain
foreign currency purchase commitments. Gains and losses from these transactions
are included in the cost of the underlying purchases.
The table below summarizes by currency the contractual amounts of the Company's
foreign exchange contracts at March 31, 1999 and 1998. The "Buy" amounts
represent the U.S. dollar equivalent of commitments to purchase foreign
currencies, and the "Sell" amounts represent the U.S. dollar equivalent to sell
foreign currencies (in thousands):
<TABLE>
<CAPTION>
1999 1998
---------------------------------------
Buy Sell Buy Sell
<S> <C> <C> <C> <C>
Currency
Deutsche mark $ 546 $12,439 $ -- $16,405
Pound sterling -- 2,556 3,677 8,507
---------------------------------------
$ 546 $14,995 $3,677 $24,912
=======================================
</TABLE>
Fair Value of Financial Instruments - The fair values of cash and cash
equivalents, receivables and notes receivable approximate their carrying values
due to the short-term nature of the instruments.
The fair value of the Company's long-term notes receivable and debt approximates
their carrying values due to the variable interest-rate feature of the
instruments. The fair values of the Company's interest rate swaps and forward
foreign exchange agreements are the estimated amounts the Company would have to
(pay) or receive to terminate the agreements at March 31, based upon quoted
market prices as provided by financial institutions which are counterparties to
the agreements and were as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998
(Pay) receive (Pay) receive
<S> <C> <C>
Interest rate swap agreements $ -- $ (141)
Forward foreign
exchange agreements 626 20
</TABLE>
10. EXTRAORDINARY ITEM
In fiscal 1999, the Company recognized an extraordinary charge of $0.8 million,
net of tax, to write off the remaining deferred loan fees associated with the
early extinguishment of the Company's indebtedness pursuant to its revised and
amended revolving credit facility. (See Note 6).
11. COMMITMENTS
Rent expense under operating leases for the years ended March 31, 1999, 1998,
and 1997 was $3.2 million, $2.3 million and $2.3 million, respectively.
1999 ANNUAL REPORT 19
<PAGE> 22
The Company and its subsidiaries have minimum rental commitments under
noncancellable operating leases as follows (in thousands):
<TABLE>
<S> <C>
2000 $ 2,252
2001 1,638
2002 1,299
2003 529
2004 7
--------
Total $ 5,725
========
</TABLE>
12. CONTINGENCIES
Environmental Matters- During the fourth quarter of fiscal 1999, the Company
reached an agreement with the Pennsylvania Department of Environmental
Protection ("PaDEP") under which the Company will pay $0.4 million for past
costs, future oversight expenses and in full settlement of claims made by PaDEP
related to the environmental remediation at a site in Pennsylvania which
continues to be owned although the related business has been sold. The Company
has provided for this amount in its accrual for environmental liabilities. The
Company must present an environmental cleanup plan for a portion of the site
following the execution of the PaDEP agreement, which is in the form of a
Consent Order, and agreement. A second Consent Order is contemplated by December
1, 2000 for another portion of the site, and a third Consent Order for the
remainder of the site is contemplated by October 1, 2002. The Company is also in
the process of finalizing the documentation of an agreed settlement with the
Federal government under which the government will pay 50% of the environmental
response costs associated with a portion of the site. At March 31, 1999, the
Company's cleanup reserve was $1.5 million based on the net present value of
future expected cleanup costs. In addition, the Company settled for a recovery
of a portion of cleanup costs with its insurance carriers for approximately $5.1
million (net) which is included in Other income-net. The Company expects that
remediation at the Pennsylvania site will not be completed for several years.
The Company also continues to participate in environmental assessments and
remediation work at ten other locations, which include operating facilities,
facilities for sale, and previously owned facilities. The Company estimates that
its potential cost for implementing corrective action at these sites will not
exceed $0.2 million payable over the next several years, and has provided for
the estimated costs in its accrual for environmental liabilities.
In addition, the Company has been named as a potentially responsible party in
seven environmental proceedings pending in several other states in which it is
alleged that the Company was a generator of waste that was sent to landfills and
other treatment facilities and, as to several sites, it is alleged that the
Company was an owner or operator. Such properties generally relate to
businesses, which have been sold or discontinued. It is not possible to reliably
estimate the costs associated with any remedial work to be performed until
studies at these sites have been completed, the scope of work defined and a
method of remediation selected and approved by the relevant state authorities,
and the costs allocated among the potentially responsible parties.
Litigation- The Company is also engaged in various other legal proceedings
incidental to its business. It is the opinion of management that, after taking
into consideration information furnished by its counsel, the above matters will
have no material effect on the Company's consolidated financial position or the
results of the Company's operations in future periods.
13. SEGMENT AND GEOGRAPHIC INFORMATION
The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, in fiscal 1999, which resulted in no significant change
in the way the Company reports information about its operating segments. The
Company's two business segments have separate management teams that report
operating results regularly which are reviewed by the chief operating decision
makers of the Company. Certain businesses have been aggregated into the same
reportable segment because they have similar products and services, production
processes, types of customers and distribution methods and their long-term
financial performance is affected by similar economic conditions.
