EXECUTION COPY
EXHIBIT 10.37
STOCK PURCHASE AGREEMENT
TransTechnology Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President, Chief Financial Officer and Treasurer
Ladies & Gentlemen:
The undersigned, Tinicum Capital Partners II, L.P. and Tinicum Capital
Partners II Parallel Fund, L.P. (collectively referred to herein as the
"Investor" or "Tinicum"), hereby confirm their agreement with TransTechnology
Corporation as follows:
1. This Stock Purchase Agreement (the "Stock Purchase Agreement") is made as of
February 15, 2006 between TransTechnology Corporation, a Delaware corporation
(the "Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to 2,500,000 shares of
common stock of the Company, $0.01 par value per share (the "Common Stock"), to
certain investors in a private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor 1,666,667 shares of
Common Stock (the "Shares")(1) for a purchase price of $7.50 in cash per share
(the "Purchase Price"), or an aggregate purchase price of $12,500,002.50 (the
"Aggregate Purchase Price"), pursuant to the Terms and Conditions for Purchase
of Shares attached hereto as Annex I and incorporated herein by reference as if
fully set forth herein (the "Terms and Conditions"). This Stock Purchase
Agreement, together with the Terms and Conditions which are incorporated herein
by reference as if fully set forth herein, may hereinafter be referred to as the
"Agreement." Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:
Existing Share Ownership of Investor
Tinicum Capital Partners II, L.P 62,875
Tinicum Capital Partners Parallel Fund II, L.P 425
[Signature Page Follows]
----------
(1) Tinicum Capital Partners II, L,.P. to receive 1,658,044 shares for an
aggregate price of $12,435,330 and Tinicum Capital Partners II Parallel
Fund, L.P. to receive 8,623 shares for an aggregate price of $64, 672.50.
1
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 4 above and the name and address information below in
preparation of the Registration Statement (as defined in Annex 1). This
Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
AGREED AND ACCEPTED: TINICUM CAPITAL PARTNERS II, L.P.
TRANSTECHNOLOGY CORPORATION By: TINICUM LANTERN II, LLC
Its: General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President, Chief Financial ----------------------------------
Officer and Treasurer Tax ID No.: (2)
------------------------
State of Formation: Delaware
---------------------
Principal Place of Business: NY, NY
------------
TINICUM CAPITAL PARTNERS PARALLEL FUND
II, L.P.
By: TINICUM LANTERN II, LLC
Its: General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Tax ID No.: (3)
-------------------------
State of Formation: Delaware
---------------------
Principal Place of Business: NY, NY
-----------
AND FOR PURPOSES OF SECTION 6.3 ONLY
By: TINICUM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
2
TABLE OF CONTENTS
1. Authorization and Sale of the Shares.................................. 2
2. Agreement to Sell and Purchase the Shares; Subscription Date.......... 2
3. Delivery of the Shares at Closing..................................... 2
4. Representations and Warranties of the Company......................... 3
5. Representations, Warranties and Covenants of the Investor............. 11
6. Covenants............................................................. 12
7. Survival of Company Representations, Warranties; Indemnification...... 14
8. Registration of the Shares; Right of First Offer...................... 15
9. Notices............................................................... 16
10. Changes............................................................... 17
11. Headings.............................................................. 17
12. Severability.......................................................... 17
13. Governing Law......................................................... 17
14. Counterparts.......................................................... 17
15. Entire Agreement...................................................... 17
16. Confidential Information.............................................. 18
17. No Third-Party Beneficiaries.......................................... 18
18. Knowledge............................................................. 18
i
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 2,500,000 shares of
Common Stock to the Investor and Other Investors.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1. At the Closing (as defined in Section 3), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares, each as set forth in
Section 3 of the Stock Purchase Agreement to which these Terms and Conditions
are attached at the Purchase Price set forth thereon.
2.2. The Company may enter into a substantially similar form of
Stock Purchase Agreement, including these Terms and Conditions, with other
investors (the "Other Investors") and expects to complete sales of shares of the
Company's common stock to the Other Investors, provided, however, that the
Company shall not grant the rights granted pursuant to Sections 6.1 through 6.3,
Section 6.5 and Section 6.8 hereof to the Other Investors. The Company may
accept executed subscription agreements from Other Investors for the purchase of
Common Stock commencing upon the date hereof and ending on February 17, 2006.(4)
2.3. The obligations of the Other Investors under any similar
subscription agreement are several and not joint with the obligations of any
Other Investors and the Investor, and no Other Investor, including the Investor,
shall be responsible in any way for the performance of the obligations of any
Other Investors under any agreement. Nothing contained herein, and no action
taken by the Investor, shall be deemed to constitute a partnership, an
association, a joint venture or any other kind of entity between the Investor
and the Other Investors, or create a presumption that the Other Investors and
the Investor are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated hereby. The Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement (provided, that such rights
may be modified, amended or waived in accordance with Section 9 below), and it
shall not be necessary for any Other Investors to be joined as an additional
party in any proceeding for such purpose.
3. Delivery of the Shares at Closing.
3.1. The completion of the purchase and sale of the Shares (the
"Closing") shall occur on February 17, 2006 (the "Closing Date"), at the offices
of ▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP. At the Closing, upon receipt by the Company of the
Aggregate Purchase Price, the transfer agent for the Company shall deliver to
the Investor one or more stock certificates representing the number of Shares as
set forth pursuant to Section 3 of the Stock Purchase Agreement, each such
certificate to be registered in the name of the Investor or, if so indicated on
the signature page of the Stock Purchase Agreement, in the name of a nominee
designated by the Investor.
3.2. The Company's obligation to issue and deliver the Shares to the
Investor shall be subject to the following conditions, any one or more of which
may be waived by the Company: (a) receipt by the Company of a certified or
official bank check or wire transfer of immediately available funds in the full
amount of the Aggregate Purchase Price; (b) the accuracy of the representations
and warranties made by the Investor herein and the fulfillment of the Investor's
obligations hereunder prior to the Closing and (c) the absence of any order,
court injunction, law, statue, or rule prohibiting the transactions contemplated
hereby.
3.3. The Investor's obligation to purchase the Shares shall be
subject to the following conditions, any one or more of which may be waived by
the Investor: (a) Investor and the Company shall have executed this Agreement
and the Registration Rights Agreement, (b) the representations and warranties of
the Company set forth herein shall be true and correct as of the Closing Date in
all material respects (except for representations and warranties that speak as
of a specific date, which representations and warranties shall be true and
correct as of such date), (c) the Company shall have complied in all material
----------
(4) The Company shall provide to Investor a finalized list of Other Investors
and the amounts to be purchased by such investors prior to the signing of
this Agreement. The Company will have three business days from the date of
this Agreement to enter into agreements with such Other Investors.
