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EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
DATED AS OF
SEPTEMBER 30, 1998
AMONG
TRUE TEMPER CORPORATION
AND
THE PURCHASER PARTY HERETO
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SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE 1.DEFINITIONS.............................................................................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Accounting Terms and Determinations...................................................11
ARTICLE 2.PURCHASE AND SALE OF SECURITIES; TERMS OF SECURITIES...................................................11
Section 2.01. Commitment to Purchase................................................................11
Section 2.02. Takedown Procedures...................................................................12
Section 2.03. Fees..................................................................................12
Section 2.04. Mandatory Termination of Commitments..................................................12
Section 2.05. Interest..............................................................................12
Section 2.06. Maturity of Notes; Prepayment of Notes................................................13
Section 2.07. Taxes.................................................................................14
ARTICLE 3.REPRESENTATIONS AND WARRANTIES.........................................................................16
Section 3.01. Corporate Existence and Power.........................................................16
Section 3.02. Authorization, Execution and Enforceability...........................................16
Section 3.03. Governmental Authorization............................................................17
Section 3.04. Contravention.........................................................................17
Section 3.05. Financial Information.................................................................17
Section 3.06. Litigation............................................................................18
Section 3.07. Environmental Matters.................................................................18
Section 3.08. Taxes.................................................................................19
Section 3.09. Subsidiaries..........................................................................19
Section 3.10. Governmental Regulations..............................................................19
Section 3.11. Full Disclosure.......................................................................19
Section 3.12. Capitalization........................................................................20
Section 3.13. Solicitation..........................................................................20
Section 3.14. Non-fungibility.......................................................................20
Section 3.15. Permits...............................................................................20
Section 3.16. Representations in Other Financing Documents and in Material
Recapitalization Documents............................................................21
Section 3.17. No Undisclosed Liabilities............................................................21
Section 3.18. ERISA Matters.........................................................................21
ARTICLE 4.REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................21
Section 4.01. Purchase for Investment; Authority; Binding Agreement.................................21
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ARTICLE 5.CONDITIONS PRECEDENT TO PURCHASE.......................................................................22
Section 5.01. Conditions to Purchaser's Obligation at Takedown......................................22
ARTICLE 6.COVENANTS..............................................................................................24
Section 6.01. Information...........................................................................24
Section 6.02. Payment of Obligations................................................................25
Section 6.03. Insurance.............................................................................25
Section 6.04. Conduct of Business and Maintenance of Existence......................................25
Section 6.05. Compliance with Laws..................................................................26
Section 6.06. Inspection of Property, Books and Records.............................................26
Section 6.07. Investment Company Act................................................................26
Section 6.08. Limitation on Debt....................................................................26
Section 6.09. Restricted Payments; Voluntary Prepayments............................................27
Section 6.10. Investments...........................................................................27
Section 6.11. Negative Pledge.......................................................................28
Section 6.12. Transactions with Affiliates..........................................................28
Section 6.13. Consolidations, Mergers and Sales of Assets; Ownership of Subsidiaries................28
Section 6.14. Use of Proceeds.......................................................................29
Section 6.15. Restrictions on Certain Amendments....................................................29
Section 6.16. Limitation on Sales of Assets and Subsidiary Stock....................................29
Section 6.17. Sale and Leaseback Transactions.......................................................29
Section 6.18. Assumed Debt..........................................................................29
Section 6.19. Business Activities...................................................................29
ARTICLE 0.XXXXXX OF DEFAULT......................................................................................29
Section 7.01. Events of Default Defined; Acceleration of Maturity; Waiver of Default................29
ARTICLE 8.LIMITATION ON TRANSFERS................................................................................32
Section 8.01. Restrictions on Transfer..............................................................32
Section 8.02. Restrictive Legends...................................................................32
Section 8.03. Notice of Proposed Transfers..........................................................32
ARTICLE 9.MISCELLANEOUS..........................................................................................33
Section 9.01. Notices...............................................................................33
Section 9.02. No Waivers; Amendments................................................................33
Section 9.03. Indemnification.......................................................................34
Section 9.04. Expenses..............................................................................36
Section 9.05. Payment...............................................................................36
Section 9.06. Confidentiality.......................................................................37
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Section 9.07. Successors and Assigns................................................................37
Section 9.08. Brokers...............................................................................37
Section 9.09. New York Law; Submission to Jurisdiction; Waiver of Jury Trial........................37
Section 9.10. Severability..........................................................................37
Section 9.11. Counterparts..........................................................................38
SCHEDULES
Schedule 3.04 Contravention
Schedule 3.07 Environmental Matters
Schedule 3.09 Subsidiaries
Schedule 3.12 Capitalization of the Company
Schedule 6.08 Debt
Schedule 6.10 Investments
Schedule 6.11 Liens
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Note
Exhibit C Form of Debt Registration Rights Agreement
Exhibit D Form of Warrant Agreement
Exhibit E Form of Equity Registration Rights Agreement
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SECURITIES PURCHASE AGREEMENT
AGREEMENT dated as of September 30, 1998 among True Temper
Corporation and the Purchaser.
The parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Accreted Value" means, for each $1,000 face amount of Notes
as of any date of determination prior to the Maturity Date, the sum of (i) the
initial offering price of each Note and (ii) that portion of the excess of the
principal amount of each Note over such initial offering price which shall have
been accreted thereon through such date, such amount to be so accreted on a
daily basis and compounded quarterly on each March 31, June 30, September 30 and
December 31 at the rate of 10.5% per annum (subject to adjustment pursuant to
Section 2.05) from the date of issuance of the Notes through the date of
determination.
"Administrative Agent" means The First National Bank of
Chicago, in its capacity as administrative agent under the Senior Credit
Facilities, and any successor thereto.
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Agreement, as amended from time to time
in accordance with its terms.
"Applicable Premium" means, with respect to any Note on any
date of redemption with respect thereto, the excess of (A) the present value at
such date of redemption of (1) the principal amount of such Note at the Maturity
Date plus (2) all required interest payments due on such Note through the
Maturity Date (excluding accrued but unpaid interest), computed using a discount
rate equal to the Treasury Rate on such date of redemption plus .50% over (B)
the Accreted Value of such Note.
"Asset Sale" means any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
the Company or any of its Subsidiaries of any asset, including without
limitation any sale and leaseback transaction, but excluding (i) dispositions in
the ordinary course of business, (ii) dispositions to the Company or a
wholly-owned Subsidiary of the Company; (iii) the licensing of intellectual
property in the ordinary course of business, and (iv) cash payments otherwise
permitted under this Agreement; provided, that
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any disposition not excluded pursuant to clauses (i) through (iv) shall
constitute an Asset Sale only if, and solely to the extent that, the Net Cash
Proceeds therefrom, together with the Net Cash Proceeds from all other such
dispositions effected by the Company and its Subsidiaries after the date hereof,
exceed $1,000,000.
"Base Financial Statements" has the meaning set forth in
Section 3.05(a).
"Black & Xxxxxx" means The Black & Xxxxxx Corporation, a
Maryland corporation, and its successors.
"Business Acquisition" means (i) an Investment by the Company
or any of its Subsidiaries in any other Person pursuant to which such Person
shall become a Subsidiary or shall be merged into or consolidated with the
Company or any of its Subsidiaries or (ii) an acquisition by the Company or any
of its Subsidiaries of the property and assets of any Person (other than the
Company or any of its Subsidiaries) that constitute a substantial part of the
assets of such Person or of any division or other business unit of such Person.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York or London are
authorized or required by law to close.
"Cash Equivalents" means (i) United States dollars, (ii)
Government Securities having maturities of not more than six months from the
date of acquisition, (iii) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Senior Credit Facilities or
with any domestic commercial bank having capital and surplus in excess of $500
million and a Xxxxxxxx Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the rating of "P-2" (or higher) from Xxxxx'x
Investors Service, Inc. or "A-3" (or higher) from Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) any fund investing exclusively in investments of the type described in
clauses (i) through (v) above.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of any association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) in the nature of corporate stock, (iii) in the case of a partnership
or limited liability company, any and all partnership or membership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with U.S. GAAP.
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"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related Parties
(as defined below), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Principals and their
Related Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the Voting Stock of the Company (measured by voting power rather
than number of shares), or (iv) the first day on which a majority of the members
of the Board of Directors of the Company are not Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulation promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to the Purchaser, the amount
set forth opposite its name on the signature pages hereto.
"Common Stock" means the authorized common stock, par value
$.01 per share, of the Company.
"Company" means True Temper Corporation, a Delaware
corporation.
"Company Corporate Documents" means the certificate of
incorporation and by-laws of the Company.
"Consolidated Subsidiary" means, at any date with respect to
any Person, any Subsidiary or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Continuing Directors" means as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of hereof, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was nominated by the Principals (or any entity
controlled by the Principals) pursuant to the Stockholders Agreement.
"Debt" of any Person means, with respect to any Person, any
indebtedness of such Person, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or bankers' acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing
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indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
U.S. GAAP, as well as all indebtedness of others secured by a Lien on any asset
of such Person (whether or not such Indebtedness is assumed by such Person) and,
to the extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person. The amount of any Indebtedness outstanding as
of any date shall be (i) the accreted value thereof, in the case of any
Indebtedness that does not require current payments of interest, and (ii) the
principal amount thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.
"Debt Incurrence" means any incurrence by the Company or any
of its Subsidiaries of any Debt, other than Debt permitted under Section 6.08.
"Debt Registration Rights Agreement" means the Debt
Registration Rights Agreement, dated as of September 30, 1998, between the
Company and the Purchaser, in the form attached as Exhibit C to this Agreement,
as amended, supplemented or otherwise modified from time to time.
"Default" means any Event of Default or any event or condition
which, with the giving of notice or lapse of time or both, would, unless cured
or waived, become an Event of Default.
"DLJSC" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, a Delaware corporation, and its successors.
"dollars" or "$" mean lawful currency of the United States of
America.
"Environmental Laws" means any and all statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees,
codes, injunctions, permits, governmental grants, licenses and governmental
restrictions relating to the effect of the environment or Hazardous Materials on
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Materials or wastes into the environment,
including ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous Materials
or wastes or the clean-up or other remediation thereof.
"Environmental Report" means the Environmental Due Diligence
Audit in respect of the Company and its Subsidiaries prepared by Strata
Environmental in September 1998.
"Equity Investors" means True Temper Sports, LLC, a Delaware
limited liability company organized at the direction of Cornerstone Equity
Investors IV, L.P., GS Private Equity Partners, L.P., GS Private Equity Partners
Offshore, L.P., Xxxxxxxx Street Partners 1998 DIF, LLC, Xxxxxxxx Street Partners
and certain current members of management of the Company and certain of its
Subsidiaries.