The Company has two reportable segments: Specialty Fastener Products and
Aerospace Products. The Specialty Fastener Products segment develops,
manufactures and sells primarily gear-driven band fasteners, circlips, threaded
and non-threaded assembly fasteners, rivets, retaining rings and custom cold
forged parts for the marine, auto, consumer/durables, aircraft, heavy equipment
and industrial machinery markets. The Aerospace Products segment develops,
manufactures and sells primarily lifting, control, and restraint
devices--principally helicopter rescue hoists and external hook systems, winches
and hoists for aircraft and weapons-handling systems, aircraft tie-downs, engine
compartment hold open rods, actuators and other motion control devices.
20 TRANSTECHNOLOGY CORPORATION
<PAGE> 23
The accounting policies of the segments are the same as those described in the
summary of accounting principles. The Company evaluates performance based on
operating profit of the respective segments. Operating profit is net sales less
operating expenses. General corporate expenses, interest and income taxes have
not been deducted in determining operating profit. Assets, depreciation and
amortization and capital expenditures are those identifiable to a particular
segment by their use. Approximately 10%, 11% and 9% of net sales in 1999, 1998
and 1997, respectively, were derived from sales to the United States Government
and its prime contractors which are attributable primarily to Aerospace
Products.
<TABLE>
<CAPTION>
Operating Depreciation/
Fiscal Net Profit Capital Amortization Identifiable
(In thousands) Year Sales (loss)(1) Expenditures Expense(2) Assets
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Specialty Fastener 1999 $177,837 $ 26,284 $13,652 $ 8,812 $205,206
Products 1998 168,469 26,177 7,935 7,801 178,331
1997 144,197 24,040 4,715 5,881 140,960
- ----------------------------------------------------------------------------------------------------------------
Aerospace Products 1999 50,169 12,080 728 991 51,883
1998 35,459 9,285 469 544 25,540
1997 34,487 7,483 618 645 26,146
- ----------------------------------------------------------------------------------------------------------------
Total segments 1999 228,006 38,364 14,380 9,803 257,089
1998 203,928 35,462 8,404 8,345 203,871
1997 178,684 31,523 5,333 6,526 167,106
- ----------------------------------------------------------------------------------------------------------------
Corporate 1999 -- (13,243)(3) 379 999 22,631
1998 -- (9,119) 341 709 32,202
1997 -- (9,253) 144 825 32,030
- ----------------------------------------------------------------------------------------------------------------
Corporate interest and 1999 -- 6,111(4) -- -- --
other income-net 1998 -- 1,038 -- -- --
1997 -- 1,147 -- -- --
- ----------------------------------------------------------------------------------------------------------------
Interest expense 1999 -- (6,938) -- -- --
1998 -- (7,228) -- -- --
1997 -- (6,797) -- -- --
- ----------------------------------------------------------------------------------------------------------------
Consolidated 1999 228,006 24,294 14,759 10,802 279,720
1998 203,928 20,153 8,745 9,054 236,073
1997 178,684 16,620 5,477 7,351 199,136
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operating profit represents net sales less operating expenses which
include all costs and expenses related to the Company's operations in each
segment. General corporate expenses and investments and other income
earned at the corporate level are included in the corporate section.
Interest expense is also separately reported. The amount of the
"Consolidated" line represents "Income from Continuing Operations Before
Income Taxes." Loss from discontinued operations is not included.
(2) The depreciation/amortization expense from discontinued operations is
excluded from the above schedule.
(3) Corporate expense for 1999 includes a $0.9 million pretax charge to the
allowance for notes receivable, and a $1.5 million pretax incentive
compensation award.
(4) Corporate interest and other income for 1999 includes a pretax net gain of
$5.1 million for settlement of litigation claims against its insurance
carriers for environmental matters and a $1.1 million gain on sale of
marketable securities.
Export sales are defined as sales to customers in foreign countries by the
Company's domestic operations. Export sales amounted to the following (in
thousands):
<TABLE>
<CAPTION>
Location 1999 1998 1997
<S> <C> <C> <C>
Western Europe $15,680 $ 7,980 $ 8,349
Canada 9,170 7,095 6,316
Pacific and Far East 3,344 2,296 3,027
Mexico, Central and South America 2,267 2,556 1,751
Middle East 415 194 194
Other 275 158 156
-----------------------------------
Total $31,151 $20,279 $19,793
===================================
</TABLE>
1999 ANNUAL REPORT 21
<PAGE> 24
Results set forth below for international operations represent sales and
operating income of domestic and foreign based subsidiaries based on the
location the product was shipped from (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Net sales:
Domestic operations $ 171,302 $ 146,682 $ 120,655
International operations (1) 56,704 57,246 58,029
-------------------------------------------
Net sales $ 228,006 $ 203,928 $ 178,684
===========================================
Operating income:
Domestic operations $ 34,621 $ 30,808 $ 24,991
International operations (1) 3,743 4,654 6,532
-------------------------------------------
Operating income 38,364 35,462 31,523
Interest expense (6,938) (7,228) (6,797)
Corporate expense and other (7,132) (8,081) (8,106)
-------------------------------------------
Income from continuing operations before taxes $ 24,294 $ 20,153 $ 16,620
===========================================
Identifiable assets:
Domestic operations $ 193,690 $ 136,347 $ 94,794
International operations (1) 63,399 67,524 72,312
Corporate 22,631 32,202 32,030
-------------------------------------------
Total assets $ 279,720 $ 236,073 $ 199,136
===========================================
</TABLE>
(1) International operations are primarily located in Europe and Brazil.