2
respects with all pre-Closing covenants of the Company hereunder and (d) the
Investor shall have received such documents as the Investor shall reasonably
have requested, including, an opinion of the Company's counsel, in substantially
the form attached hereto as Exhibit 1.(5)
3.4. Legend; Restrictions on Transfer. The certificate or
certificates for the Shares (and any securities issued in respect of or exchange
for the Shares) shall be subject to a legend or legends restricting transfer
under the Securities Act and referring to restrictions on transfer herein, such
legend to be substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
The Company and the Investor acknowledge and agree that the Investor may,
as permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Shares and, if
required under the terms of such arrangement, Investor may, as permitted by law,
transfer pledged or secured Shares to the pledgees or secured parties. So long
as Investor is not an affiliate of the Company, such a pledge or transfer would
not be subject to approval or consent of the Company, provided that, upon the
request of the Company, a legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be obtained. At the Investor's expense, so long as the
Shares are subject to the legend required by this Section 3.4, the Company will
use its best efforts to execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor, as follows:
4.1. Organization. The Company and each of its Subsidiaries (as
defined in Rule 405 under the Securities Act) is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries has full power and
authority to own, lease, operate and occupy its properties and assets and to
conduct its business as presently conducted and as described in the documents
filed by the Company under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"),
including, without limitation, its most recent report on Form 10-K (the
"Exchange Act Documents") and is registered or qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it or the location of the properties owned or leased by it requires such
qualification and where the failure to be so qualified would have a material
adverse effect upon the condition (financial or otherwise), earnings, cash flow,
business or business prospects, properties, assets, liabilities or operations of
the Company and its Subsidiaries, considered as one enterprise (a "Material
Adverse Effect"), and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2. Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and the related Registration Rights Agreement attached as
Exhibit 2 hereto (collectively the "Agreements"), and the Agreements have been
duly authorized and validly executed and delivered by the Company and constitute
legal, valid and binding agreements of the Company enforceable against the
Company in accordance with their terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
----------
(5) Among other things, opinion to address (i) due execution and delivery by
the Company of the Registration Rights Agreement and Stock Purchase
Agreement, (ii) that the execution and delivery of the Registration
Rights, Stock Purchase Agreement and the consummation of the transactions
contemplated thereby, including the issuance and sale of the Shares, will
not constitute a violation of, breach or default under [any] material
contract, violate any law or create any lien, encumbrance, etc., on any
assets of the Company, (iii) no pending legal or governmental action,
which would need to be disclosed under Regulation S-K, (iv) no persons
with registration rights or similar rights, (v) exemption from
registration requirements and compliance with all SEC requirements and
(vi) valid existence and good standing under Delaware law of Company, and
(vii) no stockholder vote is required for the issuance or entering into
the Agreements.
3
4.3. Non-Contravention. The execution and delivery of the
Agreements, the issuance and sale of the Shares under this Agreement, the
fulfillment of the terms of the Agreements and the consummation of the
transactions contemplated hereby and thereby will not (A) conflict with or
constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any Subsidiary
is a party or by which it or any of its Subsidiaries or their respective
properties are bound, (ii) the charter, by-laws or other organizational
documents of the Company or any Subsidiary, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any Subsidiary or their
respective assets or properties, except in the case of clauses (i) and (iii) for
any such conflicts, violations or defaults which are not reasonably likely to
have a Material Adverse Effect, or (B) result in the creation or imposition of
any lien, encumbrance, claim, security interest or restriction whatsoever upon
any of the material properties or assets of the Company or any Subsidiary or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them is bound or to which any of the material property or assets of the Company
or any Subsidiary is subject. No consent, approval, authorization or other order
of, or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body in the United States or any
foreign jurisdiction or any other person is required for the execution and
delivery of the Agreements and the valid issuance and sale of the Shares
pursuant to the Agreements, other than such as have been made or obtained, and
except for any post-closing securities filings or notifications required to be
made under federal or state securities laws.
4.4. Capitalization. The equity capitalization of the Company as of
February 15, 2006 is as set forth on Schedule 4.4 hereto. The Shares to be sold
pursuant to this Agreement have been duly authorized, and when issued and paid
for in accordance with the terms of this Agreement, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive rights for any
other securityholder of the Company. The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. Except as set forth on
Schedule 4.4 hereof, there are no outstanding rights (including, without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any Subsidiary, or any contract, commitment,
agreement, understanding or arrangement of any kind to which the Company is a
party or of which the Company has knowledge and relating to the issuance or sale
of any capital stock of the Company or any Subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, right of first
refusal, registration right, or other similar right exists with respect to the
Shares or the issuance and sale thereof. No further approval or authorization of
any stockholder, the Board of Directors or others is required for the issuance
and sale of the Shares. The Company owns the entire equity interest in each of
its Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than as set forth on Schedule
4.4 hereof. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party or, to the knowledge of the Company between or among any of the Company's
stockholders.
4.5. Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary or any of their officers or directors is or may be a
party or of which the business, assets or property of the Company or any
Subsidiary is subject other than as set forth on Schedule 4.5. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers.
4.6. No Violations. Neither the Company nor any Subsidiary is (i) in
violation of its charter, bylaws, or other organizational document, or (ii) in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, except for such violations, individually or in the aggregate,
which would not be material to the Company and its Subsidiaries or (iii) is in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound, except for such default which would not be
material to the Company and its Subsidiaries.
4
4.7. Governmental Permits, Etc. Each of the Company and its
Subsidiaries has and is in material compliance with all necessary franchises,
licenses, certificates, permits and other authorizations from any foreign,
federal, state or local government or governmental agency, department, or body
that are currently necessary for the operation of the business of the Company
and its Subsidiaries as currently conducted and as described in the Exchange Act
Documents except where the failure to currently possess such could not
reasonably be expected to have a Material Adverse Effect. To the knowledge of
the Company, all necessary franchises, licenses, certificates, permits and other
authorizations are in full force and effect, and no suspension or cancellation
of the same is threatened or reasonably likely.
4.8. Intellectual Property. Except as set forth on Schedule 4.8
hereof (i) each of the Company and its Subsidiaries owns, or has the valid right
to use, without limitation, all United States and foreign patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
copyrights, copyright registrations, licenses, inventions, software, trade
secrets, trade names; know-how and other similar rights (collectively,
"Intellectual Property") necessary for the conduct of its business as now
conducted except where the failure to currently own or have the right to use
would not be material to the Company and its Subsidiaries and (ii) to the
knowledge of the Company, neither the Company nor any of its Subsidiaries is
infringing, or has received any notice of, or has any knowledge of, any asserted
infringement by the Company or any of its Subsidiaries of, any rights of a third
party with respect to any Intellectual Property.
4.9. Financial Statements.
(a) The financial statements of the Company and the related
notes contained in the Exchange Act Documents present fairly, in accordance with
generally accepted accounting principles, the financial position of the Company
and its Subsidiaries as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified consistent with the
books and records of the Company and its Subsidiaries except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which are not material in amount. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, except as may be disclosed in the notes to such
financial statements, or in the case of unaudited statements, as may be
permitted by the Securities and Exchange Commission (the "SEC") on Form 10-Q
under the Exchange Act and except as disclosed in the Exchange Act Documents and
complied in all material respects with all applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto.
The other financial information contained in the Exchange Act Documents has been
prepared on a basis consistent with the financial statements of the Company.
(b) (i) The Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now
conducted taking into account the current and projected capital requirements of
the business conducted by the Company and projected capital availability; and
(ii) the current cash flow of the Company, together with the proceeds the
Company would receive upon liquidation of its assets, after taking into account
all anticipated uses of such amounts, would be sufficient to pay all such
liabilities and obligations when such is required to be paid. The Company does
not intend to incur liabilities and other obligations beyond its ability to pay
such as they mature or are required to be paid. The Company has no knowledge of
any facts or circumstances which lead it to believe that it will be required to
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction, and has no present intention to so file.
(c) Except as set forth in any Exchange Act Documents, there
are no obligations of the Company to officers, directors, stockholders or
employees of the Company other than (i) for payment of salary for services
rendered and for bonus payments; (ii) reimbursements for reasonable expenses
incurred on behalf of the Company; (iii) for other standard employee benefits
made generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors); and
(iv) obligations listed in the Company's financial statements. Except as
described above or in any Exchange Act Documents, none of the officers,
directors or, to the knowledge of the Company, key employees or stockholders of
the Company or any members of their immediate families, are indebted to the
Company, individually or in the aggregate, in excess of $60,000 or have any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation which competes with the Company, other than passive
investments in publicly traded companies (representing less than one percent
(1%) of such company) which may compete with the Company. Except as described
above, no officer, director or stockholder, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
the Company and no agreements, understandings or transactions are contemplated
between the Company and any such person. Except as set forth in any Exchange Act
Documents, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
5
4.10. No Material Adverse Change. Except as disclosed in the
Exchange Act Documents, since December 25, 2005, (A) there has not been (i) any
Material Adverse Effect, (ii) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company or any of its Subsidiaries, or
(iii) any loss or damage (whether or not insured) to the physical property of
the Company or any of its Subsidiaries which has been sustained which has a
Material Adverse Effect, and (B) the Company and its Subsidiaries have operated
the business in the ordinary course, consistent with past practice.