"Equity Issuance" means the issuance of any equity securities
by the Company or any of its Subsidiaries (including without limitation any
equity securities issued pursuant to the exercise
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of stock options or warrants or the Permanent Financing), but excluding (i) any
subscription agreement incentive plan or similar arrangement with any officer,
employee or director of the Company or any of its Subsidiaries, or (ii) the
issuance of any Capital Stock of the Company or any of its Subsidiaries to any
officer, director or employee of the Company or any of its Subsidiaries.
"Equity Registration Rights Agreement" means the Equity
Registration Rights Agreement, dated as of September 30, 1998, among the Company
and the Purchaser, in the form attached as Exhibit E to this Agreement, as
amended, supplemented or otherwise modified from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company or any Subsidiary of the Company
is treated as a single employer under Title IV of ERISA or, solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code. ERISA Affiliate shall not include Black
& Xxxxxx or any other entity that would be an ERISA Affiliate solely as a result
of Black & Xxxxxx'x classification as an ERISA Affiliate.
"Escrow Agent" means Xxxxx Inc., a Delaware corporation.
"Escrow Agreement" means the escrow agreement, dated as of
September 30, 1998, among the Company, the Purchaser and the Escrow Agent, in
the form attached as Exhibit A to this Agreement, as amended, supplemented or
otherwise modified from time to time.
"Event of Default" has the meaning set forth in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" has the meaning set forth in Section 2.01.
"Extension Fee" means that certain cash duration fee, to be
paid to the Purchaser on the first anniversary of the Issuance Date, in an
amount equal to 3.00% of the Accreted Value of Notes outstanding on such date.
"Financing Documents" means this Agreement, the Notes, the
Debt Registration Rights Agreement, the Equity Registration Rights Agreement,
the Warrant Agreement, the Warrants and the Escrow Agreement.
"Grafalloy Transaction" means the acquisition by Cornerstone
Equity Investors IV, L.P., or its assignee (including the Company) of all of the
outstanding capital stock of Grafalloy Corporation.
"Guarantee Obligation" means as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any
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bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any Debt,
leases, dividends or other obligations (the "primary obligations") of any other
third Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of the guaranteeing
person, whether or not contingent, (i) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined in
good faith by the Person to whom such Guarantee Obligation is payable.
"Hazardous Materials" means (i) asbestos; (ii) polychlorinated
biphenyls; (iii) petroleum, its hazardous derivatives, by-products and other
hydrocarbons; and (iv) any other toxic, radioactive, caustic or otherwise
hazardous substance regulated under Environmental Laws.
"Hazardous Materials Contamination" means contamination of the
buildings, facilities, soil or groundwater on or of the property of the Company
by Hazardous Materials, or any derivatives thereof, or on or of any other
property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the property of
the Company.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, currency exchange rates or commodities prices.
"Holder" means any holder of any Note.
"Intellectual Property Rights" means any patent, trade xxxx,
service xxxx, registered design, trade name or copyright required to carry on
the business of the Company and such other business as may be permitted by the
terms of this Agreement and which is carried on at the relevant time.
"Interest Payment Date" means each March 31, June 30,
September 30 and December 31 (or, if any such date is not a Business Day, the
next succeeding Business Day).
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit, Guarantee
Obligation or otherwise.
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"Issuance Date" means the date the Notes are issued by the
Company and purchased by the Purchaser.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Majority Holders" means (i) at any time prior to the issuance
of the Notes, the holders of a majority of the Commitments and (ii) at any time
thereafter, the holders of voting rights with respect to waivers, amendments and
other actions permitted or required to be taken by Holders under the terms of
the Notes constituting a majority of such voting rights attributable to the
aggregate outstanding amount of Notes at such time.
"Material Adverse Effect" means a material adverse affect on
the properties, condition (financial or otherwise) operations, performances,
projections, prospects or business of the Company and its Subsidiaries, taken as
a whole.
"Material Recapitalization Documents" means the
Recapitalization Agreement, as amended from time to time in accordance with
Section 6.15, and such other agreements entered into in connection therewith.
"Maturity Date" means the eleventh anniversary of the Issuance
Date.
"Multiemployer Plan" means any Plan that is a multiemployer
plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any transaction, an
amount equal to the cash proceeds received by the Company or any of its
Subsidiaries from or in respect of such transaction (including any non-cash
proceeds of such transaction to the extent sold for cash within 30 days of such
transaction), less (i) any expenses (including commissions) reasonably incurred
by the Company or such Subsidiary in respect of such transaction, (ii) the
amount of any Debt secured by a Lien on a related asset and discharged from the
proceeds of such transaction and (iii) any taxes paid or payable by the Company
or such Subsidiary with respect to such transaction (as reasonably estimated by
the Company's chief financial officer in good faith).
"Notes" means the Company's Senior Increasing Rate Discount
Notes substantially in the form set forth as Exhibit B hereto.
"Other Taxes" has the meaning set forth in Section 2.07(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
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"Permanent Financing" means any Debt Incurrence or Equity
Issuance following the date hereof for the purpose of refinancing the Notes.
"Permits" means all domestic and foreign licenses, permits and
approvals required for the full operation of the Company and its Subsidiaries,
including provincial, state, federal, city and county permits and approvals.
"Permitted Business" means any business in which the Company
and its Subsidiaries are engaged on the Issuance Date or any business reasonably
related, incidental or ancillary thereto.
"Permitted Liens" means Liens expressly permitted to exist by
the terms of Section 6.11 hereof.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.
"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA to which the Company, any Subsidiary or any ERISA Affiliate has,
or, within the six years preceding the date of this Agreement, had, any
liability or in respect of which the Company or any Subsidiary of the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means, for any day, a rate per annum equal to the
rate of interest publicly announced by The Bank of New York (or its successor)
from time to time in The City of New York as its prime, reference or base rate,
it being understood that such rate is one of such bank's base rates and serves
as a basis upon which effective rates of interest are calculated for those loans
making reference thereto and may not be the lowest of such bank's base rates.
"Principals" means Cornerstone Equity Investors IV, L.P. and
its Affiliates, GS Private Equity Partners, L.P., GS Private Equity Partners
Offshore, L.P., Xxxxxxxx Street Partners 1998 DIF, LLC and Xxxxxxxx Street
Partners.
"Purchaser" means Emhart, Inc., a Delaware corporation, and
its successors.
"Qualified Plan" means a Plan (other than a Multiemployer
Plan) which is "a pension plan" (as defined in Section 3(2) of ERISA) intended
to be tax-qualified under Section 401(a) of the Code.
"Recapitalization" means the reorganization, recapitalization
and sale of stock of the Company pursuant to the terms of the Recapitalization
Agreement.
"Recapitalization Agreement" means the Reorganization,
Recapitalization and Stock Purchase Agreement, dated as of June 29, 1998, among
Black & Xxxxxx, the Company and TTSI
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LLC, as amended by Amendment No. 1 thereto, dated as of August 1, 1998 and
Amendment No. 2 thereto, dated as of September 30, 1998, and as further amended
from time to time in accordance with Section 6.15.
"Related Party" with respect to any Principal means (A) any
controlling stockholder or partner, 50% (or more) owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Principal or (B)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding (directly or
through one or more Subsidiaries) a 50.1% or more controlling interest of which
consist of the Principals and/or such other Persons referred to in the
immediately preceding clause (A).
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the capital stock of the Company (except dividends
payable solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of the
capital stock of the Company or (b) any option, warrant or other right to
acquire shares of the capital stock of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means a $57,500,000 senior secured
financing consisting of a six year $20,000,000 non-amortizing revolving credit
facility and term loans in aggregate principal amount of $37,500,000 consisting
of a $10,000,000 Term A Loan due 2004 and a $27,500,000 Term B Loan due 2005, in
each case, under that certain Credit Agreement, dated as of September 30, 1998,
among TTSI, the Subsidiaries of TTSI party thereto, the lenders party thereto,
DLJ Capital Funding, Inc., as syndication agent, Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, as lead arranger and The First National Bank of Chicago,
as administrative agent for the lenders, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, provided that the principal amount
thereof does not exceed $57,500,000, plus the amount of reasonable expenses
incurred in connection therewith (other than as a result of currency
fluctuations) less (a) the amount of all scheduled principal repayments actually
made from time to time hereafter of term Debt thereunder and (b) the amount of
all principal repayments actually made from time to time hereafter of revolving
Debt thereunder to the extent made with the net cash proceeds of Asset Sales to
the extent applied to permanently reduce the revolving commitments thereunder.
"Shelf Registration" means a "shelf" registration statement on
any appropriate form pursuant to Rule 415 (or similar rule that may be adopted
by the Commission) under the Securities Act.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Registration S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Sponsors" means Cornerstone Equity Investors IV, L.P..
"Stockholders' Agreement" means the Stockholders' Agreement,
dated as of September 30, 1998, among the Equity Investors, the Company and
Emhart Industries, Inc., a
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wholly-owned subsidiary of Black & Xxxxxx, as amended, supplemented or otherwise
modified from time to time.
"Subordinated Notes" means TTSI's 10 1/2% Senior Subordinated
Increasing Rate Notes or the refinancing thereof.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"Taxes" has the meaning set forth in Section 2.07(a).
"Transfer" means any disposition of Notes that would
constitute a sale thereof under the Securities Act.
"Treasury Rate" means, as of any date, the yield to maturity
as of such date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two Business Days
prior to such date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
remaining term to maturity of the Notes; provided, however, that if such term to
maturity is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"TTSI" means True Temper Sports, Inc., a Delaware corporation,
and a wholly-owned subsidiary of the Company.
"U.S. GAAP" means generally accepted accounting principles as
in effect from time to time in the United States of America.
"Voting Stock" means, in respect of any Person, any class or
classes of Capital Stock of such Person pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not, at the time, stock of any other class or
classes shall have, or might have, voting power by reason of the happening of
any contingency).
"Warrants" means the warrants to purchase common stock of the
Company to be issued pursuant to the Warrant Agreement.
"Warrant Agreement" means the warrant agreement, dated as of
September 30, 1998, between the Company and the Purchaser in the form attached
as Exhibit D to this Agreement, as amended, supplemented or otherwise modified
from time to time.
"Warrant Shares" has the meaning set forth in Section 5.01(o).
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Section 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with U.S. GAAP applied on a consistent basis (except for changes
concurred in by the Company's independent public accountants).
ARTICLE 2.
PURCHASE AND SALE OF SECURITIES; TERMS OF SECURITIES
Section 2.01. Commitment to Purchase.
(a) Subject to the terms and conditions set forth herein and
in reliance on the representations and warranties of the Company contained
herein and in the other Financing Documents, the Company may at its option issue
and sell to the Purchaser on the Issuance Date, and the Purchaser agrees to
purchase on the Issuance Date, Notes with an initial Accreted Value equaling the
Purchaser's Commitment. The purchase price for the Notes shall be 100% of the
initial Accreted Value thereof.