14. UNAUDITED QUARTERLY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
1999
Net sales $ 51,483 $ 56,368 $ 57,863 $ 62,292 $ 228,006
Gross profit 16,900 17,949 18,078 18,989 71,916
Income before extraordinary charge 3,202 2,208 3,643 5,537(1) 14,590
Extraordinary charge for refinancing
of debt -- (781) -- -- (781)
---------------------------------------------------------------------------------
Net income $ 3,202 $ 1,427 $ 3,643 $ 5,537 $ 13,809
=================================================================================
Basic earnings (loss) per share:
Income before extraordinary charge $ 0.51 $ 0.35 $ 0.58 $ 0.90 $ 2.33
Extraordinary charge for refinancing
of debt -- (0.12) -- -- (0.12)
---------------------------------------------------------------------------------
Net income $ 0.51 $ 0.23 $ 0.58 $ 0.90 $ 2.21
=================================================================================
Diluted earnings (loss) per share:
Income before extraordinary charge $ 0.50 $ 0.34 $ 0.58 $ 0.89 $ 2.30
Extraordinary charge for refinancing
of debt -- (0.12) -- -- (0.12)
---------------------------------------------------------------------------------
Net income $ 0.50 $ 0.22 $ 0.58 $ 0.89 $ 2.18
=================================================================================
1998
Net sales $ 49,923 $ 50,013 $ 48,452 $ 55,540 $ 203,928
Gross profit 15,348 15,933 16,454 18,373 66,108
Income from continuing operations 2,367 2,387 3,314 3,923 11,991
Loss from discontinued operations (102) (125) (161) (536) (924)
---------------------------------------------------------------------------------
Net income $ 2,265 $ 2,262 $ 3,153 $ 3,387 $ 11,067
=================================================================================
Basic earnings (loss) per share:
Income from continuing operations $ 0.47 $ 0.47 $ 0.58 $ 0.63 $ 2.17
Loss from discontinued operations (0.02) (0.02) (0.03) (0.09) (0.17)
---------------------------------------------------------------------------------
Net income $ 0.45 $ 0.45 $ 0.55 $ 0.54 $ 2.00
=================================================================================
Diluted earnings (loss) per share:
Income from continuing operations $ 0.46 $ 0.45 $ 0.57 $ 0.61 $ 2.11
Loss from discontinued operations (0.02) (0.02) (0.03) (0.08) (0.16)
---------------------------------------------------------------------------------
Net income $ 0.44 $ 0.43 $ 0.54 $ 0.53 $ 1.95
=================================================================================
</TABLE>
(1) Income before extraordinary charge for the quarter ended March 31, 1999,
includes a pretax net gain of $5.1 million for an insurance settlement and
a $1.1 million pretax gain on sale of marketable securities.
22 TRANSTECHNOLOGY CORPORATION
<PAGE> 25
Independent Auditors' Report
To the Stockholders and the Board of Directors of TransTechnology Corporation:
We have audited the accompanying consolidated balance sheets of TransTechnology
Corporation and subsidiaries as of March 31, 1999 and 1998, and the related
statements of consolidated operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of TransTechnology Corporation and
subsidiaries at March 31, 1999 and 1998, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 1999
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
May 12, 1999
1999 ANNUAL REPORT 23
<PAGE> 26
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The Company's fiscal year ends on March 31. Accordingly, all references to years
in this Management's Discussion refer to the fiscal year ended March 31 of the
indicated year. Also, when referred to herein, operating profit means net sales
less operating expenses, without deduction for general corporate expenses,
interest and income taxes.
Sales in 1999 were $228.0 million, an increase of $24.1 million or 12% from
1998, compared with a $25.2 million or a 14% increase from 1997 to 1998. Gross
profit in 1999 increased $5.8 million or 9% from 1998, compared with an increase
of $9.9 million or 18% from 1997 to 1998. Operating profit for 1999 was $38.4
million, an increase of $2.9 million or 8% from 1998, compared with an increase
of $3.9 million or 12% from 1997 to 1998. Income from continuing operations
before income taxes in 1999 was affected by a $5.1 million net gain from the
settlement of litigation relative to claims against its insurance carriers for
environmental matters and a $1.1 million gain from the sale of marketable
securities. Changes in sales, operating profit and new orders are discussed
below by segment, and additional information regarding industry segments is
contained in Note 13 of the Notes to Consolidated Financial Statements.
Net income, including an extraordinary charge in 1999, was $13.8 million or
$2.18 per diluted share compared to $11.1 million, including discontinued
operations, or $ 1.95 per diluted share in 1998. Changes in net income were
affected by operating profit, as discussed in the Business Segment sections
below, discontinued operations, and an extraordinary charge as discussed in the
sections below.
During the first half of 1999 the Company made two acquisitions. On June 29,
1998, the Company acquired all of the outstanding stock of Aerospace Rivet
Manufacturers Corporation ("ARM") for $26.2 million in cash including direct
acquisition costs, and other contingent consideration. ARM, located in Santa Fe
Springs, California, produces rivets and externally threaded fasteners. On July
28, 1998, the Company acquired all of the outstanding stock of NORCO, Inc.
("NORCO") for $17.7 million in cash including direct acquisition costs and other
contingent consideration. NORCO, located in Ridgefield, Connecticut, produces
engine compartment hold open rods, actuators and other motion control devices
for the aerospace industry.
During the first half of 1999, the Company incurred an extraordinary charge for
early extinguishment of debt in the amount of $0.8 million after tax. The early
debt extinguishment enabled the Company to expand its credit facility in order
to accommodate the ARM and NORCO acquisitions, as well as to simplify its debt
structure as more fully described in the discussion of Liquidity and Capital
Resources.