4.11. ERISA Except as disclosed in an Exchange Act Document, neither
the Company, any of its Subsidiaries or any person required to be aggregated
with the Company or any of its Subsidiaries maintains or contributes to, or is
subject to liability for, any "defined benefit plan," as defined in Sections
3(35) of the Employee Retirement Income Security Act, as amended ("ERISA") (any
such defined benefit plan, a "Plan"). No Plan is subject to Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code"), or Title IV of ERISA.
Each employee benefit plan, within the meaning of Section 3(3) of ERISA,
maintained by the Company and its Subsidiaries is in compliance in all material
respects with the requirements of ERISA and the Code. The Company or its
Subsidiaries may amend or terminate each Plan under the terms of such Plan
without incurring any liability thereunder.
4.12. Product Liability. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary or any of their officers or directors is or may be a
party based on any legal or equitable theory of recovery whatsoever, relating to
any alleged defect in design, manufacture, materials or workmanship, including
any failure to warn or alleged breach of express or implied warranty,
representation, or condition, relating to any product designed, manufactured or
sold by or on behalf of the Company or any of its Subsidiaries within the last
three years. There have not been, within the last three years, any product
recalls or post-sale warnings by the Company or any of its Subsidiaries relating
to a product designed, manufactured or sold by or on behalf of the Company or
any of its Subsidiaries, and no circumstances exist affecting the safety of the
products of the Company or any of its Subsidiaries. All products designed or
manufactured by the Company or any of its Subsidiaries, and any services
rendered in the conduct of the business of the Company or any of its
Subsidiaries, within the last three years, have been in material conformity with
all applicable standards, contractual commitments and all express or implied
warranties.
4.13. No Undisclosed Liabilities. Except as set forth on Schedule
4.13 hereof or disclosed in an Exchange Act Document, neither the Company nor
any of its Subsidiaries has, since December 25, 2005, incurred any debts,
liabilities, claims, demands, expenses, commitments and obligations (whether
accrued, absolute, contingent, known, disclosed or undisclosed, asserted or
unasserted, liquidated or unliquidated) ("Liabilities"), which individually or
in the aggregate are material to the Company or its Subsidiaries, except such
Liabilities as were incurred in the ordinary course of business consistent with
past practice and are of a nature, type and magnitude consistent with the
Liabilities reflected in the Company's Exchange Act Documents.
4.14. Assets. The assets, rights and properties of the Company and
its Subsidiaries constitute all of the assets, rights and properties which are
necessary for the conduct of the business of the Company and its Subsidiaries as
presently conducted and are sufficient to provide the Company with the means and
capability to conduct the business of the Company and its Subsidiaries as
presently being conducted. The Company and its Subsidiaries have good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects, except such as are described in
Schedule 4.14 or in the Exchange Act Documents or such as do not materially
affect the value of such property and do not interfere with the use made of such
property by the Company and its Subsidiaries. The Company and its Subsidiaries
have good and marketable title in fee simple, free of any material liens or
encumbrances, to all real property owned by them, except such as are described
in Schedule 4.14. Any real property and buildings held under lease by the
Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made of such property and buildings by the Company and its
Subsidiaries.
4.15. Insurance. The Company maintains insurance of the types and in
the amounts and covering such risks as is prudent and adequate for its business
as currently conducted, including, without limitation, property and casualty
insurance, including physical damage, general liability, workers compensation,
product liability and all other risks customarily insured against (any such
insurance or similar agreements collectively the "Policies"). To the knowledge
of the Company (X) the Policies are valid, outstanding, and enforceable, and
have been issued to the Company or any of its Subsidiaries or are held by the
Company or any of its affiliates for the benefit of the Company or its
Subsidiaries, (Y) are in full force and effect, and to the knowledge of the
Company have been issued by licensed insurers, and (Z) all premiums with respect
to the Policies covering all periods up to and
6
including the Closing Date have been paid, and, except as set forth on Schedule
4.15 hereof, no written notice of cancellation or termination has been received
with respect to any Policies.
4.16. Labor Relations. Except as described in Schedule 4.16, no
labor dispute with employees of the Company or any of its Subsidiaries exists
or, to the knowledge of the Company is threatened or imminent, that could have
or be reasonably expected to have a Material Adverse Effect. To the knowledge of
the Company, no employee of the Company or its Subsidiaries is or will be in
violation of any judgment, decree, or order or any term of any employment
contract, patent disclosure agreement, or other contract or agreement relating
to the relationship of any such employee with the Company of any of its
Subsidiaries, or any other party because of the nature of the business presently
conducted by the Company and its Subsidiaries.
4.17. Environmental. Except as disclosed in any Exchange Act
Document, neither the Company nor its Subsidiaries are in violation in any
material respect of applicable federal, state, local and foreign laws and
regulations, all common law and all other provisions having the force or effect
of law relating to pollution or protection of the environment ("Environmental
Laws"). To the knowledge of the Company, except as described in Schedule 4.17
hereto, there are no material pending or threatened claims, actions, causes of
action, investigations or notices by any person alleging a potential liability
arising out of, based on or resulting from the presence or release of, or threat
of release of, or exposure to, any hazardous materials, noise or odor or any
violation or alleged violation of any Environmental Laws ("Environmental
Claims"), against the Company or any of its Subsidiaries or against any person
whose liability for any Environmental Claims the Company or any of its
Subsidiaries has or may have retained or assumed, either contractually or by
operation of law.
4.18. Disclosure. The representations and warranties of the Company
contained in this Section 4 as of the date hereof and as of the Closing Date and
all material information provided to the Investor by or on behalf of the Company
including the schedules, taken as a whole, do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding
anything to the contrary contained in this Agreement or in any of the Schedules,
any information disclosed in one Schedule shall, should the existence of the
fact or item or its contents be readily apparent to be relevant to any other
Schedules, be deemed to be disclosed in respect to such other Schedules.
4.19. Reporting Status. (a) Except as noted on Schedule 4.19
attached hereto, the Company has filed in a timely manner all documents that the
Company was required to file under the Exchange Act or the Securities Act during
the two (2) years preceding the date of this Agreement, including all such
documents filed after the date hereof and prior to the Closing. None of the
Company's Subsidiaries is required to file any form, report, schedule, statement
or other document with the SEC. The Company is not currently eligible to use
Form S-3 under the Securities Act to register the Shares to be offered for the
account of the Investor, but is eligible to effectuate such registration on Form
S-1 under the Securities Act. The following documents complied in all material
respects with the SEC's requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading:
(i) Annual Report on Form 10-K for the year ended March 31,
2005, Quarterly Reports on Form 10-Q for the quarters ended December 26, 2004;
June 26, 2005; September 25, 2005 and December 25, 2005; Current Reports on Form
8-K filed on January 14, 2005; January 18, 2005; January 28, 2005; February 15,
2005; March 15, 2005; June 9, 2005; June 27, 2005; July 19, 2005; August 19,
2005; September 12, 2005; October 20, 2005; December 23, 2005; and December 28,
2005; and the Definitive Proxy Statement filed September 14, 2005 with respect
to the 2005 annual meeting of the Company's stockholders; and
(ii) all other documents, if any, filed by the Company with
the SEC during the two (2) year period preceding the date of this Agreement
pursuant to the reporting requirements of the Exchange Act.