(b) Each Commitment will terminate (the "Expiration Date") on
the earliest of (i) the termination of the Recapitalization Agreement in
accordance with the terms thereof prior to the consummation of the
Recapitalization, (ii) the consummation of the Recapitalization without the
issuance of the Notes (if such date occurs prior to the Issuance Date), (iii)
the date on which the Company, any of its Subsidiaries or the Sponsors commences
the marketing of any proposed Permanent Financing with respect to which DLJSC or
any of its Affiliates is not the sole manager, sole agent, sole initial
purchaser or sole underwriter (if such date occurs prior to the Issuance Date)
and (iv) 5:00 P.M. (New York City time) on October 15, 1998 (if such date occurs
prior to the Issuance Date); provided, that if at any time on or after the date
hereof an Event of Default shall have occurred and be continuing, the Purchaser
may at its option terminate its Commitment by notice to the Company, such
termination to be effective upon the giving of such notice; and provided further
that each Commitment shall automatically terminate, without notice to the
Company or any other action on the part of the Purchaser, upon the occurrence of
any of the events specified in Sections 7.01(e) and 7.01(f) with respect to the
Company.
(c) No Commitment is revolving in nature, and principal
amounts of Notes prepaid in accordance with Section 2.06 may not be resold to
the Purchaser hereunder.
Section 2.02. Takedown Procedures.
As partial consideration for the sale of stock and other
transactions contemplated by the Reorganization, Recapitalization and Stock
Purchase Agreement, dated as of June 29, 1998, among Black & Xxxxxx, TTSI and
TTSI LLC, the Company shall deliver to the Purchaser a single Note representing
the aggregate principal amount at the Maturity Date of Notes to be purchased by
the Purchaser registered in the name of the Purchaser, or, if requested by the
Purchaser, separate Notes in such other denominations and registered in such
name or names as shall be designated by the Purchaser by notice to the Company
at least one Business Day prior to the Issuance Date.
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Section 2.03. Fees.
(a) The Company shall pay the Purchaser a fee of $375,000.
(b) On the first anniversary of the Issuance Date, the Company
shall pay the Purchaser the Extension Fee.
Section 2.04. Mandatory Termination of Commitments.
Each Commitment shall terminate on the Expiration Date.
Section 2.05. Interest
(a) Each Note will accrete at the rate in effect under clause
(b), (c) or (e) of this Section, compounded quarterly to the Maturity Date, on
each Interest Payment Date of each year in which such Note remains outstanding
commencing with the first Interest Payment Date after the date of issuance
thereof. No cash interest will be payable on the Notes prior to the Maturity
Date. Interest on each Note shall be calculated at the rates per annum set forth
below, and shall accrue from and including the most recent Interest Payment Date
to which interest has been paid on such Note (or if no interest has accrued on
such Note, from the date of issuance thereof) to but excluding the date on which
payment in full of the principal sum of such Note has been made.
(b) The interest rate applicable to each Note shall be a
floating rate per annum equal to the sum of (i) the Prime Rate in effect from
time to time plus (ii) 2.00% plus (iii) an additional percentage amount equal to
1.00% from and including the Interest Payment Date falling on March 31, 1999 and
increasing by 0.50% effective on each Interest Payment Date thereafter until the
earlier of (x) the date the principal amount of, and accrued and unpaid interest
on, if any, such Note is paid in full and (y) the first anniversary of the
Issuance Date or, in any case, if less, the maximum rate permitted by applicable
law. Interest on each Note will be calculated on the basis of a 365-day year and
paid for the actual number of days elapsed.
(c) The interest rate applicable to each Note commencing on
the first anniversary of the Issuance Date shall be a floating rate per annum
equal to greatest of (i) the sum of (A) the Prime Rate in effect from time to
time plus (B) 4.00%, (ii) the sum of (A) the Treasury Rate plus (B) 7.00%, (iii)
the sum of (A) the DLJ High Yield Composite Index plus (B) 3.00%, and (iv) the
sum of (A) the interest rate applicable to such Note on the day immediately
preceding the first anniversary of the Issuance Date plus (B) .50%, in each
case, increasing by .50% on each Interest Payment Date thereafter until the date
the principal amount of, and accrued and unpaid interest on, if any, such Note
is paid in full.
(d) In addition to any adjustments to the Interest Rate set
forth in subsections (b) and (c) of this Section 2.05, if, pursuant to the terms
of the Debt Registration Rights Agreement, a Shelf
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Registration with respect to the Notes either (i) has not been filed with the
Commission on or prior to the 90th day following the first anniversary of the
Issuance Date or (ii) has not been declared effective by the Commission on or
prior to the 180th day following the first anniversary of the Issuance Date,
then the Company shall pay liquidated damages thereafter of $.192 per week per
$1,000 principal amount of Notes outstanding until the date on which the Shelf
Registration is declared effective by the Commission. Following the
effectiveness of the Shelf Registration, the Company shall also pay such
liquidated damages beginning on the first date on which such Shelf Registration
ceases to remain effective and shall continue at such increased interest rate
until such Shelf Registration is again declared effective by the Commission.
(e) The Purchaser may, on the first anniversary of the
Issuance Date, fix the interest rate on the Notes at a rate to be determined by
the Purchaser in its sole discretion provided that such rate shall not exceed
seventeen percent (17.00%).
(f) Notwithstanding anything to the contrary set forth above,
at no time shall the per annum interest rate on the Notes exceed seventeen
percent (17.00%), nor shall the per annum interest rate on the Notes be lower
than ten percent (10.00%).
Section 2.06. Maturity of Notes; Prepayment of Notes.
(a) The Notes shall mature on the Maturity Date.
(b) The Company at its option may, upon ten days' written
notice to the Holders, at any time, prepay all or any part of the Notes at a
redemption price equal to 100.00% of the Accreted Value or the principal amount
of the Notes, as the case may be, so prepaid together with any accrued interest
to the date of prepayment, plus the Applicable Premium as of the date of
prepayment if the interest rate has been fixed in accordance with Section
2.05(e).
(c) The Company shall, within five days of receipt by the
Company or any of its Subsidiaries of the Net Cash Proceeds of any Permanent
Financing and within thirty days of receipt by the Company or any of its
Subsidiaries of the Net Cash Proceeds of any Asset Sale, in each case, to the
extent not required to be used to repay the Subordinated Notes or Debt under the
Senior Credit Facilities and not subject to any period during which the Company
or any of its Subsidiaries may reinvest such proceeds prior to a requirement to
repay Debt under the Senior Credit Facilities, redeem an amount of the Notes
equal to the amount of such Net Cash Proceeds (less any amounts not required to
be paid as a result of the requirement in subsection (d) of this Section 2.06),
at a redemption price equal to 100.00% of the Accreted Value or the principal
amount of the Notes, as the case may be, so prepaid together with accrued
interest to the date of prepayment, plus the Applicable Premium as of the date
of prepayment if the interest rate has been fixed in accordance with Section
2.05(e).
(d) Any prepayment of the Notes pursuant to Section 2.06(b)
shall be in a minimum amount of at least $1,000,000 of Accreted Value, unless
less than $1,000,000 of Accreted Value of the Notes remain outstanding, in which
case all of the Notes must be prepaid. Any prepayment of the Notes pursuant to
Section 2.06(c) shall be in a minimum amount which is a multiple of $1,000 times
the number of Holders at the time of such prepayment.
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(e) Any partial prepayment shall be made so that the Notes
then held by each Holder shall be prepaid in an amount which shall bear the same
ratio, as nearly as may be, to the total amount being prepaid as the Accreted
Value principal amount of such Notes, as the case may be, held by such Holder
shall bear to the aggregate Accreted Value or principal amount of all Notes, as
the case may be, then outstanding. In the event of a partial prepayment, upon
presentation of any Note the Company shall execute and deliver to or on the
order of the Holder, at the expense of the Company, a new Note in principal
amount at the Maturity Date equal to the remaining outstanding portion of such
Note.
Section 2.07. Taxes.
(a) For the purposes of this Section, the following terms have
the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any payment
by the Company pursuant to this Agreement or under any Note or any other
Financing Document, and all liabilities with respect thereto, excluding, in the
case of the Purchaser or any other Holder, taxes imposed on the net income of
the Purchaser or such Holder and franchise or similar taxes imposed on the net
income of the Purchaser or such Holder, by a jurisdiction under the laws of
which the Purchaser or such Holder is organized or in which its principal
executive office or the office holding any Notes or any Financing Document is
located.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or any other Financing Document or from the execution, delivery, registration,
recordation or enforcement of, or otherwise with respect to, this Agreement or
any Note or any other Financing Document.
(b) All payments by the Company to or for the account of the
Purchaser or any other Holder under any Financing Document shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Company shall be
required by law to deduct any Taxes or Other Taxes from any such payment, the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Purchaser or such Holder (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
the Company shall make such deductions, the Company shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and the Company shall promptly furnish to the Purchaser or
such Holder (as the case may be) the original or a certified copy of a receipt
or other documentation available to the Company evidencing payment thereof.
(c) The Company agrees to indemnify the Purchaser and each
other Holder for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted (whether or not
correctly) by any jurisdiction on amounts payable under this Section) paid by
the Purchaser or such Holder (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto;
provided, however, that
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the Company shall not be obligated to make any payment pursuant to this Section
2.07(c) in respect of penalties or interest attributable to any Taxes or Other
Taxes, if written demand therefor has not been made by the Purchaser or such
Holder (as the case may be) within 60 days from the date on which the Purchaser
or Holder received written notice of the imposition of Taxes or Other Taxes by
the relevant taxing authority, or for any additional imposition which may arise
from the failure of the Purchaser or the Holder (as the case may be) to apply
payments in accordance with the applicable tax law after the Company has made
the payments required hereunder. After the Purchaser or a Holder (as the case
may be) receives written notice of the imposition of Taxes, the Purchaser or
Holder will act in good faith to notify the Company of its obligations
thereunder as soon as reasonably possible.