During 1999, the Company recorded a charge for the possible loss on notes
receivable in the amount of $0.9 million before tax. This provision related to
notes receivable due from the sale of a previously discontinued company.
During the fourth quarter of 1999, the Company realized a gain from the
disposition of its stock in Mace Security International Inc. in the amount of
$1.1 million, as well as an additional gain of $5.1 million relating to the
settlement of environmental claims with its insurance carriers. The Company's
loss from discontinued operations net of applicable tax benefits was $0.9
million in both 1998 and 1997.
24 TRANSTECHNOLOGY CORPORATION
<PAGE> 27
Interest expense decreased by $0.3 million in 1999 from 1998 primarily due to
lower interest rates. Interest expense increased $0.4 million in 1998 from 1997
primarily as a result of increased bank borrowings related to the acquisition of
TCR Corporation in April, 1997.
New orders received during 1999 totaled $220.9 million, an increase of $14.0
million or 7% from 1998. New orders received during 1998 totaled $206.9 million,
an increase of $30.4 million or 17% from 1997. At March 31, 1999, total backlog
of unfilled orders was $89.7 million compared to $75.9 million and $66.5 million
at March 3l, 1998 and 1997, respectively. New orders and backlog by industry
segment are discussed below.
SPECIALTY FASTENER PRODUCTS SEGMENT 1999 COMPARED WITH 1998
Sales for the Specialty Fastener Products segment were $177.8 million in 1999,
an increase of $9.4 million or 6% from 1998. The increase in sales was primarily
due to the acquisition of ARM on June 29, 1998. Domestic fastener sales were
otherwise generally flat as compared to 1998 sales. Sales of the European hose
clamp division were lower reflecting mainly the loss of one major customer,
which had been anticipated. Sales from the Brazilian retaining ring operation
were also reduced compared to 1998 due to the currency devaluation as well as
economic difficulties experienced in Brazil during 1999. Domestic retaining ring
sales were also lower compared to 1998 due to a loss in market share suffered
during the consolidation of two plants in New Jersey earlier in the year.
Operating profit for the Specialty Fastener Products segment was $26.3 million
in 1999, an increase of $0.1 million compared to 1998. Increased operating
profit generated by the ARM acquisition was essentially offset by the lower
sales and resulting lower operating profit as discussed above from the domestic
and Brazilian retaining ring divisions as well as the European hose clamp
division. Lower operating profit also was experienced at the domestic hose clamp
division due to increased price competition and a change in product mix
resulting in lower absorption of overhead.
In 1999, new orders in the Specialty Fastener Products segment were $171.5
million, virtually the same as 1998. Increased orders stemming from the ARM
acquisition were offset as were sales for the period due to the reasons
discussed above. Backlog of unfilled orders was $45.9 million at March 31, 1999,
compared to $43.5 million at March 31, 1998.
SPECIALTY FASTENER PRODUCTS SEGMENT 1998 COMPARED WITH 1997
Sales for the Specialty Fastener Products segment were $168.5 million in 1998,
an increase of $24.3 million or 17% from 1997. The increase in sales was
primarily due to the inclusion of almost a full year of TCR Corporation
operations in 1998 and overall increased volume of domestic and European
gear-driven fasteners in 1998 as compared to 1997. Specialty Fastener sales were
negatively impacted in 1998 by unfavorable currency exchange rates affecting the
Company's European retaining ring businesses and price reductions due to the
continued consolidation of major European distributors. Domestic retaining ring
sales were down primarily as a result of operational problems associated with
the consolidation of the Company's domestic retaining ring businesses.
Operating profit for the Specialty Fastener Products segment was $26.2 million
in 1998, an increase of $2.1 million or 9% from 1997. The primary factor
contributing to the segment's increased operating profit in 1998 was the TCR
Corporation acquisition, as well as the domestic and European gear-driven
fasteners sales increases over the prior year as mentioned above. These
increases were partially offset by unfavorable, unhedged, intercompany foreign
exchange transactions, lower margins for European retaining rings due to the
distributor consolidation, inefficiencies resulting from work moved to the UK
from the closed German facility and the stronger dollar versus Deutsche mark
compared to 1997.
In 1998, new orders in the Specialty Fastener Products segment increased $30.4
million or 17% from 1997. The primary reasons for the increase were the same as
those noted in the paragraph above relative to the increase in sales. Backlog of
unfilled orders were $43.5 million at March 31, 1998, compared to $34.0 million
at March 31, 1997.
1999 ANNUAL REPORT 25
<PAGE> 28
AEROSPACE PRODUCTS SEGMENT 1999 COMPARED WITH 1998
Sales for the Aerospace Products segment were $50.2 million in 1999, an increase
of $14.7 million or 41% from 1998. The increase was primarily due to the
acquisition of NORCO on July 28, 1998. Sales of rescue hoist and cargo hook
products were also higher for 1999 mainly due to the timing of program sales
such as the Boeing V-22 program which were developed in prior years from
continuing research and development efforts.
The Aerospace Products segment reported an operating profit of $12.1 million in
1999, an increase of $2.8 million or 30% from 1998. The increase was primarily
due to the increased sales and operating profit generated by the NORCO
acquisition.