4.20. Exchange Act Reporting; Compliance. The Company's Common Stock
is registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act, nor has the Company
received any notification that the SEC or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration. The
Company shall comply with all requirements of the NASD and the SEC with respect
to the issuance of the Shares.
7
4.21. No Manipulation of Stock. The Company has not taken and will
not take any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock.
4.22. Company not an "Investment Company." The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
4.23. Foreign Corrupt Practices. Neither the Company, nor to the
best knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
4.24. Accountants. To the knowledge of the Company, Deloitte &
Touche LLP, who the Company expects will consent to the incorporation by
reference of its report dated August 12, 2005 with respect to the consolidated
financial statements of the Company included in the Company's Annual Report on
Form 10-K for the year ended March 31, 2005 into any Registration Statement (as
defined in the Registration Rights Agreement) and the prospectus which forms a
part thereof contemplated by the Registration Rights Agreement, are and, during
the periods covered by their report, were independent accountants as required by
the Securities Act and the rules and regulations promulgated thereunder.
4.25. Contracts. The contracts described in the Exchange Act
Documents that are material to the Company are in full force and effect on the
date hereof, and neither the Company nor, to the knowledge of the Company, any
other party to such contracts is in breach of or default under any of such
contracts which would have a Material Adverse Effect. The Company has filed with
the SEC all contracts and agreements required to be filed by the Exchange Act
and Securities Act.
4.26. Taxes.
(a) Each of the Company and its subsidiaries has (i) duly and
timely filed (or there has been duly and timely filed on its behalf) with the
appropriate governmental authorities all returns, reports, declarations,
estimates, information returns and other documents (including any related or
supporting information) with respect to Taxes (including any attachments thereto
and amendments thereof), and including, where permitted or required, combined,
consolidated or unitary returns for any group of entities that includes the
Company and any of its subsidiaries (the "Tax Returns") required to be filed by
them (giving effect to all valid extensions and such Tax Returns are true,
correct and complete in all material respects; (ii) timely paid in full (or
there has been timely paid on its behalf) all Taxes required to be paid by it,
except for (A) those Taxes for which the failure to have paid would not,
individually or in the aggregate, reasonably be expected to materially affect
the Company and its Subsidiaries and (B) those Taxes which are being contested
in good faith and adequately disclosed and provided for in the financial
statements of the Company and for which the Company has provided adequate
reserves in accordance with generally accepted accounting principles ("GAAP");
and (iii) made adequate provision in accordance with GAAP (or provision has been
made on its behalf) for all accrued Taxes not yet due and payable. Since the
date of the Company's most recent Financial Statements, neither the Company nor
any of its Subsidiaries have incurred any liability for Taxes other than in the
ordinary course of business consistent with past practice.
(b) Except as set forth in Schedule 4.26 hereto, there are no
liens for Taxes upon any property or assets of the Company or any Subsidiary,
except for liens which arise by operation of law with respect to current Taxes
not yet due and payable, or for Taxes which are being contested in good faith
and for which the Company has provided adequate reserves in accordance with
GAAP.
(c) Each of the Company and its subsidiaries has complied in
all material respects with all applicable laws relating to the payment and
withholding of Taxes and has, within the time and manner prescribed by law,
withheld and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over.
8
(d) Except as noted in Schedule 4.26 hereto, no federal,
state, local or foreign audits, actions, suits, proceedings, investigations,
claims or other administrative proceedings ("Tax Claims") have commenced or are
pending with regard to any Taxes of the Company or any of its subsidiaries, and
no notification has been received that an audit, investigation, claim or other
administrative proceeding is pending or threatened with respect to any Taxes due
from or with respect to the Company or any of its subsidiaries. No deficiency
for any Tax has been proposed, asserted or assessed with respect to the Company
or any of its subsidiaries which has not been finally resolved and paid in full.
(e) Except as noted in Schedule 4.26 hereto, none of the
Company or any of its subsidiaries is a party to, bound by, or has any
obligation under, any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement, whether written or unwritten, or has any
potential liability or obligation to any person as a result of, or pursuant to,
any such agreement, contract or arrangement.
(f) None of the Company or any of its subsidiaries (i) has
been included in any "consolidated," "unitary," "combined" or similar Tax Return
provided for under the laws of the United States, any foreign jurisdiction or
any state or locality with respect to Taxes other than a group of which the
Company is the common parent or (ii) has any liability for Taxes as a result of
transferee, successor or similar liability.
(g) The Company has not given or been requested to give
waivers or extensions of any statute of limitations relating to the payment of
Taxes of the Company or any of its Subsidiaries.
(h) The Company and its subsidiaries have made available to
the Investor complete copies of (i) all federal, state, local and foreign
income, franchise and other material Tax Returns of the Company and/or any of
its subsidiaries relating to taxable periods ended since 2000, and (ii) any
audit report issued within the last three years relating to any income,
franchise or other material Taxes due from or with respect to the Company and/or
any of its subsidiaries.
(i) No closing agreements, private letter rulings, technical
advance memoranda or similar agreement or ruling have been entered into or
issued by any taxing authority with respect to the Company or any of its
subsidiaries within three years of the date this Agreement, and no such
agreement or ruling has been applied for and is currently pending.
(j) Neither the Company nor any of its subsidiaries has agreed
or is required to make any adjustments under Section 481(a) of the Code (or any
similar provision of state, local, foreign or other Law) by reason of a change
in accounting method or otherwise for any Tax period for the which the
applicable statutes of limitations has not yet expired.
(k) Neither the Company nor any of its subsidiaries has been a
"distributing corporation" or a "controlled corporation" in a distribution
intended to qualify under Section 355(a) of the Code.
(l) Neither the Company nor any of its subsidiaries has
engaged in any transaction that, for federal income tax reporting purposes,
gives rise to a disclosure obligation as a "reportable transaction" under
Section 6011 of the Code and the Treasury Regulations thereunder.
(m) Neither the Company nor any of its subsidiaries will be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the Closing Date as a result of any intercompany transaction or excess loss
account described in Treasury Regulations under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law).
(n) Except as disclosed on Schedule 4.26 hereto, none of the
Company or any of its subsidiaries has engaged in a trade or business, had a
permanent establishment (within the meaning of an applicable tax treaty or local
law), or has otherwise become subject to Tax in a jurisdiction other than the
country of its formation or has a foreign branch or division.
(o) None of the Company or any of its subsidiaries is or has
been a "United States real property holding corporation" within the meaning of
Section 897 of the Code or the Treasury Regulations thereunder.
"Taxes" means all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including, without limitation, all net
income, gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property
9
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, and all interest, penalties, fines, additions to tax or additional
amounts imposed by any taxing authority in connection with any item described
above.
4.27. Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the Investor
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
4.28. Private Offering. Assuming the correctness of the
representations and warranties of the Investor set forth in Section 5 hereof,
the offer and sale of Shares are exempt from registration under the Securities
Act. The Company has not distributed and will not distribute prior to the
Closing Date any offering material in connection with this Offering and sale of
the Shares other than the documents of which this Agreement is a part or the
Exchange Act Documents. The Company has not in the past nor will it hereafter
take any action independent of the placement agent to sell, offer for sale or
solicit offers to buy any securities of the Company which would bring the offer,
issuance or sale of the Shares within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the
exemptions of Section 4 of the Securities Act. Neither the Company nor any
person acting on behalf of the Company has offered or sold any of the Shares by
any form of general solicitation or general advertising. The Company has offered
the Shares for sale only to the Investor and certain other "accredited
investors" within the meaning of Rule 501 under the Securities Act.