(d) The Company shall have no obligation for Taxes under
Section 2.07(b) or Section 2.07(c) for or on account of:
(i) any Taxes (other than Other Taxes) that would not
have been so imposed but for the existence of any present or former
connection between the Purchaser or Holder or the beneficial owner (or
between a fiduciary, settlor, beneficiary, member, or shareholder of,
or possessor of a power over, the Purchaser, Holder or beneficial
owner, if the Purchaser, Holder or beneficial owner is an estate, a
trust, a partnership or corporation) and the jurisdiction imposing the
Tax other than merely holding such Note or any Financing Document, or
the receipt of payments in respect thereof, including, without
limitation, the Purchaser, Holder or beneficial owner (or such
fiduciary, settlor, beneficiary, member, shareholder, or possessor)
being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business or having a permanent establishment
or other fixed base therein, or making or having made an election the
effect of which is to subject the Purchaser, Holder or beneficial owner
(or such fiduciary, settlor, beneficiary, member, shareholder, or
possessor) to such Tax;
(ii) any Taxes in the nature of estate, inheritance
or gift taxes;
(iii) any Tax that is imposed or withheld by reason
of the failure of the Holder or beneficial owner of a Note to comply
with a written request by the Company, addressed to such Holder or
beneficial owner, to provide information concerning the nationality,
residence or identity of such Holder or beneficial owner, if providing
such information under a statute, treaty, regulation or administrative
practice of the jurisdiction imposing such Tax would result in a
complete exemption from such Tax;
(iv) any Taxes imposed on any payment on a Note to a
Holder that is a fiduciary or partnership or other than sole beneficial
owner of such payment to the extent a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the payment of taxes
had such beneficiary, settlor, member or beneficial owner directly
received its beneficial or distributive share of such payment; and
(v) any combination of items (i) through (iv) above.
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(e) If the Company determines in good faith that a reasonable
basis exists for contesting the imposition of a Tax or Other Tax with respect to
the Purchaser or a Holder, the Purchaser or Holder shall cooperate with the
Company in challenging such Tax or Other Tax at the Company's expense
(including, without limitation, any additional costs, expenses or Taxes incurred
by the Purchasers or Holders, as the case may be, as a result of such contesting
of such Taxes) if requested by the Company; provided, however, that nothing in
this Section 2.07(e) shall require the Purchaser or Holder to submit to the
Company any tax returns or any part thereof, or to prepare or file any tax
returns other than as the Purchaser or Holder in it sole discretion shall
determine.
(f) The Purchaser and each Holder agrees, to the extent
reasonable and without material cost to it, to cooperate with the Company to
minimize any amounts payable by the Company under this Section 2.07.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchaser (both
before and after giving effect to the Recapitalization) as set forth below:
Section 3.01. Corporate Existence and Power.
The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and as proposed to be conducted after the
Recapitalization.
Section 3.02. Authorization, Execution and Enforceability.
(a) The execution, delivery and performance by the Company of
the Financing Documents and the issuance of the Notes by the Company have been
duly and validly authorized and are within its corporate powers. Each of the
Financing Documents (other than the Notes) and the Material Recapitalization
Documents to which it is a party has been duly authorized, executed and
delivered by the Company and constitutes its valid and binding agreement
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and
equitable principles of general applicability. When executed and delivered by
the Company against payment therefor in accordance with the terms hereof, the
Notes will constitute valid and binding obligations of the Company, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and equitable
principles of general applicability.
(b) The Warrants have been duly authorized by the Company and,
when executed and authenticated pursuant to the terms of the Warrant Agreement
and delivered to the Escrow Agent pursuant to the provisions of this Agreement,
will be valid and binding obligations of the Company, enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and equitable
principles of general applicability.
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(c) The Warrant Shares to be issued upon exercise of the
Warrants have been duly authorized and reserved for issuance by the Company and
will be issued at the times and in the manner required by the Warrant Agreement
and, upon due exercise of a Warrant, the Warrant Shares issued will be validly
issued, fully paid and nonassessable.
Section 3.03. Governmental Authorization.
The execution and delivery by the Company of each of the
Financing Documents and the Material Recapitalization Documents to which it is a
party did not and will not, the issuance and sale of the Notes and the Warrants
and Warrant Shares by the Company will not, and the consummation of the
transactions contemplated hereby and thereby will not, require any action by or
in respect of, or filing with, any governmental body, agency or governmental
official except such actions and filings which (i) have been taken or made and
remain in full force and effect, or (ii) if not taken or made, will not have a
material adverse effect on the validity or enforceability of the Financing
Documents and the Material Recapitalization Documents.
Section 3.04. Contravention.
Except as set forth on Schedule 3.04, the execution and
delivery by the Company of the Financing Documents and the Material
Recapitalization Documents to which it is a party did not and will not, the
issuance and sale of the Notes and the Warrants and Warrant Shares by the
Company will not, and the consummation of the transactions contemplated hereby
and thereby will not, (A) contravene or constitute a default under or violation
of any provision of (i) applicable law or regulation, (ii) the Company Corporate
Documents or (iii) any agreement, judgment, injunction, order, decree or other
instrument binding upon it or any of its assets, except, in the case of clauses
(i) and (iii), for such contraventions, defaults or violations that would not
reasonably be expected to result in a Material Adverse Effect, or (B) result in
the creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries other than Liens created or imposed pursuant to the Senior Credit
Facilities.
Section 3.05. Financial Information.
(a) (i) The combined balance sheets of the Company and its
Subsidiaries as of December 31, 1995, December 31, 1996 and December 31, 1997
and the related combined statements of profit and loss and cash flows for the
fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997
(collectively, the "Base Financial Statements"), audited by Ernst & Young (ii)
the unaudited combined balance sheets of the Company and its Subsidiaries as of
December 31, 1993 and December 31, 1994 and the related unaudited combined
statements of profit and loss and cash flows for the fiscal years ended December
31, 1993 and December 31, 1994, and (iii) the unaudited interim combined balance
sheets of the Company and its Subsidiaries as of June 30, 1997 and June 30, 1998
and the related combined interim statements of profit and loss and cash flows
for the six moths ended June 30, 1997 and June 30, 1998, in the case of each of
clauses (i), (ii) and (iii), have been prepared in conformity with U.S. GAAP,
fairly present the combined financial position of such entities as of each such
date and their combined results of operations, changes in stockholders' equity
and cash flows for each such period.
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(b) The pro forma combined balance sheets as of December 31,
1997 and June 30, 1998 and the related pro forma combined statements of profit
and loss for the fiscal year ended December 31, 1997 and the six months ended
June 30, 1998 have been prepared on a basis consistent with the Base Financial
Statements of the Company and its Subsidiaries and give effect to assumptions
used in the preparation thereof on a reasonable basis and in good faith and
present fairly the historical and proposed transactions contemplated by the
Recapitalization; and such pro forma financial statements comply as to form in
all material respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-1 under the Securities
Act.
(c) There has occurred no material adverse change in the
business, assets or financial condition of the Company and its Subsidiaries,
taken as a whole, since December 31, 1997.
Section 3.06. Litigation.
There is no action, suit or proceeding pending or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries, any Plan or any fiduciary of any Plan before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could have a material
adverse effect on the Financing Documents or the Recapitalization.
Section 3.07. Environmental Matters.
Except as provided on Schedule 3.07 and except to the extent
that the following would not reasonably be expected to result in a Material
Adverse Effect:
(a) No property owned, leased or operated by the Company or
any of its Subsidiaries is affected by any Hazardous Materials Contamination.
(b) No asbestos or asbestos-containing materials are present
on any of the properties now or previously owned, leased or operated by the
Company or any of its Subsidiaries.
(c) No polychlorinated biphenyls in regulated concentrations
are located on or in any properties now or previously owned, leased or operated
by the Company or any of its Subsidiaries, in the form of electrical
transformers, fluorescent light fixtures with ballasts, cooling oils or any
other device.
(d) No underground storage tanks are located on any properties
now or previously owned, leased or operated by the Company or any of its
Subsidiaries, or were located on any such property and subsequently removed or
filled.
(e) No written notice, notification, demand, CERCLA-related
request for information, complaint, citation, summons, investigation,
administrative order, consent order or consent agreement, litigation or
settlement with respect to Hazardous Materials or Hazardous Materials
Contamination has been issued to the Company or is pending, as the case may be,
or, to the Company's knowledge, proposed, threatened or anticipated, in each
case, with respect to or in connection with the operation of any properties now
or previously owned, leased or operated by the Company or any of its
Subsidiaries. Except to the extent the following would not result in a Material
Adverse Effect, all such properties and their existing and prior uses by the
Company, and,
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to the Company's knowledge, the uses of the properties prior to the Company's
ownership, lease or operation comply and at all times have complied with any
applicable governmental requirements relating to environmental matters or
Hazardous Materials and there is no condition on any of such properties which is
in violation of any applicable governmental requirements relating to Hazardous
Materials, and neither the Company nor any of its Subsidiaries has received any
communication from or on behalf of any governmental authority that any such
condition exists.
(f) For purposes of this Section 3.07, the terms "Company" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Company or any
Subsidiary to the extent the Company would be liable for the liabilities of such
predecessor under any applicable Environmental Laws.
Section 3.08. Taxes.
(a) All income tax returns and all other tax returns which are
required to be filed by or on behalf of the Company and its Subsidiaries have
been filed and all taxes shown as due on such returns have been paid or adequate
reserves have been established on the books of the Company, except to the extent
that the failure to file any such returns or pay any such taxes would not
reasonably be expected to result in a Material Adverse Effect and except for any
such taxes that are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established in accordance with U.S.
GAAP. The charges, accruals and reserves on the books of the Company in respect
of taxes or other governmental charges have been established in accordance with
U.S. GAAP.
(b) There is no tax, levy, impost, deduction, charge or
withholding imposed by any governmental instrumentality either (i) on or by
virtue of the execution, delivery, performance, enforcement or admissibility
into evidence of any Financing Document or (ii) on any payment to be made by the
Company pursuant to any Financing Document. The Company is permitted under
applicable laws to pay any additional amounts payable by it under Section 2.07.
Section 3.09. Subsidiaries.
Other than those listed on Schedule 3.09, the Company has no
Subsidiaries.
Section 3.10. Governmental Regulations.
None of the Company or any of its Subsidiaries is or will be
subject to regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Federal Power Act,
the Interstate Commerce Act or to any other statute, rule or regulation limiting
its ability to incur Indebtedness for borrowed money.
Section 3.11. Full Disclosure.
The information heretofore furnished by the Sponsors or the
Company to the Purchaser in writing for purposes of or in connection with the
Financing Documents or any transaction contemplated hereby does not, and all
such information hereafter furnished by the Sponsors or the Company to the
Purchaser will not (in each case as amended or supplemented and taken together
and on the date as of which such information is furnished), contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in the light of the circumstances
under which they
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are made, not misleading. The Company has disclosed to the Purchaser any and all
facts which materially and adversely affect or may affect (to the extent the
Company can now reasonably foresee), the business, assets or financial position
of the Company or the ability of the Company to perform its obligations under
the Financing Documents or to complete the Permanent Financing.
Section 3.12. Capitalization.