In 1999 new orders in the Aerospace Products segment increased by $14.0 million
or 40% from 1998. This increase was again primarily due to the NORCO
acquisition. New orders for rescue hoist and cargo hooks were also up slightly.
At March 31, 1999, the backlog of unfilled orders was $43.8 million, compared to
$32.4 million at March 31, 1998.
AEROSPACE PRODUCTS SEGMENT 1998 COMPARED WITH 1997
Sales for the Aerospace Products segment were $35.5 million in 1998, an increase
of $l.0 million or 3% from 1997. The increase was primarily due to customer
timing and placement of new orders.
The Aerospace Products segment reported an operating profit of $9.3 million in
1998, an increase of $1.8 million or 24% from 1997. The increase was primarily
due to product mix, plant operating efficiency improvements, higher sales volume
and tight inventory management.
In 1998 new orders in the Aerospace Products segment decreased by $0.8 million
or 2% from 1997. This decrease was primarily due to customer orders. At March
31, 1998, the backlog of unfilled orders was $32.4 million, compared to $32.5
million at March 31, 1997.
YEAR 2000 READINESS
The Company has been addressing the Year 2000 issue since 1997 and has been
monitoring the progress made at each business unit. The Year 2000 problem
relates to the method that computer programs use to specify a date. In order to
save space in computer data storage, many programs in the past have been written
with two digits for the year specification instead of four digits. The two-digit
date field can make it difficult for computer programs to distinguish between
years such as 1900 and 2000, and therefore can cause malfunctions in computer
operations. Such malfunctions could interfere with any date sensitive processes,
which exist in most computer operations, as well as any equipment, which uses
semiconductor, or "embedded" chip technology. Similar system malfunctions could
also occur at third party supplier locations and consequently create delivery
and service problems for the Company.
The Company has taken steps to have all of its computer systems and facilities
in compliance with the Year 2000 date requirement before that date is reached.
Thus far, the Company has reviewed its facilities and internal computer systems
at all locations for compliance and identified all critical systems in need of
correction. The correction and testing of all critical systems has progressed
substantially and is scheduled for completion by September 1999. The approximate
level of completion at each business unit presently varies between eighty and
ninety-five percent based on current information available. The Company
generally does not sell products that are Year 2000 affected, however, it does
sell test equipment, which is presently Year 2000 compliant, and is providing
retrofit compliant programs to customers with older equipment.
The Company has also taken steps to review Year 2000 compliance by its major
vendors and customers. Survey results have been received and are being reviewed
and updated on a continuing basis. Based on information received to date, there
are no expected interruptions from critical customers or vendors. The cost of
Year 2000 compliance is expected to be $0.5 million of which $0.3 million has
already been incurred and $0.2 million is anticipated to be incurred during
fiscal year 2000. The total cost capitalized for Year 2000 compliance is
expected to be less than $0.1 million.
26 TRANSTECHNOLOGY CORPORATION
<PAGE> 29
As a precaution against unforeseen Year 2000 problems, the Company has
considered contingency plans including alternative automated and manual backup
methods. Other contingency plans which the Company is considering include the
outsourcing and sharing of computer processing requirements. Based on the
present and contingent planning assessment, the Company believes that the
"worst-case" scenario for the Year 2000 problem is in the category of outside
third party services and supplies. Certain government and utility provided
services are not generally available from alternative sources. Should such
services become unavailable there would be a likelihood of manufacturing
interruptions and resulting adverse financial consequences to the Company.
Based on the information obtained to date, the Company does not believe that
there will be any significant interruptions in systems that will adversely
affect the Company relative to the Year 2000 issue. The Company is not, however,
able to identify or control all external Year 2000 issues which may exist at
third-party levels or provide contingency plans for all possible future events.
Assessments of future events and other forward-looking assessments may be
adversely affected by subsequent findings and test results that could have a
material impact on the Company's financial condition and results of operations.
EURO CURRENCY
Effective January 1, 1999, eleven countries comprising the European Union
established fixed foreign currency exchange rates and adopted a common currency
unit designated as the "Euro". The Euro has since become publicly traded and may
be used in commerce during the transition period which is scheduled to end
January 1, 2002, at which time a Euro denominated currency is scheduled to be
issued and is intended to replace those currencies of the eleven member
countries. The transition to the Euro has not resulted in problems for the
Company to date, and is not expected to have any material adverse impact on the
Company's future operations.
NEW ACCOUNTING STANDARDS
In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities, was issued and is
effective for the Company for its fiscal year ending March 31, 2002. SFAS No.
133 requires that all derivative instruments be measured at fair value and
recognized in the balance sheet as either assets or liabilities. The Company is
currently evaluating the impact this pronouncement will have on its consolidated
financial statements.
ACQUISITIONS
On July 28, 1998, the Company acquired all of the outstanding stock of NORCO,
Inc. for $17.7 million in cash, including direct acquisition costs, and other
contingent consideration. NORCO, Inc., located in Ridgefield, Connecticut,
produces aircraft engine compartment hold open rods, actuators and other motion
control devices.
On June 29, 1998, the Company acquired all of the outstanding stock of Aerospace
Rivet Manufacturers Corporation ("ARM") for $26.2 million in cash, including
direct acquisition costs, and other contingent consideration. ARM, located in
Santa Fe Springs, California, produces rivets and externally threaded fasteners.