4.29. Inventory. All of the Company's inventory consists of a
quality and quantity useable and saleable in the ordinary and usual course of
business, except for items of excess and obsolete materials, all of which items
have been written off or written down on the applicable balance sheet to fair
market value or for which adequate reserves have been provided therein. All
inventories not written off have been priced at the lower of cost or market. The
quantities of each type of inventory (whether raw materials, work-in-progress,
or finished goods) are in quantities sufficient for the ordinary and usual
course of the Company's business. The valuation of all of the inventory of the
Company and its Subsidiaries have been determined consistent with GAAP,
consistently applied throughout the periods covered by the Exchange Act
Documents filed by the Company within the last three fiscal years.
4.30. Accounts Receivable. All notes and accounts receivable of the
Company and its Subsidiaries on the books and records of the Company and its
Subsidiaries, reflect valid receivables resulting from bona fide transactions
with third parties in the ordinary course of business, subject to no setoffs or
counterclaims except those that are customarily required by government
authorities under government contracts governed by the Federal Acquisition
Regulations, and that are reasonably anticipated to be paid in accordance with
their terms at their recorded amounts, subject to the reserve for bad debts set
forth on the balance sheets of the Company Company's financial statements or
Exchange Act Documents. The valuation of all notes and accounts receivable of
the Company and its Subsidiaries have been determined consistent with GAAP,
consistently applied throughout the periods covered by the Exchange Act
Documents filed by the Company within the last three fiscal years.
4.31. Controls and Procedures. The Company is in material compliance
with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 which are applicable to it
as of the Closing Date. The Company has established and maintains an effective
system of internal control over financial reporting (as such term is defined in
the Exchange Act ) regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that (i) pertain to maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company's assets that could have a material impact on the financial
statements. The Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in the applicable Exchange Act Documents their
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the periods covered by such Exchange Act Documents based on
such evaluation. Since the last such evaluation date, there has been no change
in the
10
Company's internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting, and no significant deficiencies or material
weaknesses in internal controls over financial reporting, or other factors that
could significantly affect the Company's internal control over financial
reporting, have been identified.
4.32. Section 203 Exemption. The Board of Directors has adopted this
Agreement and the Registration Rights Agreement and the transactions
contemplated hereby and thereby in such manner as is sufficient to render the
restrictions of Section 203 of the Delaware General Corporations Law
inapplicable to the Agreements and all transactions contemplated hereby and
thereby.
4.33. No Registration Rights. No person has the right to require the
Company or any Subsidiary to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the
SEC for the issuance and sale of the Shares.
5. Representations, Warranties and Covenants of the Investor.
5.1. The Investor represents and warrants to, and covenants with,
the Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the number of Shares, each as set forth in Section 3 of the Stock
Purchase Agreement in the ordinary course of its business and for its own
account for investment only and with no present intention of distributing any of
such Shares, or any arrangement or understanding with any other persons
regarding the distribution of such Shares; (iii) the Investor will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy,) any of the Shares except in compliance with the Securities
Act, applicable state securities laws and the respective rules and regulations
promulgated thereunder; and (iv) the Investor has, in connection with its
decision to purchase the number of Shares as set forth in Section 3 of the Stock
Purchase Agreement, relied upon the Exchange Act Documents and the
representations and warranties of the Company contained herein. The Investor
understands that its acquisition of the Shares has not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein. Subject to compliance with the Securities Act, applicable
securities laws and the respective rules and regulations promulgated thereunder,
nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Shares for any period of time.
5.2. The Investor acknowledges, represents and agrees that no action
has been or will be taken in any jurisdiction outside the United States by the
Company that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States where legal action by the Company
for that purpose is required. Each Investor outside the United States will
comply with all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.
5.3. The Investor hereby covenants with the Company not to make any
sale of the Shares without complying with the provisions of this Agreement and
the Registration Rights Agreement and without complying with any prospectus
delivery requirement then applicable to it, and the Investor acknowledges that
the certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith.
5.4. The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investor
herein may be legally unenforceable.
11
5.5. Neither the Investor nor any person acting on its behalf or at
its direction has engaged in any purchase or sale of Common Stock (including
without limitation any short sale), pledge, transfer, establishment of an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange
Act) during the thirty (30) trading days immediately preceding the date of this
Agreement or otherwise has engaged or will engage, directly or indirectly, in
any action designed to, or which might be reasonably expected to, cause or
result in any manipulation of the price of the Common Stock. The Investor will
not use any of the restricted Shares acquired pursuant to this Agreement to
cover any short position in the Common Stock of the Company if doing so would be
in violation of applicable securities laws and otherwise will comply with
federal securities laws in the holding and sale of the Shares.
5.6. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Shares.
5.7. The Company acknowledges and agrees that Investor does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 5, 6 and 16(a) of this Agreement, or in the Confidentiality Agreement
(as defined below).
6. Covenants.
6.1. Investor Board Nominee. So long as the Investor shall continue
to own 50% of the Shares purchased pursuant to this Agreement, the Investor
shall have the right to nominate one director to the Board of Directors (the
"Investor Board Nominee"), who shall initially be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. If the
Investor Board Nominee is any person other than ▇▇. ▇▇▇▇▇▇▇▇, such person shall
be reasonably acceptable to the Company. The Company agrees to fully support and
include the Investor Board Nominee in any slate of directors put forth for
election at any meeting of stockholders at which directors are elected, and that
the Board of Directors shall recommend that stockholders vote in favor of the
Investor Board Nominee. The Investor shall provide to the Company all
information necessary for the inclusion of the Investor Board Nominee in any
filings with the SEC.(6)
6.2. Voting of Investor Shares. For the two (2) year period
commencing at the Closing, at any meeting of the stockholders of the Company the
Investor agrees to, in its sole discretion, vote all of its shares of Common
Stock either (a) pursuant to the recommendation of the board of directors of the
Company (the "Board of Directors") or (b) proportionately with the vote of all
other shareholders at any such meeting, provided that in any vote to elect
members of the Board of Directors, the Investor shall be free to vote all of its
Shares for the Investor Board Nominee; however, any shares not voted by the
Investor in favor of the Investor Board Nominee shall be voted in accordance
with this Section 6.2.
6.3. Maximum Ownership. The Investor agrees that, for a period of
two (2) years commencing at the Closing, the Investor and its affiliates will
not Acquire (as defined below) any additional Common Stock, or securities
convertible into Common Stock, which would cause the Investor's aggregate
ownership (which shall include ownership by its affiliates) to exceed 30% of the
then outstanding shares of Common Stock (the "Maximum Ownership Provision"). The
Board of Directors may at any time, in its sole discretion, waive the Maximum
Ownership Provision. The Company and the Investor further agree that the
provisions of this Section 6.3 with respect to the permitted acquisition of
additional Common Stock shall supersede and replace the provisions with respect
to acquisition of Common Stock set forth in Section 7 of the Confidentiality
Agreement, dated as of September 21, 2005 by and among Tinicum, Inc. and the
Company (the "Confidentiality Agreement"). Promptly following the Closing, the
Company, the Investor and Tinicum, Inc. shall formally amend the Confidentiality
Agreement to (x) modify the term set forth in Section 21 thereof, which shall
not be applicable to Section 7 thereof, until the later of (i) September 21,
2007 or (ii) such date when the Investor owns less than 50% of the Shares
purchased pursuant to this Agreement, (y) add Investor as a party to the
Confidentiality Agreement jointly and severally with Tinicum, Inc, and (z) amend
Section 7 thereof to read in its entirety as set forth on Exhibit 4 hereto.