At the Issuance Date, after giving effect to the
Recapitalization, the capitalization of the Company will be as set forth on
Schedule 3.12. All of the issued and outstanding shares of Common Stock are,
and, as of the time of the closing of the Recapitalization, will be, validly
issued, fully paid and nonassessable and free and clear of any Lien or other
right or claim (other than Liens created under the Senior Credit Facilities) and
except as contemplated in the Stockholders' Agreement, the holders thereof are
not entitled to any preemptive or other similar rights. Except for the Material
Recapitalization Documents or as set forth on Schedule 3.12, there are no
subscriptions, options, warrants, rights, convertible securities, exchangeable
securities or other agreements or commitments of any character pursuant to which
the Company is required to issue any shares of its capital stock.
Section 3.13. Solicitation. No form of general solicitation or
general advertising was used by the Company or, to the best of its knowledge,
any other Person acting on behalf of the Company, in connection with the offer
and sale of the Notes. Neither the Company nor any Person acting on behalf of
the Company has, either directly or indirectly, sold or offered for sale to any
Person any of the Notes or any other similar security of the Company except as
contemplated by this Agreement, and the Company represents that neither the
Company nor any person acting on its behalf other than the Purchaser and its
Affiliates will sell or offer for sale to any Person any such security to, or
solicit any offers to buy any such security from, or otherwise approach or
negotiate in respect thereof with, any Person or Persons so as thereby to bring
the issuance or sale of any of the Notes within the provisions of Section 5 of
the Securities Act.
Section 3.14. Non-fungibility. When the Notes are issued and
delivered pursuant to this Agreement, the Notes will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as securities which
are (i) listed on a national securities exchange registered under Section 6 of
the Exchange Act or (ii) quoted in a U.S. automated inter-dealer quotation
system.
Section 3.15. Permits. Except to the extent any of the
following would not result in a Material Adverse Effect: (a) the Company and its
Subsidiaries have all Permits as are necessary for the conduct of their
respective businesses as it has been carried on; (b) all such Permits are in
full force and effect, and each of the Company and its Subsidiaries has
fulfilled and performed all obligations with respect to such Permits; (c) no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination by the issuer thereof or which results in any other
impairment of the rights of the holder of any such Permit; and (d) each of the
Company and its Subsidiaries has no reason to believe that any governmental body
or agency is considering limiting, suspending or revoking any such Permit.
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Section 3.16. Representations in Other Financing Documents and
in Material Recapitalization Documents.
(a) Each of the representations and warranties of the Company
set forth in any of the other Financing Documents is true and correct in all
material respects.
(b) Each of the representations and warranties of the Company
set forth in any of the Material Recapitalization Documents is true and correct
in all material respects.
Section 3.17. No Undisclosed Liabilities.
Neither the Company nor any of its Subsidiaries has any
material liability (absolute or contingent) except (A) those shown on the
financial statements described in Sections 6.01(a) and (b) and (B) those
incurred under the Financing Documents.
Section 3.18. ERISA Matters.
During the twelve consecutive months ending on the date of the
execution and delivery of this Agreement, no steps have been taken to terminate
any Qualified Plan, and no contribution failure has occurred with respect to any
Qualified Plan sufficient to give rise to a Lien under section 302(f) of ERISA,
which, in the aggregate, is reasonably expected to lead to liability on the part
of the Company or any ERISA Affiliate in excess of $1,000,000. No condition
exists or event or transaction has occurred with respect to any Qualified Plan
which could reasonably be expected to result in the incurrence by the Company of
any material liability, fine or penalty other than as could not reasonably be
expected to have a Material Adverse Effect. Since the date of the last period
covered by the Base Financial Statements, none of the Company, any Subsidiary or
any ERISA Affiliate has taken any action that could be expected to increase (i)
any contingent liability with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation coverage described in part 6
of Subtitle B of Title I of ERISA or (ii) any contingent liability with respect
to any Qualified Plan or Multiemployer Plan, except as would not have a Material
Adverse Effect.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.01. Purchase for Investment; Authority; Binding
Agreement.
The Purchaser represents and warrants to the Company that:
(a) the Purchaser is an Accredited Investor within the meaning
of Rule 501(a) under the Securities Act and the Notes to be acquired by it
pursuant to this Agreement are being acquired for its own account without a view
toward distribution and the Purchaser will not offer, sell, transfer, pledge,
hypothecate or otherwise dispose of the Notes unless pursuant to a transaction
either registered under, or exempt from registration under, the Securities Act;
(b) the execution, delivery and performance of this Agreement
and the purchase of the Notes pursuant hereto are within the Purchaser's
corporate powers and have been duly and validly authorized by all requisite
corporate action;
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(c) this Agreement has been duly executed and delivered by the
Purchaser;
(d) this Agreement constitutes a valid and binding agreement
of the Purchaser enforceable in accordance with its terms; and
(e) the Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Notes and the Purchaser is capable of bearing the
economic risks of such investment.
ARTICLE 5.
CONDITIONS PRECEDENT TO PURCHASE
Section 5.01. Conditions to Purchaser's Obligation at
Takedown.
The obligation of the Purchaser to purchase the Notes to be
issued and sold by the Company on the Issuance Date is subject to the
satisfaction of the following conditions contemporaneously with such purchase:
(a) (i) Each of the conditions to the parties' obligations
under the Material Recapitalization Documents shall have been satisfied or, with
the prior written consent of the Purchaser, waived and (ii) the Recapitalization
shall have been completed on the terms set forth in the Material
Recapitalization Documents (as such terms may have been amended or waived with
the consent of the Purchaser).
(b) The Purchaser shall have received executed copies of each
of the Material Recapitalization Documents, the Financing Documents and the
Stockholders' Agreement, each of which shall be in full force and effect and no
term or condition thereof shall have been amended, waived or otherwise modified
without the prior written consent of the Purchaser.
(c) There shall exist no action, suit, investigation,
litigation or proceeding pending or to the Company's knowledge threatened in any
court or before any arbitrator or any governmental instrumentality that could
reasonably be expected to (A) have a material adverse effect on any Financing
Document, the Material Recapitalization Document, the Notes or the
Recapitalization or any of the other transactions contemplated thereby or hereby
or (B) result in a Material Adverse Effect.
(d) The Purchaser shall have received evidence satisfactory to
them of the substantially simultaneous repayment in full of all existing Debt of
the Company and its Subsidiaries (other than Debt permitted under Sections 6.08)
and the termination of each existing Lien on any asset securing any such Debt.
(e) The Purchaser shall have received opinions, dated on or
prior to the Issuance Date, of Xxxxxxxx & Xxxxx, special counsel for the
Company, in the form and substance satisfactory to the Purchaser.
(f) All fees and expenses payable to the Purchaser hereunder
shall have been paid in full.
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(g) The representations and warranties of the Company
contained in the Financing Documents shall be true and correct in all material
respects on and as of the Issuance Date as if made on and as of such date and
the Company shall have performed and complied with all covenants and agreements
required by the Financing Documents to be performed by it or complied with by it
at or prior to the Issuance Date.
(h) There shall not exist any Default.
(i) The Purchaser shall have received the Notes to be issued
on the Issuance Date, duly executed by the Company in the denominations and
registered in the names specified in or pursuant to Section 2.02.
(j) The capitalization, tax and corporate and ownership
structure (including the articles of incorporation and by-laws) of the Company
and its Subsidiaries before and after the consummation of the Recapitalization
shall be consistent with that set forth in documents provided to the Purchaser
prior to the date hereof or shall otherwise be satisfactory to the Purchaser in
all material respects.
(k) The Purchaser shall have received a certificate of the
Secretary or Assistant Secretary of the Company, dated as of a date reasonably
satisfactory to the Purchaser, certifying (A) (i) that attached thereto is a
true, complete and correct copy of resolutions duly adopted by the Board of
Directors of the Company, authorizing (1) the execution, delivery and
performance of the Financing Documents to which it is a party, and (2) the
transactions contemplated hereby, and (ii) that such resolutions have not been
amended, modified, revoked or rescinded, (B) as to the incumbency and specimen
signature of each officer executing any Financing Documents on its behalf, and
(C) true and complete copies of its constituent documents, and such certificates
and the resolutions attached thereto shall be in form and substance satisfactory
to the Purchaser.
(l) Pursuant to the terms of the Escrow Agreement, the Company
shall have executed and delivered to the Escrow Agent fully authenticated
Warrants, unregistered or registered in blank, representing the right to
purchase at any time up to an aggregate of 2.1% of the fully-diluted common
stock of the Company, calculated after giving effect to the transactions
occurring on or prior to the Issuance Date (the "Warrant Shares"), exercisable
for a period of seven years at a price equal to $.01 per share.
(m) All matters relating to the transactions contemplated by
this Agreement, the Financing Documents, the Purchase Agreement, the Senior
Credit Facilities, the Stockholders' Agreement and the transactions contemplated
hereby and thereby shall be satisfactory to the Purchaser in its discretion, and
the Purchaser shall have received such additional certificates, legal and other
opinions and documentation as they shall reasonably request.
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ARTICLE 6.
COVENANTS
The Company agrees that, from and after the Issuance Date and
so long as any Notes remain outstanding and unpaid, and for the benefit of the
Purchaser and the Holders:
Section 6.01. Information.
The Company will deliver to the Purchaser:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and cash flows) for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on in a manner acceptable to the Commission by independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Company,
a consolidated balance sheet of the Company and its Subsidiaries as of the end
of such quarter and the related consolidated statement of income for such
quarter and for the portion of the Company's fiscal year ended at the end of
such quarter and the related consolidated statement of cash flow for the portion
of the Company's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and the
corresponding portion of the Company's previous fiscal year, all certified
(subject to footnote presentation and normal year-end adjustments) as to
fairness of presentation and consistency by the chief financial officer or the
chief accounting officer of the Company and, if required, with footnote
reconciliation to U.S. GAAP;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 6.08 through 6.11,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Company is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any executive officer of the
Company obtains knowledge of a Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting officer of
the Company setting forth the details thereof and the action which the Company
is taking or proposes to take with respect thereto;
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(f) promptly upon the filing thereof, copies of all
applications, registration statements or reports which the Company or any of its
Subsidiaries shall have filed with the Commission or any other national or
international stock exchange;
(g) promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding to which the
Company or any of its Subsidiaries is a party in which the amount involved is
$1,000,000 or more;
(h) promptly following the occurrence thereof, notice and a
description in reasonable detail of any material adverse change in the business,
assets or financial position of the Company and its Subsidiaries taken as a
whole;
(i) promptly following the occurrence thereof, notice and a
copy of any amendment entered into with respect to the Senior Credit Facilities;
and.
(j) from time to time such additional information regarding
the financial position or business of the Company and its Subsidiaries as the
Purchaser may reasonably request.
Section 6.02. Payment of Obligations.
The Company will pay and discharge, and will cause each
Subsidiary to pay and discharge, material obligations and liabilities,
including, without limitation, tax liabilities, at or before such obligations
and liabilities become due, except where the same may be contested in good faith
by appropriate proceedings, and will maintain, and will cause each Subsidiary to
maintain, in accordance with U.S. GAAP, appropriate reserves for the accrual of
any of the same.