On April 17, 1997, the Company acquired all of the outstanding stock of TCR
Corporation for $32.6 million in cash plus direct acquisition costs, and other
contingent consideration. TCR Corporation, located in Minneapolis, Minnesota,
produces cold forged and other externally threaded fasteners and related
products for the automotive, heavy vehicle, marine and industrial markets.
On June 18, 1996, the Company acquired the Pebra hose clamp business from Pebra
GmbH Paul Braun i.K. for approximately $3.6 million in cash including direct
acquisition costs. Pebra manufactures heavy duty hose clamps primarily for use
in the manufacture of heavy trucks in Europe.
DISCONTINUED OPERATIONS
During fiscal 1998 and 1997, the Company recorded after tax costs of $0.9
million in both years for the disposal of previously discontinued and sold
operations. These costs represent adjustments to previous estimates related
primarily to legal and environmental matters.
Liquidity and Capital Resources
The Company's debt-to-capitalization ratio was 45%, 35%, and 49% as of March 31,
1999, 1998 and 1997, respectively. The current ratio at March 31, 1999, was
3.39, compared to 2.06, and 2.35 at March 31, 1998 and 1997, respectively.
Working capital was $71.1 million at March 31, 1999, up $20.1 million from 1998
and $19.6 from 1997.
1999 ANNUAL REPORT 27
<PAGE> 30
Effective July 24, 1998, the Company's credit facility was increased from $115.0
million to $125.0 million and was amended to eliminate the Term A and Term B
loans, as well as the asset based lending requirement of the prior loan
agreement. The loan maturity date and all principal payments due were extended
until July 23, 2003, at which time the principal is due in full. The primary
purpose for the increase in the credit facility was to accommodate the ARM and
NORCO acquisitions on June 29, 1998 and July 28, 1998, respectively. Effective
November 27, 1998, the Company's credit facility was amended to increase the
amount available from $125.0 million to $145.0 million in order to continue to
have borrowing capacity for additional acquisition activity.
The credit agreement provides for revolving credit (the "Revolver") for both
domestic and international borrowings, as well as, for letters of credit. The
credit facility is provided by a group of commercial banks and is secured by all
of the Company's assets.
The amount of the revolving bank credit line commitment available for
international credit is $25.0 million and $5.0 million is available for letters
of credit. As of March 31, 1999, the Company's debt consisted of $80.4 million
of borrowings under the domestic revolving credit line, $21.4 million of
borrowings under the international credit line and $0.7 million of other
borrowings. Outstanding letters of credit under the credit line at March 31,
1999 were $0.1 million.
Interest on the Revolver is tied to the primary bank's prime rate, or at the
Company's option, the London Interbank Offered Rate ("LIBOR"), plus a margin
that varies depending upon the Company's achievement of certain operating and
financial goals. At March 31, 1999, $101.4 million of the Company's outstanding
borrowings utilized LIBOR, of which, $7.7 million and $13.7 million were payable
in Deutsche marks and Pounds sterling, respectively. The credit facility
requires the Company to have interest rate protection on a minimum of $50.0
million of its variable rate debt effective April 30, 1999. Interest rate
protection is generally arranged by means of interest rate swap agreements. The
credit agreement limits the Company's ability to pay dividends to 25% of net
income and restricts capital expenditures to a range of $11.8 million to $15.8
million annually, and contains other customary financial covenants.
The Company purchased 249,000 shares of treasury stock during 1999 for $4.9
million. Treasury stock purchases are made in the open market or in negotiated
transactions when opportunities are deemed to arise. Purchases of treasury stock
are limited by the terms of the Company's credit agreement.
Management believes that the Company's anticipated cash flow from operations,
combined with the bank credit agreement described above, will be sufficient to
support working capital requirements, capital expenditures and dividend payments
at their current or expected levels. Capital expenditures in 1999 were $14.8
million compared with $8.7 million in 1998 and $5.5 million in 1997, with
capital expenditures for the Specialty Fastener Products Segment being much
larger than those required by the Aerospace Products Segment.
MARKET RISK
The Company is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange rates and interest rates. The Company does not enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company enters into financial instruments to manage and reduce the impact of
changes in foreign currency exchange rates and interest rates. The
counterparties are major financial institutions.
The Company enters into forward exchange contracts principally to hedge the
currency fluctuations in transactions denominated in foreign currencies, thereby
limiting the Company's risk that would otherwise result from changes in exchange
rates. During 1999, the principal transactions hedged were intercompany loans,
intercompany purchases and trade flows. Gains and losses on forward foreign
exchange contracts and the offsetting gains and losses on hedged transactions
are reflected in the income statement.
28 TRANSTECHNOLOGY CORPORATION
<PAGE> 31
At March 31, 1999, the Company had outstanding forward foreign exchange
contracts to purchase and sell $15.5 million of various currencies (principally
Deutsche marks and Pounds sterling). At March 31, 1999, if all forward contracts
were closed out, the Company would receive approximately $0.6 million (the
difference between the fair value of all outstanding contracts and the contract
amounts). A 10% fluctuation in exchange rates for these currencies would change
the fair value by $1.3 million. However, since these contracts hedge foreign
currency denominated transactions, any change in the fair value of the contracts
would be offset by changes in the underlying value of the transaction being
hedged.
The Company enters into interest rate swap agreements to manage its exposure to
interest rate changes. The swaps involve the exchange of fixed and variable
interest rate payments without exchanging the notional principal amount.
Payments or receipts on the swap agreements are recorded as adjustments to
interest expense. At March 31,1999 the Company had no outstanding interest rate
swap agreements.