Tinicum, Inc. has acknowledged its obligation set forth in the preceding
sentence by its signature to this Agreement. For purposes of this Section 6.3,
the term "Acquire" shall mean purchase, offer to purchase, contract to purchase,
hold pursuant to an assignment, transfer, pledge, swap or hedge or otherwise
acquire (or enter into any transaction which is designed to, or might reasonably
be expected to, result in the acquisition (whether by actual acquisition or
effective economic acquisition due to a cash settlement or otherwise) by the
Investor or any of its affiliates or any person in privity with the Investor or
any of its affiliates), directly or indirectly, or establish or increase a call
equivalent position or decrease a put equivalent position with respect to any
shares of the capital stock of the Company, any securities convertible into or
exercisable or exchangeable for such capital stock, or which the undersigned has
beneficial ownership within the rules and regulations of the SEC.
----------
(6) Parties to discuss committee assignments for Investor Board Nominee.
12
6.4. Preservation of NOLs. The Company and the Investor have
discussed, and the Investor is aware, of, the importance to the Company of
preserving the benefits of its substantial net operating loss carry forwards
("NOLs") under the requirements of the Code and Treasury Regulations. In
furtherance of this objective, and notwithstanding anything in this Agreement to
the contrary, The Company will notify Investor and the Other Investors in
writing when, in consultation its independent auditors, it has determined that
additional acquisitions of its equity securities by any of the Investor or Other
Investors may subject the utilization of its NOLs to the Section 382 Limitation
(as defined under the Code). Investor covenants, upon receipt of such notice and
delivery of similar notices to the Other Investors, that neither it nor its
affiliates will acquire any additional Common Stock of the Company until such
time as Investor requests and receives written approval from the Company, which
approval shall not be unreasonably withheld and shall be provided solely on the
basis of whether the Company and its independent auditors have determined that
such proposed acquisition by Investor, upon consideration of the relevant facts
and circumstances known to the Company, would more likely than not subject the
Company to the Section 382 Limitation with respect to the utilization of its
NOLs. The Company and the Investor hereby further agree, following the Closing,
to continue to explore the feasibility of, and to use good faith commercial
efforts to implement, if determined by the Board of Directors to be in the best
interest of the Company, additional mechanisms to ensure protection of the
Company's NOLs in order to avoid the imposition of the Section 382 Limitation on
the Company, including without limitation the possible adoption at the next
annual meeting of shareholders of a charter amendment to impose restrictions
upon the transfer of the Common Stock of the Company. The Company agrees that
the Stock Purchase Agreements entered into with Other Investors will contain
provisions no less restrictive than the restrictions imposed upon the Investor
under this Section 6.4. Notwithstanding any other provision of this Section 6.4,
nothing in this Agreement shall (X) prohibit the Investor from making any
proposal, as permitted by Section 7 of the Confidentiality Agreement, or, upon
approval of the Board of Directors, effecting any transaction which would have
the effect of subjecting the utilization of the Company's NOLs to the Section
382 Limitation, or (Y) extend the term of the covenants contained in Section 6.3
of this Agreement.
6.5. Access to Information. So long as the Investor shall continue
to own 50% of the Shares purchased pursuant to this Agreement, the Company and
its Subsidiaries shall afford the Investor or any authorized representative or
agent thereof who is not a competitor the opportunity to visit and inspect the
properties of the Company and its Subsidiaries and to discuss the business and
finances of the Company and its Subsidiaries with the officers of the Company
and the Subsidiaries , during normal business hours following reasonable notice
as often as may be reasonably requested; provided however, that notwithstanding
the foregoing, the Company shall have no obligation to provide the Investor with
(a) any trade secrets of the Company or (b) any information that, in the opinion
of counsel, may constitute or result in a waiver of the attorney-client
privilege of the Company. In exercising its rights hereunder, the Investor shall
(and shall cause each of its representatives and agents to) conduct themselves
so as not to interfere in any material respect in the conduct of the business of
the Company. The Investor acknowledges and agrees that, prior to the Closing,
any contact by such the Investor and its representatives and agents with
officers, employees, customers or agents of the Company and its subsidiaries
hereunder shall be arranged and supervised by representatives of the Company,
unless the Company otherwise expressly consents with respect to any specific
contact. Any access or confidential non-public information obtained in
connection with the Investor's exercise of its rights pursuant to this Section
6.4 shall be deemed "Evaluation Material" subject to the confidentiality, but
not use, terms of the Confidentiality Agreement.
6.6. Conduct of Business. During the period from the date of this
Agreement to the Closing, the Company will continue to operate its business in
the ordinary course.
6.7. Use of Proceeds. The Aggregate Purchase Price, together with
all other funds received pursuant to the Offering, net of reasonable and
customary offering fees and expenses, will be used to pay down existing
indebtedness, in the order and amounts set forth on Schedule 6.6 hereof.(7)
6.8. Investor Expenses. The Company agrees to reimburse the Investor
all reasonable, documented legal and out-of-pocket expenses incurred in the
entering into of the Agreements, up to a maximum of $50,000.
6.9. Transferability; Termination of Covenants. The Investor may not
transfer or assign any of its rights or obligations pursuant to this Section 6,
whether in connection with a sale of Shares or otherwise. The covenants of the
Company set forth in this Section 6 shall terminate upon a merger or
consolidation of the Company into another entity, the sale of all or
substantially all the assets of the Company or a transaction or series of
related transactions in which a person or persons acquire
----------
(7) Schedule to indicate that Term Loan C, in an amount of $9.2 million, will
be repaid first as permitted by the Company's existing credit agreement,
and itemize all other projected repayment of debt.
13
from stockholders of the Company shares representing more than fifty percent
(50%) of the outstanding voting power of the Company, provided that, the
covenants will not terminate upon any such transaction if the stockholders of
the Company prior to the transaction continue to own fifty percent (50%) or more
of the outstanding voting power of any surviving entity after giving effect to
such transaction.
7. Survival of Company Representations, Warranties; Indemnification.
7.1. Survival of Representations and Warranties. Notwithstanding any
investigation made by any party to this Agreement, all representations and
warranties made by the Company shall survive for two (2) years following the
execution of this Agreement.
7.2. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Investor and each of its partners, officers, managers, employees and
representatives (each an "Investor Indemnitee") from and against (x) any losses,
claims, demands, penalties, fines, actions, damages, costs, expenses (including,
without limitation, reasonable legal fees and expenses incurred by the Investor
Indemnitee in investigating or defending any such proceeding) or liabilities
(all of the foregoing, including associated costs and expenses, a "Loss")
insofar as such Loss arises out of, or is based upon any breach of the
representations or warranties of the Company contained herein or failure to
comply with the covenants and agreements of the Company contained herein, and
(y) any finally judicially determined material diminution in value of the
Investor's Shares as measured against the Purchase Price (a "Diminution")
insofar as such Diminution arises out of, or is based upon any breach of the
representations or warranties of the Company contained herein, provided,
however, that the Company shall not be liable in any such case to the extent
that such Diminution or Loss arises out of, or is based upon, the bad faith,
gross negligence or willful misconduct of the Investor in connection therewith,
provided, further, that the Company shall not have any obligation to indemnify
the Investor from and against any Loss or Diminution until the Investor has
suffered, individually or in the aggregate, any Loss or Diminution in excess of
$750,000 (such amount, the "Indemnification Threshold") and then only to the
extent the amount of all Loss or Diminution exceeds the Indemnification
Threshold. Notwithstanding anything to the contrary herein, and except in the
case of fraud or intentional misrepresentation, in no event shall the Company be
obligated to indemnify the Investor Indemnitees pursuant to this Section 7.2(a)
for an aggregate amount in excess of the Aggregate Purchase Price. The Company
shall reimburse each Investor Indemnitee for the indemnifiable amounts provided
for herein on demand as such expenses are incurred provided that, to the extent
that it is finally judicially determined that an Investor Indemnitee was not
entitled to any such reimbursement or any part of such reimbursement made by the
Company, such Investor Indemnitee shall promptly pay such amount to the Company,
together with interest thereon, at the prime rate announced by the Wall Street
Journal, from time to time.