Section 6.03. Insurance.
The Company shall, and shall cause each of its Subsidiaries
to, keep its insurable properties adequately insured at all times by financially
sound and reputable insurers; maintain such other insurance, to such extent and
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies in the same or similar businesses
operating in the same or similar locations, including (i) public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about in connection with the use of any properties owned,
occupied or controlled by it and (ii) business interruption insurance; and
maintain such other insurance as may be required by law.
Section 6.04. Conduct of Business and Maintenance of
Existence.
The Company will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted by the
Company and its Subsidiaries, and will preserve, renew and keep in full force
and effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business, except that (i) the Company may discontinue any immaterial line of
business of the Company and its Subsidiaries if the Board of Directors of the
Company determines that such discontinuation is in the best interests of the
Company and not disadvantageous to the holder of any Note and (ii) nothing in
this Section 6.04 shall prohibit the merger or consolidation of any wholly-owned
Subsidiary of the Company with or into any other wholly-owned Subsidiary of the
Company.
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Section 6.05. Compliance with Laws.
(a) The Company will comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder where noncompliance could reasonably be expected to have a Material
Adverse Effect).
(b) The Company will take all actions to ensure that (i) the
obligations of the Company under the Financing Documents are at all times valid,
binding and enforceable against the Company in accordance with their terms under
all applicable laws, and (ii) the Financing Documents may be admitted into
evidence in any relevant jurisdiction.
Section 6.06. Inspection of Property, Books and Records.
The Company will keep, and will cause each Subsidiary to keep,
proper books of record and account in which full, true and correct entries shall
be made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of the Purchaser at reasonable times and intervals, and upon
reasonable notice, but, unless an Event of Default shall have occurred and be
continuing, not more frequently than once in each fiscal year, to visit its
corporate offices, to discuss its financial matters with its officers and, only
in the presence of a representative of the Company (whose attendance at such
discussion cannot be unreasonably refused), its independent public accountants
(and the Company hereby authorizes such independent public accountants to
discuss the Company's financial matters with the Purchaser or its
representatives, so long as a representative of the Company is present) and to
examine any of its books or other financial records.
Section 6.07. Investment Company Act.
The Company will not be or become an open-end investment
trust, unit investment trust or face-amount certificate company that is or is
required to be registered under the Investment Company Act of 1940, as amended.
Section 6.08. Limitation on Debt.
Neither the Company nor any Subsidiary will create, incur,
assume or suffer to exist any Debt, except:
(a) Debt outstanding on the date of this Agreement (other than
Debt incurred under the Senior Credit Facilities and the Subordinated Notes) and
identified in Schedule 6.08 and refinancings and replacements thereof in a
principal amount not exceeding the principal amount of the Debt so refinanced or
replaced on terms no less favorable to the Holders of the Notes than those in
place on the date of this Agreement and with an average life to maturity of not
less than the then average life to maturity of the Debt so refinanced or
replaced;
(b) Debt of the Company evidenced by the Notes and Debt of
TTSI evidenced by the Subordinated Notes;
(c) Debt under the Senior Credit Facilities, in a principal
amount not to exceed $50,000,000 (in addition to Debt incurred under clause (f)
below);
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(d) Debt owing to the Company or a Subsidiary;
(e) Debt incurred by the Company or any of its Subsidiaries
that is represented by Capital Lease Obligations, mortgage financings or
purchase money obligations; provided, that the amount of such Debt does not
exceed 90% of the fair market value of the asset so financed and that the
maximum aggregate amount of all Debt permitted under this clause (e) shall not
at any time exceed $1,000,000;
(f) Debt incurred by the Company or any of its Subsidiaries in
connection with the Grafalloy Transaction in an amount not to exceed $7,500,000
(which may be borrowed pursuant to the Senior Credit Facilities);
(g) other unsecured Debt of the Company and its Subsidiaries
in an aggregate amount at any time outstanding not to exceed $1,000,000;
(h) other Debt the Net Cash Proceeds of which are applied in
accordance with Section 2.06 to prepay all amounts owing under the Notes; and
(i) the incurrence by the Company or any of its Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or hedging:
(i) interest rate risk with respect to any floating rate Debt that is permitted
by the terms of this Agreement to be outstanding; (ii) exchange rate risk with
respect to any agreement or Indebtedness of such Person payable in a currency
other than U.S. dollars; or (iii) commodities risk relating to commodities
agreements, entered into in the ordinary course of business, for the purchase of
raw material used by the Company and its Subsidiaries.
Section 6.09. Restricted Payments; Voluntary Prepayments.
(a) The Company will not declare or make any Restricted
Payment other than Restricted Payments contemplated in connection with the
Recapitalization; provided, however, the foregoing will not prohibit the
purchase, redemption, retirement or acquisition of any equity securities of the
Company or any of its Subsidiaries from any officer, director or employee
(whether current or former) of the Company or any of its Subsidiaries pursuant
to any subscription agreement, incentive plan, employment agreement,
stockholders agreement or similar agreement; provided, however, the aggregate
amount paid shall not exceed (i) $1,000,000 in any fiscal year (with unused
amounts in any fiscal year being carried over to succeeding fiscal years subject
to a maximum (without giving effect to clause (ii)) of $2,000,000 in any fiscal
year, plus (ii) the aggregate cash proceeds received by the Company from any
issuance or reissuance of any equity securities of the Company or any of its
Subsidiaries to any officer, director or employee of the Company or any of its
Subsidiaries.
(b) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, optionally redeem, retire, purchase,
acquire, defease or otherwise make any payment, other than required interest
payments, in respect of any Debt which is subordinated to or pari passu with the
Notes, other than payments in respect of Debt owing to the Company or a
Subsidiary.
Section 6.10. Investments.
The Company will not, and will not permit any of its
Subsidiaries to, make or acquire any Investment in any Person other than (i)
Investments in existence on the date hereof and identified on Schedule 6.10;
(ii) Investments in Cash Equivalents; (iii) Investments made after the date
hereof in Persons which are direct or indirect Subsidiaries immediately after
such Investment is made; (iv) Investments in the form of loans to officers,
directors and employees of the Company and its Subsidiaries for the sole purpose
of purchasing common stock of the Company (or purchases of such loans made by
others) in an aggregate amount at any time outstanding not to exceed $1,000,000;
(v) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 6.18
hereof; (vi) any acquisition of assets solely in exchange for the issuance of
Common Stock of the Company and (vii) the Grafalloy Transaction, provided, such
Investment does not exceed an aggregate fair market value of $7,500,000. Without
limiting the generality of the foregoing, the Company will not make, or permit
any of its Subsidiaries to make, any Business Acquisition other than (i) the
Grafalloy Transaction and (ii) any Business Acquisition with respect to which
the consideration paid by the Company consists solely of Common Stock.
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Section 6.11. Negative Pledge.
The Company will not create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except:
(a) the Liens identified on Schedule 6.11;
(b) other Liens approved by the Majority Holders securing Debt
permitted by Section 6.08;
(c) Liens securing the Senior Credit Facilities;
(d) Liens securing Debt permitted by Sections 6.08(e) and
6.08(i); and
(e) Liens arising in the ordinary course of its business which
(i) do not secure Debt, (ii) do not secure any obligation in an amount exceeding
$1,000,000 and (iii) do not in the aggregate materially detract from the value
of the assets of the Company and its Subsidiaries, taken as a whole, or
materially impair the use thereof in the operation of its business.
Section 6.12. Transactions with Affiliates.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, pay any funds to or for the account of, make any
investment (whether by acquisition of stock or indebtedness, by loan, advance,
transfer of property, guarantee or other agreement to pay, purchase or service,
directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate, except on terms to the Company or such
Subsidiary no less favorable than terms that could be obtained by the Company or
such Subsidiary from a Person that is not an Affiliate, as determined, in the
case of any transaction with a value of $1,000,000 or more, in good faith by the
Board of Directors of the Company; provided, that no determination of the Board
of Directors shall be required with respect to any of the following: (i)
transactions entered into in the ordinary course of business; (ii) transactions
entered into in connection with the execution or performance of the Company's
obligations under the Management Services Agreement; (iii) any transaction among
True Temper Funding, Inc. or any of its Affiliates on the one hand and the
Company on the other hand; and (iv) the Grafalloy Transaction.
Section 6.13. Consolidations, Mergers and Sales of Assets;
Ownership of Subsidiaries.
(a) Neither the Company nor any of its Subsidiaries will
consolidate or merge with or into any other Person; provided, that (i) any
wholly-owned Subsidiary of the Company may merge or consolidate with or into any
other wholly-owned Subsidiary and (ii) the Company or any Subsidiary may merge
with an Affiliate for the sole purpose of reincorporating in a new jurisdiction.
The Company will not, and will not permit its Subsidiaries to, sell, lease or
otherwise transfer, directly or indirectly, any substantial part of the assets
of the Company and its Subsidiaries, taken as a whole, to any other Person.
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(b) The Company will at all times continue to own, directly or
indirectly, 100% of the capital stock of each Person which is a wholly-owned
Subsidiary of the Company on the date hereof.
Section 6.14. Use of Proceeds.
The proceeds from the issuance and sale of the Notes by the
Company pursuant to this Agreement shall be used to fund the Recapitalization
and to pay related fees and expenses.
Section 6.15. Restrictions on Certain Amendments.
The Company will not amend or waive, or suffer to be amended
or waived, any Corporate Document or any Material Recapitalization Document from
the respective forms thereof delivered to the Purchaser pursuant to Section 5.01
in a way which has a material adverse effect on the Holders or the Purchaser
without the prior written consent of the Purchaser.
Section 6.16. Limitation on Sales of Assets and Subsidiary
Stock.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any agreement with respect to or consummate any
Asset Sale, unless (a) at least 75% of the consideration received by the Company
or such Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents; provided, that any securities sold for cash within 30 days of the
consummation of such Asset Sale shall be considered cash for purposes hereof and
(y) the consideration received by the Company is at least equal to the fair
market value of the assets or property sold, transferred or otherwise disposed
of (as determined in good faith by the Board of Directors of the Company) and
the Net Cash Proceeds thereof are applied in accordance with Section 2.06(c).
Section 6.17. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction.
Section 6.18. Assumed Debt.
At all times during the 45 days following the Issuance Date,
the Company shall have unused revolving commitments available for drawing under
the Senior Credit Facilities and/or letters of credit under the Senior Credit
Facilities in a principal amount equal to the outstanding principal amount of
all outstanding Debt set forth on Schedule 6.08 with respect to which any
default or event of default exists on the Issuance Date. If any such default or
event of default with respect to any such outstanding Debt is not cured or
waived on or prior to the date occurring 45 days after the Issuance Date, the
Company shall pay or cause to be paid the principal amount of such Debt
outstanding on such 45th day.