CONTINGENCIES
Environmental Matters- During the fourth quarter of fiscal 1999 the Company
reached an agreement with the Pennsylvania Department of Environmental
Protection ("PaDEP") under which the Company will pay $0.4 million for past
costs, future oversight expenses and in full settlement of claims made by PaDEP
related to the environmental remediation at a site in Pennsylvania which
continues to be owned although the related business has been sold. The Company
has provided for this amount in its accrual for environmental liabilities. The
Company must present an environmental cleanup plan for a portion of the site
following the execution of the PaDEP agreement, which is in the form of a
Consent Order and agreement. A Second Consent Order is contemplated by December
1, 2000 for another portion of the site, and a third Consent Order for the
remainder of the site is contemplated by October 1, 2002. The Company is also in
the process of finalizing the documentation of an agreed settlement with the
Federal government under which the government will pay 50% of the environmental
response costs associated with a portion of the site. At March 31, 1999 the
Company's cleanup reserve was $ 1.5 million based on the net present value of
future expected cleanup costs. In addition, the Company settled for a recovery
of a portion of cleanup costs with its insurance carriers for approximately $5.1
million (net) which is included in Other income-net. The Company expects that
remediation at the Pennsylvania site will not be completed for several years.
The Company also continues to participate in environmental assessments and
remediation work at ten other locations, which include operating facilities,
facilities for sale, and previously owned facilities. The Company estimates that
its potential cost for implementing corrective action at these sites will not
exceed $0.2 million payable over the next several years, and has provided for
the estimated costs in its accrual for environmental liabilities.
In addition, the Company has been named as a potentially responsible party in
seven environmental proceedings pending in several other states in which it is
alleged that the Company was a generator of waste that was sent to landfills and
other treatment facilities and, as to several sites, it is alleged that the
Company was an owner or operator. Such properties generally relate to
businesses, which have been sold or discontinued. It is not possible to reliably
estimate the costs associated with any remedial work to be performed until
studies at these sites have been completed, the scope of work defined, a method
of remediation selected and approved by the relevant state authorities, and the
costs allocated among the potentially responsible parties.
Litigation- The Company is also engaged in various other legal proceedings
incidental to its business. It is the opinion of management that, after taking
into consideration information furnished by its counsel, the above matters will
have no material effect on the Company's consolidated financial position or the
results of the Company's operations in future periods.
1999 ANNUAL REPORT 29
<PAGE> 32
Board of Directors and
Corporate Officers
[PHOTO OMITTED]
Board of Directors
From left to right:
James A. Lawrence, John H. Dalton, Walter Belleville, Michel Glouchevitch,
Thomas V. Chema, William J. Recker and Michael J. Berthelot
(not pictured, Gideon Argov)
[PHOTO OMITTED]
Corporate Officers
From left to right:
Robert L.G. White,
President Aerospace Products Group;
Gerald C. Harvey,
VP, Secretary and General Counsel;
Ulf Jemsby,
President International Industrial Products Group;
Joseph F. Spanier,
VP, CFO and Treasurer;
Monica Aguirre,
Assistant Secretary;
Michael J. Berthelot,
Chairman, President and CEO;
Robert Tunno,
President Domestic Industrial Products Group
30 TRANSTECHNOLOGY CORPORATION
<PAGE> 33
DIRECTORS
* Gideon Argov
Chairman of the Board, President and Chief Executive Officer
Kollmorgen Corporation
*+ Walter Belleville
Chairman of the Board
ATI Machinery, Inc.
@ Michael J. Berthelot
Chairman of the Board, President and Chief Executive Officer
TransTechnology Corporation
@+ Thomas V. Chema
Partner
Arter & Hadden
John H. Dalton
Former Secretary of the Navy
+@ Michel Glouchevitch
Managing Director
Triumph Capital Group
*+ James A. Lawrence
Executive Vice President and Chief Financial Officer
General Mills, Inc.
William J. Recker
Chairman of the Board
Gretag Imaging Group Inc.
* Audit Committee
@ Nominating Committee
+ Incentives & Compensation Committee
CORPORATE OFFICERS
Michael J. Berthelot
Chairman of the Board, President and Chief Executive Officer
Joseph F. Spanier
Vice President, Chief Financial Officer and Treasurer
Gerald C. Harvey
Vice President, Secretary and General Counsel
Robert L. G. White
President Aerospace Products Group
Robert Tunno
President Domestic Industrial Products Group
Ulf Jemsby
President International Industrial Products Group
Monica Aguirre
Assistant Secretary
COUNSEL
Hahn, Loeser & Parks
Cleveland, Ohio
AUDITORS
Deloitte & Touche LLP
Parsippany, New Jersey
TRANSFER AGENT AND REGISTRAR
Boston EquiServe, L.P.