(b) Promptly after receipt by the Investor Indemnitee of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against the Company pursuant to this Section 7.2, such Investor
Indemnitee shall notify the Company in writing of such claim or of the
commencement of such action, but the omission to so notify the Company will not
relieve it from any liability which it may have to the Investor Indemnitee under
this Section 7.2 (except to the extent that such omission materially and
adversely affects the Company's ability to defend such action) or from any
liability otherwise than under this Section 7.2. Subject to the provisions
hereinafter stated, in case any such action shall be brought against an Investor
Indemnitee, the Company shall be entitled to participate therein, and, to the
extent that it shall elect by written notice delivered to the Investor
Indemnitee promptly after receiving the aforesaid notice from such Investor
Indemnitee, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to such Investor Indemnitee. After notice from the
Company to such Investor Indemnitee of its election to assume the defense
thereof, the Company shall not be liable to such Investor Indemnitee for any
legal expenses subsequently incurred by such Investor Indemnitee in connection
with the defense thereof, provided, however, that if there exists or shall exist
a conflict of interest that would make it inappropriate, in the opinion of
counsel to the Investor Indemnitee, for the same counsel to represent both the
Investor Indemnitee and the Company or any affiliate or associate thereof, the
Investor Indemnitee shall be entitled to retain its own counsel at the expense
of the Company; provided, however, that the Company shall not be responsible for
the fees and expenses of more than one separate counsel (together with
appropriate local counsel) for all indemnified parties. In no event shall the
Company be liable in respect of any amounts paid in settlement of any action
unless the Company shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld, conditioned or delayed.
The Company shall not, without the prior written consent of the Investor
Indemnitee, effect any settlement of any pending or threatened proceeding in
respect of which the Investor Indemnitee is or could have been a party and
indemnification could have been sought hereunder by such Investor Indemnitee,
unless such settlement includes an unconditional release of such Investor
Indemnitee from all liability on claims that are the subject matter of such
proceeding.
14
(c) For avoidance of confusion, no control person, director,
or officer of the Company is an indemnifying person for purposes of subsection
(a) hereof.
7.3. Except for any claim for fraud or intentional
misrepresentation, the indemnification provisions provided pursuant to this
Section 7 shall be the sole remedy of the Investor, provided that, nothing in
this Agreement shall prevent the Investor from seeking to enforce any agreements
or covenants set forth herein (including this indemnification) in any court of
law.
8. Registration of the Shares; Right of First Offer.
8.1. Registration Rights Agreement. The Company and the Investor
shall, at the Closing, enter into a Registration Rights Agreement (the
"Registration Rights Agreement"), in the form attached hereto as Exhibit 2,
governing certain rights and obligations relating to the Shares.
8.2. Right of First Offer.
(a) Right of First Offer. In the event that the Company shall
issue, sell or exchange, agree or obligate itself to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, in a private sale
transaction not involving a public offering, any (i) shares of Common Stock,
(ii) any other equity security of the Company, including without limitation,
preferred shares, (iii) any debt security of the Company which by its terms is
convertible into or exchangeable for any equity security of the Company, (iv)
any security of the Company that is a combination of debt and equity, or (v) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any such equity security or any such debt security of the Company, in each such
case the Company shall first offer to sell such securities (the "Offered
Securities") to the Investor as follows: The Investor shall have the right to
purchase that portion of the Offered Securities determined as follows: the
amount of the Offered Securities shall be multiplied by a fraction, (i) the
numerator of which is the number of shares of Common Stock acquired hereunder
and then held by the Investor and (ii) the denominator of which is the total
number of shares of issued and outstanding Common Stock on a fully diluted
basis, of the Company (the "Investor's Pro Rata Portion"), at a price and on
such other terms as shall have been specified by the Company in writing with
respect to such private sale and delivered to the Investor (the "Offer"), which
Offer by its terms shall remain open and irrevocable for a period of seven (7)
days from receipt of the Offer (the "Offer Acceptance Period").
(b) Notice of Acceptance. Notice of the Investor's intention
to accept, in whole or in part, any Offer made shall be evidenced by a writing
signed by the Investor and delivered to the Company prior to the end of the
7-day period of such Offer, setting forth such of the Investor's Pro Rata
Portion as the Investor elects to purchase (the "Notice of Acceptance").
(c) Conditions to Acceptances and Purchase.
(i) Permitted Sales of Refused Securities. The Company
shall have one hundred eighty (180) days from the expiration of the Offer
Acceptance Period to close the sale of all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Investor
(the "Refused Securities"), upon terms and conditions, including, without
limitation, unit price and interest rates, which are no more favorable, in the
aggregate, to such other person or persons to whom the Offered Securities are
proposed to be sold or no less favorable to the Company than those set forth in
the Offer.
(ii) Reduction in Amount of Offered Securities. In the
event the Company shall propose to sell an amount of the Offered Securities
which is less than the aggregate amount of all of the Investor's Pro Rata
Portions with respect to the Investor who has timely submitted Notices of
Acceptance (any such sale to be in the manner and on the terms specified above),
then the number of the Offered Securities specified in the Investor's Notice of
Acceptance shall be reduced to an amount which shall be not less than the amount
of the Offered Securities which the Investor elected to purchase pursuant to (b)
above multiplied by a fraction, (i) the numerator of which shall be the amount
of Offered Securities which the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities the Company
proposed to sell in its writing delivered pursuant to Section 8.2(a) above. In
the event that the number or amount of Offered Securities specified in the
Investor's Notice of Acceptance, is so reduced, the Company may not sell or
otherwise dispose of more than the reduced amount of the Offered Securities
until such securities have again been offered to the Investor in accordance with
(a) above.
(iii) Closing. At the closing of the sale of the Offered
Securities, which shall include full payment to the Company of the sale to such
other person or persons of all or less than all the Offered Securities, the
Investor shall
15
purchase from the Company, and the Company shall sell to the Investor, the
number of Offered Securities specified in the Notice of Acceptance, as reduced
pursuant to Section 8.2(b) above upon the terms and conditions specified in the
Offer. The purchase by the Investor of any Offered Securities is subject in all
cases to the timely preparation, execution and delivery by the Company and the
Investor of a form of purchase agreement, which shall be the same for each
Investor, relating to such Offered Securities reasonably satisfactory in form
and substance to the Company and the Investor and their respective counsel
reflecting the terms and conditions specified in the Offer. In connection
therewith, the Investor undertakes to use commercially reasonable efforts to
execute and deliver such agreement with respect to the shares to be purchased by
the Investor such that the sale of the Offered Securities by the Company may
take place with such other person or persons in a timely manner as required by
any agreements between or among the Company and such other person or persons.
(d) Further Sale. In each case, any Offered Securities not
purchased by the Investor or other person or persons in accordance with Section
8.2(c)(iii) above may not be sold or otherwise disposed of until they are again
offered to the Investor under the procedures specified in Section
8.2(c)(i)-(iii) above.
(e) Exceptions. The rights of the Investor under this Section
8.2 shall not apply to: (i) Common Stock issued as a stock dividend to holders
of Common Stock or upon any subdivision or combination of shares of Common
Stock; (ii) any capital stock or derivative thereof granted to an employee,
director or consultant under a Company stock or stock option plan or as
compensation for services; (iii) any securities issued as consideration for the
acquisition of another entity by the Company by merger or share exchange
(whereby the Company owns no less than 51% of the voting power of the surviving
entity) or purchase of substantially all of such entity's stock or assets; (iv)
any securities issued in connection with a license, strategic partnership, joint
venture or other similar agreement, provided that the purpose of such
arrangement is not primarily the raising of capital; (v) securities issued in an
underwritten public offering, or (viii) securities of the Company proposed to be
sold by a person, persons or entity other than the Company.