Section 6.19. Business Activities.
The Company will not, and will not permit any Subsidiary to,
engage in any business other than a Permitted Business, except to such extent as
would not be material to the Company and its Subsidiaries taken as a whole.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.01. Events of Default Defined; Acceleration of
Maturity; Waiver of Default.
In case one or more of the following (each, an "Event of
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by
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operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body, shall
have occurred and be continuing:
(a) default in the payment of all or any part of the principal
or premium, if any, on any of the Notes as and when the same shall become due
and payable either at maturity, upon any redemption, by declaration or
otherwise; or
(b) [Reserved]; or
(c) failure on the part of the Company for 30 days after
written notice from a Holder to observe or perform any of the covenants
contained in Sections 6.07 through 6.19 of this Agreement; or
(d) failure on the part of the Company to observe or perform
any other of the covenants or agreements contained in the Financing Documents,
if such failure shall continue for a period of 30 days after the date on which
written notice thereof shall have been given to the Company by a Holder; or
(e) the Company or any of its Significant Subsidiaries shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect in any
jurisdiction or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing; or
(f) an involuntary case or other proceeding shall be commenced
against the Company or any of its Significant Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against the Company
or any of its Significant Subsidiaries under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g) there shall be a default in respect of any Debt of the
Company or any of its Significant Subsidiaries (other than such defaults
existing with respect to the Debt set forth on Schedule 3.04 during the period
ending on the date that is 45 days after the Issuance Date) in an aggregate
principal amount in excess of $1,000,000 whether such Debt now exists or shall
hereafter be created (excluding the Notes) if such default results in
acceleration of the maturity of such Debt; or the Company or any of its
Subsidiaries shall fail to pay at maturity any such Debt whether such Debt now
exists or shall hereafter be created; or
-30-
35
(h) a final judgment for the payment of money which exceeds
$1,000,000 shall be rendered against the Company or any of its Subsidiaries by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days after such
judgment becomes final; or
(i) any representation, warranty, certification or statement
made or deemed made by the Company or any of its Subsidiaries in any Financing
Document or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with any Financing
Document shall prove to have been untrue in any material respect when made or
deemed made; or
(j) a Change of Control has occurred; or
(k) any of the Financing Documents shall for any reason fail
to constitute the valid and binding agreement of the Company; or
(l) any of the following events, to the extent that such
events, singly or in the aggregate, could reasonably be expected to give rise to
a liability of the Company, any Subsidiary or any ERISA Affiliate in excess of
$1,000,000: (i) the Company, any Subsidiary or any ERISA Affiliate shall fail to
pay when due any amount or amounts, which such entity shall have become liable
to pay under Title IV of ERISA; (ii) notice of intent to terminate a Qualified
Plan shall be filed under Title IV of ERISA by the administrator of any Plan,
the Company, any Subsidiary, any ERISA Affiliate or any combination of the
foregoing; (iii) the PBGC shall institute proceedings under Title IV of ERISA to
terminate, impose liability (other than for premiums due under Section 4007 of
ERISA and not in default) in respect of or cause a trustee to be appointed to
administer, any Plan; (iv) a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Qualified Plan (other
than the Formica Corporation Employee Retirement Plan) be terminated; or (v) the
Company, any Subsidiary or any ERISA Affiliate shall incur a partial or complete
withdrawal from a Multiemployer Plan; then, and in each and every such case
(other than under clauses (e) and (f) with respect to the Company), unless the
principal of all the Notes shall have already become due and payable, the
Majority Holders (or, if at such time the Purchaser no longer hold at least 50%
of the aggregate outstanding principal amount of the Notes, Holders of at least
33 1/3% of the aggregate outstanding principal amount of the Notes), by notice
in writing to the Company and the agent bank under the Senior Credit Facilities,
may declare the entire principal amount of the Notes together with accrued
interest thereon to be immediately due and payable; provided that (a) for so
long as the Senior Credit Facilities are in effect, such acceleration shall not
become effective until the earlier of (i) five Business Days after the notice of
acceleration is given to the Administrative Agent and (ii) the date on which the
Debt under the Senior Credit Facilities is accelerated; and, (b)for as long as
the Subordinated Notes are outstanding, such acceleration shall not become
effective until the earlier of (i) five Business Days after the notice of
acceleration is given to the holders of Subordinated Notes (or their
representatives), and (ii) the date on which the Debt under the Subordinated
Notes is accelerated. If an Event of Default specified in clauses (e) or (f)
occurs, the principal of and accrued interest on the Notes will be immediately
due and payable without any notice, declaration or other act on the part of the
Holders. The Majority Holders may annul any such notice of acceleration or past
Defaults (other than monetary Defaults not yet cured) by delivering a notice of
annulment to the Company and the Administrative Agent. If an Event of Default
shall occur and be continuing, the Purchaser shall have the right to appoint one
(1) representative to serve as a member of the Company's Board
-31-
36
of Directors; provided, however, that such right shall terminate if the
Purchaser no longer holds at least 50% of the aggregate outstanding principal
amount of the Notes.
ARTICLE 8.
LIMITATION ON TRANSFERS
Section 8.01. Restrictions on Transfer.
From and after the Issuance Date, none of the Notes shall be
transferable except upon the conditions specified in Sections 8.02 and 8.03,
which conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the Transfer of any of such Notes or any interest
therein. The Purchaser will cause any proposed transferee of any Notes (or any
interest therein) held by it to agree to take and hold such Notes (or any
interest therein) subject to the provisions and upon the conditions specified in
this Section 8.01 and in Sections 8.02 and 8.03.
Section 8.02. Restrictive Legends.
(a) Each Note issued to the Purchaser or to a subsequent
transferee shall (unless otherwise permitted by the provisions of Section
8.02(b) or Section 8.03) include a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS
BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND
THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET
FORTH IN THE SECURITIES PURCHASE AGREEMENT DATED AS OF
SEPTEMBER 30, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS
PRINCIPAL EXECUTIVE OFFICE.
(b) Any Holders of Notes registered pursuant to the Securities
Act and qualified under applicable state securities laws may exchange such Notes
on transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 8.02.
Section 8.03. Notice of Proposed Transfers.
(a) Five Business Days prior to any proposed Transfer (other
than Transfers of Notes (i) registered under the Securities Act, (ii) to an
Affiliate of DLJSC or a general partnership in which DLJSC, or any of its
Affiliates is one of the general partners or (iii) to be made in reliance on
Rule 144A under the Securities Act) of any Notes, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
Transfer, setting forth the manner and circumstances of the proposed Transfer,
and shall be accompanied by (i) an opinion of counsel reasonably satisfactory to
the Company addressed to the Company to the effect that the proposed Transfer of
such Notes may be effected without registration under the Securities Act, (ii)
such
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37
representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
holder to the Company. Each Note transferred as above provided shall bear the
legend set forth in Section 8.02(a) except that such Note shall not bear such
legend if the opinion of counsel referred to above is to the further effect that
neither such legend nor the restrictions on Transfer in Sections 8.01 through
8.03 are required in order to ensure compliance with the provisions of the
Securities Act.
(b) Five Business Days prior to any proposed Transfer of any
Notes to be made in reliance on Rule 144A under the Securities Act ("Rule
144A"), the holder thereof shall give written notice to the Company of such
holder's intention to effect such Transfer, setting forth the manner and
circumstances of the proposed Transfer and certifying that such Transfer will be
made (i) in full compliance with Rule 144A and (ii) to a transferee that (A)
such holder reasonably believes to be a "qualified institutional buyer" within
the meaning of Rule 144A and (B) is aware that such Transfer will be made in
reliance on Rule 144A. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, whereupon the holder of
such Notes shall be entitled to Transfer such Notes in accordance with the terms
of the notice delivered by the holder to the Company. Each Note transferred as
above provided shall bear the legend set forth in Section 8.02(a).
ARTICLE 9.
MISCELLANEOUS
Section 9.01. Notices.
All notices, demands and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given to such party at its address set forth on the signature pages hereof,
or such other address as such party may hereinafter specify for the purpose.
Each such notice, demand or other communication shall be effective (i) if given
by facsimile, when such facsimile is transmitted to the facsimile number
specified on the signature page hereof, or (ii) if given by overnight courier,
addressed as aforesaid or by any other means, when delivered at the address
specified in this Section.
Section 9.02. No Waivers; Amendments.
(a) No failure or delay on the part of any party in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to any party at law or in equity or
otherwise.
(b) Any provision of this Agreement may be amended,
supplemented or waived if, but only if, such amendment, supplement or waiver is
in writing and is signed by the Company
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38
and the Majority Holders; provided, that without the consent of each Holder of
any Note affected thereby, an amendment, supplement or waiver may not (a) reduce
the aggregate principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (b) reduce the rate or extend the time for
payment of interest on any Note, (c) reduce the principal amount of or extend
the stated maturity of any Note or (d) make any Note payable in money or
property other than as stated in the Notes. In determining whether the Holders
of the requisite principal amount of Notes have concurred in any direction,
consent, or waiver as provided in this Agreement or in the Notes, Notes which
are owned by the Company or any other obligor on or guarantor of the Notes, or,
except for DLJSC and its Affiliates by any Person controlling, controlled by, or
under common control with any of the foregoing, shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; and provided,
further, that no such amendment, supplement or waiver which affects the rights
of the Purchaser and its Affiliates otherwise than solely in their capacities as
Holders of Notes shall be effective with respect to them without their prior
written consent.
Section 9.03. Indemnification.
(a) The Company (the "Indemnifying Party") agrees to indemnify
and hold harmless the Purchaser, its Affiliates, and each Person, if any, who
controls the Purchaser, or any of its Affiliates, within the meaning of the
Securities Act or the Exchange Act (a "Controlling Person"), and the respective
partners, agents, employees, officers and directors of the Purchaser, its
Affiliates and any such Controlling Person (each an "Indemnified Party," and
collectively, the "Indemnified Parties"), from and against any and all losses,
claims, damages, liabilities and expenses (including, without limitation and as
incurred, reasonable costs of investigating, preparing or defending any such
claim or action, whether or not such Indemnified Party is a party thereto)
arising out of, or in connection with any activities contemplated by this
Agreement or any other services rendered in connection herewith, including, but
not limited to, losses, claims, damages, liabilities or expenses arising out of
or based upon any untrue statement or any alleged untrue statement of a material
fact or any omission or any alleged omission to state a material fact in any of
the disclosure or offering or confidential information documents (the
"Disclosure Documents") pertaining to any of the transactions or proposed
transactions contemplated herein, including any eventual refinancing or resale
of the Notes, provided, that the Indemnifying Party will not be responsible for
any claims, liabilities, losses, damages or expenses that are determined by
final judgment of a court of competent jurisdiction to result solely from such
Indemnified Party's gross negligence, willful misconduct or bad faith. The
Indemnifying Party also agrees that (i) no Purchaser shall have liability
(except for breach of provisions of this Agreement) for claims, liabilities,
damages, losses or expenses, including legal fees, incurred by the Indemnifying
Party in connection with this Agreement, unless they are determined by final
judgment of a court of competent jurisdiction to result from the Purchaser's
gross negligence, willful misconduct or bad faith and (ii) no Purchaser shall in
any event have any liability to the Company on any theory of liability for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, or in connection with, or as a result of this
Agreement.