Canton, Massachusetts
OPERATIONAL GROUPS
Domestic Industrial Products Group
Aerospace Rivet Manufacturers Corporation (ARM)
Solid rivets and threaded fasteners
17425 Railroad Street
City of Industry, CA 91744-1026
626/646-2150
Fax 626/646-2166
www.aerospacefasteners.com
Michael Rott - President
Breeze Industrial Products
Gear-driven band fasteners
100 Aero-Seal Drive
Saltsburg, PA 15681-9594
724/639-3571
Fax 724/639-3020
www.breezeclamps.com
Thomas G. Watson - President
Pebra Products Division
Gear-driven band fasteners
Werk 4, Hauptstra(beta)e 2/1
78628 Frittlingen, Germany
49/7426 949 20
Fax 49/7426 949 224
The Palnut Company
Single and multi-thread fasteners
152 Glen Road
Mountainside, NJ 07092-2997
908/233-3300
Fax 908/233-6566
www.palnut.com
Stanley E. Erman - President
TCR Corporation
Cold forged and machined products
1600 67th Avenue North
Minneapolis, MN 55430-1755
612/560-2200
Fax 612/561-0949
John Funk - President
Waldes/Industrial Retaining Ring (IRR)
Multi-sized retaining rings and assembly tools
70 East Willow Street
Millburn, NJ 07041-9998
973/376-3892
Fax 973/926-4699
www.waldes.com
Peter J. Lowe - President
<PAGE> 34
International Industrial Products Group
Seeger-Orbis GmbH
Retaining rings and circlips
Wiesbadener Stra(beta)e 243
D-61462 Konigstein, Germany
49/6174 2050
Fax 49/6174 205 100
[email protected]
Sven-Uwe Wolber - Managing Director
Anderton International Ltd.
Retaining rings and circlips
Ferncliffe Road
Bingley, West Yorkshire
England BD16 2PL
44/1274 782 200
Fax 44/1274 771 900
Daran Brown - Managing Director
TransTechnology Brasil Ltda.
Retaining rings and circlips
Av. Prestes Maia 230
Diadema, Sao Paulo
Brazil 09930-270
55/11 713 3133
Fax: 55/11 713 4412
www.seegerreno.com.br
Serge Zerey - Managing Director
Aerospace Products Group
Breeze-Eastern
Lifting and restraint products
700 Liberty Avenue
Union, NJ 07083-8198
908/686-4000
Fax 908/686-9292
www.breeze-eastern.com
Robert L. G. White - President
Norco, Inc.
Hold open rods and mechanical systems
139 Ethan Allen Highway
Ridgefield, CT 06877-6294
203/544-8301
Fax: 203/544-7121
www.norcoinc.com
Surin M. Malhotra - President
<PAGE> 35
Investor Relations Contact
Michael J. Berthelot
Chairman of the Board, President
and Chief Executive Officer
TransTechnology Corporation
150 Allen Road
Liberty Corner, New Jersey 07938
908/903-1600
Fax 908/903-1616
www.transtechnology.com
Annual Meeting
The Annual Shareholders'
Meeting will be held on Thursday, July 15, 1999 at the Somerset Hills Hotel 200
Liberty Corner Road Warren, New Jersey 07059
Form 10-K and
Additional Information
The Company, upon request to the Investor Relations department, will provide to
any shareholder a copy of the Form 10-K required to be filed with the Securities
and Exchange Commission and any other available information.
<PAGE> 36
[LOGO]TransTechnology
corporation
engineered products for global partners(TM)
150 Allen Road
Liberty Corner, New Jersey 07938
908 / 903-1600
Fax 908 / 903-1616
www.transtechnology.com
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
---------------------------
LISTED BELOW ARE THE WHOLLY OWNED SUBSIDIARIES
OF TRANSTECHNOLOGY CORPORATION
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
<S> <C>
Aerospace Rivet Manufacturers Corporation California
Anderton (Predecessors) Limited England
Electronic Connections and Assemblies, Inc. Delaware
Industrial Retaining Ring Company New Jersey
NORCO, Inc. Connecticut
Palnut Fasteners, Inc. Delaware
Rancho TransTechnology Corporation California
Retainers, Inc. New Jersey
Seeger Inc. Delaware
Seeger-Orbis Beteiligungsgesellschaft GmbH Germany
Seeger-Orbis GmbH & Co. OHG Germany
Seeger Reno Industria e Comercio Ltd. Brazil
SSP Industries California
SSP International Sales, Inc. California
TCR Corporation Minnesota
TransTechnology (GB) Limited (f/k/a) Anderton International Limited England
TransTechnology Acquisition Corporation Delaware
TransTechnology Aerospace, Inc. California
TransTechnology Australasia Pty. Ltd. Australia
TransTechnology (Europe) Ltd. England
TransTechnology International Corporation Virgin Islands
TransTechnology Seeger Inc. Delaware
TransTechnology Seeger-Orbis GmbH Germany
TransTechnology Systems & Services, Inc. Michigan
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,255
<SECURITIES> 0
<RECEIVABLES> 36,323
<ALLOWANCES> 240
<INVENTORY> 58,668
<CURRENT-ASSETS> 100,901
<PP&E> 111,401
<DEPRECIATION> 35,017
<TOTAL-ASSETS> 279,720
<CURRENT-LIABILITIES> 29,807
<BONDS> 102,509
0
0
<COMMON> 67
<OTHER-SE> 12,324
<TOTAL-LIABILITY-AND-EQUITY> 279,720
<SALES> 228,006
<TOTAL-REVENUES> 234,780
<CGS> 156,090
<TOTAL-COSTS> 54,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 803
<INTEREST-EXPENSE> 6,938
<INCOME-PRETAX> 24,294
<INCOME-TAX> 9,704
<INCOME-CONTINUING> 14,590
<DISCONTINUED> 0
<EXTRAORDINARY> (781)
<CHANGES> 0
<NET-INCOME> 13,809
<EPS-BASIC> 2.21
<EPS-DILUTED> 2.18
</TABLE>