(f) Termination of Right. The Right of First Offer set forth
in this Section 8.2 shall be available so long as the Investor shall continue to
own 50% of the Shares purchased pursuant to this Agreement and shall in any
event terminate two (2) years following the Closing Date.
9. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or electronic mail
or other electronic means providing for verifiable proof of receipt by the
addressee thereof (including transmittal in PDF format), or (B) if delivered
from outside the United States, by International Federal Express (or other
recognized international express courier), e-mail or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express (or other recognized international express
courier), two business days after so mailed, (iv) if delivered by facsimile,
upon electronic confirmation of receipt and (v) if delivered by electronic mail
or other electronic means providing for verifiable proof of receipt by the
address thereof, when transmitted, and shall be delivered as addressed as
follows:
(a) if to the Company, to:
TransTechnology Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President,
Chief Financial Officer and Treasurer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: F. ▇▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
16
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(b) if to the Investor
Tinicum Capital Partners II, L.P.
&
Tinicum Capital Partners Parallel Fund II, L.P.
c/o Tinicum Incorporated
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
or at such other address as such party each may specify by written notice to the
others.
10. Changes. This Agreement may be modified, amended or waived pursuant to
a written instrument signed by the Company and the Investor. Any agreements with
Other Investors may be modified, amended or waived only pursuant to a written
instrument signed by the Company and Investor holding a majority of the Shares
issued and sold in the Offering, provided that such modification, amendment or
waiver is made with respect to all Agreements and does not adversely affect the
Investor without adversely affecting all Investors in a similar manner.
11. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
13. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Any signatures delivered by a party by facsimile
transmission or by other electronic means providing for verifiable proof of
receipt by the addressee thereof (including via e-mail transmission and PDF
format) shall be deemed an original signature hereto.
15. Entire Agreement. This Agreement and the Schedules annexed hereto,
together with the Confidentiality Agreement, the Registration Rights Agreement
and Opinion attached hereto as exhibits, constitute the entire agreement between
the parties hereto and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares and the resale registration of
the Shares.
17
16. Confidential Information.
(a) The Investor represents to the Company that, at all times
during the Company's offering of the Shares, the Investor has maintained in
confidence all non-public information regarding the Company received by the
Investor from the Company or its agents, and covenants that it will continue to
maintain in confidence such information until such information (a) becomes
generally publicly available other than through a violation of this provision or
the provisions of the Confidentiality Agreement by the Investor or its agents or
(b) is required to be disclosed in legal proceedings (such as by deposition,
interrogatory, request for documents, subpoena, civil investigation demand,
filing with any governmental authority or similar process), provided, however,
that before making any use or disclosure in reliance on this subparagraph (b)
the Investor shall, to the extent not prohibited by applicable law, rule or
regulation, promptly notify the Company of the circumstances giving rise thereto
and will furnish only that portion of the non-public information which is
legally required and will exercise its best efforts to obtain reliable assurance
that confidential treatment will be accorded any non-public information so
furnished.
(b) The Company shall promptly after the execution of this
Agreement issue a press release substantially in the form attached hereto as
Exhibit 3, and within one business day following the Closing Date, file with the
SEC a Form 8-K (which shall include as exhibits the Agreement), in each case,
disclosing the material terms of the transactions contemplated hereby (including
at least the number of Shares sold and proceeds therefrom). The Company shall
not publicly disclose the name of Investor or any beneficial owner of Shares
held by the Investor, or include the name of Investor or such beneficial owner
in any filing with the SEC or any state and federal regulatory agency (other
than the filing of the Agreements with the SEC pursuant to the Exchange Act),
without the prior written consent of Investor, except to the extent such
disclosure is required by law or regulation.
17. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person except as provided in Section 12 of the Registration Rights
Agreement.
18. Knowledge. The term "knowledge" in this Agreement shall mean the
knowledge of the executive officers of the Company after making reasonable
inquiry under the circumstances.
18
INDEX OF DEFINED TERMS
Acquire................................................................... 12
Aggregate Purchase Price.................................................. 1
Agreements................................................................ 3
Board of Directors........................................................ 12
Closing................................................................... 2
Closing Date.............................................................. 2
Common Stock.............................................................. 1
Company................................................................... 1
Confidentiality Agreement................................................. 12
Diminution................................................................ 13
Environmental Claims...................................................... 6
Environmental Laws........................................................ 6
Exchange Act.............................................................. 3
Exchange Act Documents.................................................... 3
GAAP...................................................................... 8
Indemnification Threshold................................................. 13
Intellectual Property..................................................... 4
Investment Company Act.................................................... 7
Investor.................................................................. 1
Investor Board Nominee.................................................... 11
Investor Indemnitee....................................................... 13
Investor's Pro Rata Portion............................................... 14
Knowledge................................................................. 17
Liabilities............................................................... 6
Loss...................................................................... 13
Material Adverse Effect................................................... 3
Maximum Ownership Provision............................................... 12
NASD...................................................................... 7
Notice of Acceptance...................................................... 14
Offer..................................................................... 14
Offer Acceptance Period................................................... 14
Offered Securities........................................................ 14
Offering.................................................................. 1
Other Investors........................................................... 2
Plan...................................................................... 5
Policies.................................................................. 6
Purchase Price............................................................ 1
Refused Securities........................................................ 15
Registration Rights Agreement............................................. 14
Sale Transaction.......................................................... 22
SEC....................................................................... 5
Shares.................................................................... 1
SPA....................................................................... 22
Stock Purchase Agreement.................................................. 1
Tax Claims................................................................ 8
Tax Returns............................................................... 8
Terms and Conditions...................................................... 1
Tinicum................................................................... 1
19
EXHIBIT 4
7. Standstill. You agree that, for a period until the earlier of (i)
a public announcement of any tender or exchange offer, merger or other business
combination involving the Company, any of the subsidiaries or assets of the
Company or the subsidiaries constituting a significant portion of the
consolidated assets of the Company and its subsidiaries (a "Sale Transaction"),
(ii) September 21, 2007, (iii) such date as the Investor (as such term is
defined in the SPA) or its affiliates do not own 50% of the shares purchased in
the Stock Purchase Agreement, dated February 15, 2006, by and among the Company,
Tinicum Capital Partners, L.P., Tinicum Capital Partners Parallel Fund II, L.P.
and Tinicum Inc. (the "SPA"), or (iv) the Board of Directors waives the
restrictions in this paragraph 7, unless specifically invited in writing by the
Company, neither you nor any of your affiliates or Representatives will in any
manner, directly or indirectly: (a) assist, facilitate or encourage any other
person to effect or seek, offer or propose (whether publicly or otherwise) to
effect or participate in (x) any Sale Transaction or (y) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the Company or any of its subsidiaries, it being understood that the
foregoing shall not prohibit you or your affiliates from effecting or
participating in such transaction, (b) engage in any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote any voting securities of the Company; (c) form,
join or in any way participate in a "group" (as defined under the ▇▇▇▇ ▇▇▇) with
unaffiliated third parties with respect to the Company or otherwise act in
concert with any person in respect of any such securities; (d) other than by
requesting to the Board of Directors of the Company to waive any of the
provisions of this Section, take any action which would or would reasonably be
expected to force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party (other than your representatives and any
financing sources) with respect to any of the foregoing. The Company agrees that
during such period you may request that the Company or any of its
Representatives, directly or indirectly, amend or waive any provisions of this
paragraph. Nothing in this paragraph 7 shall prohibit or be construed to
prohibit the Investor from making any filings with the Securities and Exchange
Commission which the Investor reasonably determines it is required to make.
20