EXHIBIT B
STOCK PURCHASE AGREEMENT
TransTechnology Corporation
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx,
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]
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(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.
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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/ Xxxx Xxxxxxxxxx
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/s/ Xxxxxx X. Xxxxxxx
------------------------------------
By: Xxxxxx X. Xxxxxxx Name: Xxxx Xxxxxxxxxx
Vice President, Chief Financial ----------------------------------
Officer and Treasurer Tax ID No.: (2)
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State of Formation: Delaware
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Principal Place of Business:800 3rd Ave.
NY, NY
10022
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TINICUM CAPITAL PARTNERS PARALLEL FUND
II, L.P.
By: TINICUM LANTERN II, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxxx
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Tax ID No.: (3)
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State of Formation: Delaware
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Principal Place of Business:800 3rd Ave.
NY, NY
10022
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AND FOR PURPOSES OF SECTION 6.3 ONLY
By: TINICUM, INC.
By: /s/ Xxxx Xxxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxxx
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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
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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 Xxxx Xxxxxx & 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
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(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.
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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).
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(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.
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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.
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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.
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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
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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 Xxxxxxxx-Xxxxx 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 Xxxxxxx Xxxxxxxx. If the
Investor Board Nominee is any person other than Xx. Xxxxxxxx, 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
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Vice President,
Chief Financial Officer and Treasurer
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
with a copy to:
Xxxx Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: F. Xxxxxx X'Xxxxx, Esq.
16
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
(b) if to the Investor
Tinicum Capital Partners II, L.P.
&
Tinicum Capital Partners Parallel Fund II, L.P.
c/o Tinicum Incorporated
Attention: Xxxx Xxxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Email: xxxxxxxxxxx@xxxxxxx.xxx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxx.xxx
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 0000 Xxx) 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