(b) If any action shall be brought against an Indemnified
Party with respect to which indemnity may be sought against the Indemnifying
Party under this Agreement, such Indemnified Party shall promptly notify the
Indemnifying Party in writing and the Indemnifying
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39
Party shall, if requested by such Indemnified Party or if the Indemnifying Party
desires to do so, assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party and payment of all
reasonable fees and expenses. The failure to so notify the Indemnifying Party
shall not affect any obligations the Indemnifying Party may have to such
Indemnified Party under this Agreement or otherwise unless the Indemnifying
Party is materially adversely affected by such failure. Such Indemnified Party
shall have the right to employ separate counsel in such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party, unless: (i) the Indemnifying Party has
failed to assume the defense and employ counsel reasonably satisfactory to such
Indemnified Party or (ii) the named parties to any such action (including any
impleaded parties) include such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party, provided, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the reasonable fees and expenses
of more than one such firm of separate counsel, in addition to any local
counsel, which counsel shall be designated by the Purchaser. The Indemnifying
Party shall not be liable for any settlement of any such action effected without
the written consent of the Indemnifying Party (which shall not be unreasonably
withheld) and the Indemnifying Party agrees to indemnify and hold harmless each
Indemnified Party from and against any loss or liability by reasons of
settlement of any action effected with the consent of the Indemnifying Party. In
addition, the Indemnifying Party will not, without the prior written consent of
the Purchaser, settle or compromise or consent to the entry of any judgment in
or otherwise seek to terminate any pending or threatened action, claim, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not any Indemnified Party is a party thereto) unless such
settlement, compromise, consent or termination includes an express unconditional
release of the Purchaser and the other Indemnified Parties, reasonably
satisfactory in form and substance to the Purchaser, from all liability arising
out of such action, claim, suit or proceeding.
(c) If for any reason the foregoing indemnity is unavailable
to an Indemnified Party or insufficient to hold an Indemnified Party harmless,
then in lieu of indemnifying the Indemnified Party, the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such claims, liabilities, losses, damages, or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and by the Purchaser on the other from the transactions
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
is not permitted under applicable law, in such proportion as is appropriate to
reflect not only the relative benefits received by the Indemnifying Party on the
one hand and the Purchaser on the other, but also the relative fault of the
Indemnifying Party and the Purchaser as well as any other relevant equitable
considerations. Notwithstanding the provisions of this Section 9.03, the
aggregate contribution of all Indemnified Parties shall not exceed the amount of
fees actually received by the Purchaser pursuant to this Agreement. It is hereby
further agreed that the relative benefits to the Indemnifying Party on the one
hand and the Purchaser
-35-
40
on the other with respect to the transactions contemplated hereby shall be
deemed to be in the same proportion as (i) the aggregate principal amount of
Notes issued by the Company bears to (ii) the fees actually received by the
Purchaser pursuant to this Agreement. The relative fault of the Indemnifying
Party on the one hand and the Purchaser on the other with respect to the
transactions contemplated hereby shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of material fact or
the omission or alleged omission to state a material fact related to information
supplied by the Indemnifying Party or by the Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. No Indemnified Party shall have any liability to the
Indemnifying Party or any other person in connection with the services rendered
pursuant to the Commitment except for the liability for claims, liabilities,
losses or damages finally determined by a court of competent jurisdiction to
have resulted from action taken or omitted to be taken by such Indemnified Party
in bad faith or to be due to such Indemnified Party's willful misconduct, or
gross negligence. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(d) The indemnification, contribution and expense
reimbursement obligations set forth in this Section 9.03 (i) shall be in
addition to any liability the Indemnifying Party may have to any Indemnified
Party at common law or otherwise, (ii) shall survive the termination of this
Agreement and the payment in full of the Notes and (iii) shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Purchaser or any other Indemnified Party.
Section 9.04. Expenses.
The Company agrees to pay all reasonable out-of-pocket costs,
expenses and other payments in connection with the purchase and sale of the
Notes as contemplated by this Agreement including without limitation (i)
reasonable fees and disbursements of special counsel and any local counsel for
the Purchaser incurred in connection with the preparation of this Agreement,
(ii) all reasonable out-of-pocket expenses of the Purchaser, including
reasonable fees and disbursements of counsel, in connection with any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (iii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Purchaser and each Holder of Notes, including
reasonable fees and disbursements of a single counsel (which counsel shall be
selected by the Purchaser if the Purchaser is a Holder of Notes when such Event
of Default occurs), in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
Section 9.05. Payment.
The Company agrees that, so long as the Purchaser shall own
any Notes purchased by it from the Company hereunder, the Company will make
payments to the Purchaser of all amounts due thereon by wire transfer by 1:00
P.M. (New York City time) on the date of payment to such account as is specified
beneath the Purchaser's name on the signature page hereof or to such other
account or in such other similar manner as the Purchaser may designate to the
Company in writing.
-36-
41
Section 9.06. Confidentiality.
The Purchaser shall not use confidential information obtained
from the Company by virtue of the transactions contemplated by this Agreement
or their other relationships with the Company in connection with the
performance by the Purchaser of services for other companies, and the Purchaser
shall not furnish any such information to other companies. The Purchaser has no
obligation to use in connection with the transactions contemplated by this
Agreement, or to furnish to the Company, confidential information obtained from
other companies.
Section 9.07. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, the Purchaser, the holders of Debt and under the Senior
Credit Facilities and their respective successors and assigns; provided that
the Company may not assign or otherwise transfer its rights or obligations
under this Agreement to any other Person without the prior written consent of
the Majority Holders. All provisions hereunder purporting to give rights to the
Purchaser and its Affiliates, or to Holders are for the express benefit of such
Persons.
Section 9.08. Brokers.
The Company represents and warrants that, except for DLJSC,
it has not employed any broker, finder, financial advisor or investment banker
who might be entitled to any brokerage, finder's or other fee or commission in
connection with the Recapitalization or the sale of the Notes.
Section 9.09. New York Law; Submission to Jurisdiction; Waiver
of Jury Trial.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 9.10. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
-37-
42
Section 9.11. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[SIGNATURE PAGES FOLLOW]
-38-
43
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers, as of the
date first above written.
TRUE TEMPER CORPORATION
By:
---------------------------------
Name:
Title:
Address for Notices:
True Temper Corporation
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx
-00-
00
XXXXXXXXX:
Commitment:
$25,000,000 [Initial Accreted Value]
{EMHART, INC.}
By:
------------------------
Name:
Title:
Address for Notices:
C/O The Black & Xxxxxx Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Miles & Stockbridge P.C.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Wiring Instructions:
ABA#
A/C#
for further credit to
A/C#
Attention:
-40-
45
SCHEDULE 3.04
CONTRAVENTION
NONE
46
SCHEDULE 3.07
ENVIRONMENTAL MATTERS
All matters set forth in the reports entitled "Environmental Review, True Temper
Sports, Inc., 0000 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxxxxxx 00000" and
"Environmental Review, True Temper Sports, Xxxxxxx 00 Xxxxx, Xxxxx, Xxxxxxxxxxx
00000" prepared by Strata Environmental, copies of which have been provided to
Purchaser.
47
SCHEDULE 3.09
SUBSIDIARIES
True Temper Sports, Inc., a Delaware corporation
48
SCHEDULE 3.12
CAPITALIZATION OF HOLDINGS
SEE ATTACHED
49
SCHEDULE 6.08
DEBT
NONE
50
SCHEDULE 6.10
INVESTMENTS
NONE
51
SCHEDULE 6.11
LIENS
Liens described under Section 7.2.3 to the Senior Credit Facilities.
52
EXHIBIT B
[FORM OF NOTE]
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT, AS
SUCH TERM IS DEFINED IN SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. UPON INQUIRY MADE BY ANY HOLDER HEREOF, ADDRESSED TO TRUE
TEMPER CORPORATION, 0000 XXXXXXXXXX XXXXX, XXXXX 000, XXXXXXX, XXXXXXXXX 00000,
ATTENTION: CHIEF FINANCIAL OFFICER, TRUE TEMPER CORPORATION WILL PROVIDE A
STATEMENT SETTING FORTH THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT,
THE ISSUE DATE AND THE YIELD TO MATURITY WITH RESPECT TO THE NOTE HELD BY SUCH
HOLDER.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN
ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS PRINCIPAL EXECUTIVE OFFICE
No. __ $___________
TRUE TEMPER CORPORATION
Senior Increasing Rate Discount Note
TRUE TEMPER CORPORATION, a Delaware corporation (together with
its successors, the "Company"), for value received hereby promises to pay to
Emhart, Inc. and registered assigns (the "Holder") the initial principal sum of
_______________________________ plus the amounts by which the principal has been
increased in accordance with Section 2.05 of the Securities Purchase Agreement
(as defined) by wire transfer of immediately available funds to the Holder's
account at such bank in the United States as may be specified in writing by the
Holder to the Company, on the Maturity Date in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to accrete interest on the unpaid
principal amount hereof on the dates and at the rate or rates provided for in
the Securities Purchase Agreement. Reference is made to the Securities Purchase
Agreement for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
This Note is one of a duly authorized issue of Senior
Increasing Rate Discount Notes of the Company (the "Notes") referred to in the
Securities Purchase Agreement, dated as of September 30, 1998, among the Company
and the Purchaser named therein (as the same may be amended from time to time in
accordance with its terms, the "Securities Purchase Agreement"). The
53
Notes are transferable and assignable to one or more purchasers (in minimum
denominations of $5,000,000 or larger multiples of $1,000,000), in accordance
with the limitations set forth in the Securities Purchase Agreement. The Company
agrees to issue from time to time replacement Notes in the form hereof to
facilitate such transfers and assignments.
The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the registered
holders of the Notes and particulars of the respective Notes held by them and of
all transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of the
Notes shall be proven by the Register.
This Note shall be deemed to be a contract under the laws of
the State of New York, and for all purposes shall be construed in accordance
with the laws of said State. The parties hereto, hereby waive presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically provided herein, and assent to extensions of the time of payment,
or forbearance or other indulgence without notice.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: September 30, 1998
TRUE TEMPER CORPORATION
By:
------------------------
Name:
Title:
