EX-10.45 3 y55186ex10-45.txt CONSENT & AMENDMENT NO 2 TO FORBEARANCE AGREEMENT EXHIBIT 10.45 CONSENT AND AMENDMENT NO. 2 TO FORBEARANCE AGREEMENT This CONSENT AND AMENDMENT NO. 2 TO FORBEARANCE AGREEMENT, dated as of September 27, 2001 (this "Agreement"), is by and among (a) TransTechnology Corporation ("TransTechnology"), TransTechnology Seeger-Orbis GmbH ("GmbH") and TransTechnology (GB) Limited ("Limited", together with TransTechnology and GmbH, the "Borrowers"), (b) Fleet National Bank ("FNB") and the other lending institutions listed on Schedule 1 to the Credit Agreement (as hereinafter defined) (collectively, the "Lenders"), (c) FNB, acting through its London Branch, as Sterling Fronting Bank (the "Sterling Fronting Bank"), (d) BHF-BANK Aktiengesellschaft, as DM Fronting Bank (the "DM Fronting Bank"; together with the Sterling Fronting Bank, the "Fronting Banks"), (e) FNB, as issuing bank for Letters of Credit (in such capacity, the "Issuing Bank"), and (f) FNB as Administrative Agent for the Lenders, the Fronting Banks and the Issuing Bank (in such capacity, the "Administrative Agent"). WHEREAS, the Borrowers, the Lenders, the Fronting Banks, the Issuing Bank, ABN AMRO Bank N.V., as Syndication Agent, Bank One, NA, as Documentation Agent, and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement dated as of June 30, 1995, and amended and restated as of July 24, 1998, as further amended and restated as of August 31, 1999, as amended by that certain Consent and Amendment Agreement No. 1 dated as of August 21, 2000, as further amended by that certain Amendment Agreement No. 2 dated as of December 29, 2000, and as further amended by that certain Amendment Agreement No. 3 dated as of January 31, 2001 (as so amended and restated, the "Credit Agreement"). Capitalized terms used herein unless otherwise defined shall have the respective meanings set forth in the Credit Agreement; WHEREAS, pursuant to that certain Forbearance and Waiver Agreement dated as of March 29, 2001, as amended by that certain Consent and Amendment to Forbearance Agreement dated as of June 25, 2001 (as so amended, the "Forbearance Agreement"), by and among the Borrowers, the Lenders, the Fronting Banks, and the Administrative Agent, the Lenders and the Administrative Agent agreed to forbear from (a) exercising their rights and remedies under the Credit Agreement and the other Loan Documents to collect the indebtedness of the Borrowers to the Administrative Agent and the Lenders under the Credit Agreement and the other Loan Documents and (b) ceasing to make Revolving Credit Loans or International Facility Loans or to issue, extend or renew Letters of Credit; WHEREAS; pursuant to the terms of the Forbearance Agreement the forbearance period will end on September 27, 2001; WHEREAS, the Borrowers have requested that the Lenders and the Administrative Agent extend such forbearance period; WHEREAS, in accordance with Section 2 of the Forbearance Agreement, the Borrowers have requested that the Lenders consent to the sale (the "Engineered -2- Components Sale") of TransTechnology's Engineered Components business, which consists of TransTechnology Engineered Components, LLC, TransTechnology Canada Corporation and the Palnut Division of TransTechnology (collectively, the "Engineered Components Assets"), to KTIN Acquisition, LLC (an entity formed by Kohlberg Management IV, L.L.C., a private investment company located in Mt. Kisco, New York); and WHEREAS, the Lenders and the Administrative Agent are willing to extend the forbearance period and consent to the Engineered Components Sale, but only on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing premises, the parties hereto hereby agree as follows: SECTION 1. CONSENT TO ENGINEERED COMPONENTS SALE. Subject to the satisfaction of the conditions contained in Section 3 hereof, the Lenders, the Fronting Banks, and the Administrative Agent consent to the Engineered Components Sale and consent to the release of the Administrative Agent's liens on the Engineered Components Assets so long as (a) the Net Cash Proceeds received by the Borrowers in connection with the Engineered Components Sale (the "Engineered Components Sale Proceeds") are not less than One Hundred Fifteen Million Dollars ($115,000,000), (b) all documents relating to the Engineered Components Sale, including, but not limited to any fairness opinions issued in connection with the Engineered Components Sale, shall be in form and substance satisfactory to the Administrative Agent, (c) all Engineered Components Sale Proceeds shall be applied immediately upon receipt to prepay the Revolving Credit Loans, and (d) the Engineered Components Sale Proceeds are received not later than October 19, 2001. The Borrowers, the Lenders, the Fronting Banks, and the Administrative Agent hereby agree that upon the consummation of the Engineered Components Sale the Total Revolving Credit Commitment shall be reduced by the amount of the Engineered Components Sale Proceeds (rounded to the nearest $1,000) whereupon the Revolving Credit Commitments of the Lenders shall be reduced pro rata on such date in accordance with their respective Commitment Percentages. The Lenders and the Fronting Banks authorize the Administrative Agent to enter into appropriate release documents necessary in order to release the Administrative Agent's liens on the Engineered Components Assets. SECTION 2. AMENDMENT TO FORBEARANCE AGREEMENT. (a) The Forbearance Agreement is hereby amended with effect from the Effective Date of this Agreement as follows: (i) Section 1 of the Forbearance Agreement is amended by deleting the date "September 27, 2001" in the two (2) places where such date is contained therein and substituting the date "December 21, 2001". (ii) Schedule 3(a) of the Forbearance Agreement is deleted in its entirety and replaced with Schedule 3(a) attached hereto as Exhibit A. -3- (iii) Section 3(b) of the Forbearance Agreement is amended by (A) deleting the dollar amount "$154,000,000" contained in the first sentence thereof and replacing it with the dollar amount "$153,045,000". (iv) Section 3(d) of the Forbearance Agreement is amended by inserting at the end thereof the following new sentence: "Notwithstanding anything to the contrary contained in this Section 3(d), commencing on October 19, 2001 and for so long thereafter as the Total Revolving Credit Commitment exceeds $45,045,000 the Applicable Margin in effect with respect to Base Rate Loans and the Applicable Margin in effect with respect to Eurocurrency Rate Loans will be increased by 50bps." (v) Section 3(e) of the Forbearance Agreement is amended by (a) deleting the date "September 27, 2001" contained therein and substituting the date "December 21, 2001", and (b) inserting at the end thereof the following new sentence: "Notwithstanding anything to the contrary contained in this Section 3(e), commencing on October 19, 2001 and for so long thereafter as the Total Revolving Credit Commitment exceeds $45,045,000 the Borrowers may not elect to convert any part of the Loans to or maintain any part of the Loans as Eurocurrency Rate Loans denominated in Dollars." (vi) Section 3(k) of the Forbearance Agreement is amended by deleting the dollar amount "$2,200,000" contained therein and substituting the dollar amount "$4,700,000". (vii) Section 3(n) of the Forbearance Agreement is amended by deleting the date "September 27, 2001" contained therein and substituting the date "December 21, 2001". (viii) Schedule 6(a) of the Forbearance Agreement is deleted in its entirety and replaced with Schedule 6(a) attached hereto. (ix) Section 10 of the Forbearance Agreement is amended by adding the following new paragraph (e) at the end thereof: "(e) An additional forbearance fee on the earlier of (a) the date that Borrowers prepay the Revolving Credit Loans and permanently reduce the Total Revolving Credit Commitment in connection with the Engineered Components Sale, and (b) October 19, 2001, equal to one-quarter of one percent (1/4%) of the Total Revolving Credit Commitment (after giving effect to the reduction of the Total Revolving Credit Commitment as a result of the Engineered Components Sale)." (x) The Forbearance Agreement is amended by adding the following new Section 10.A immediately after Section 10: -4- "SECTION 10.A. BORROWING TO PAY SUBDEBT INTEREST. On October 1, 2001, TransTechnology shall pay the Administrative Agent, for the pro-rata benefit of each Lender, a fee equal to One Hundred Thousand Dollars ($100,000) (representing four percent (4%) of Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Subdebt Interest Payment Amount") which is the amount equal to the interest payment due on the Senior Subordinated Loans on October 1, 2001 rounded to the nearest $100,000). At all times after October 1, 2001, a portion of the Loans equal to the Subdebt Interest Payment Amount shall bear interest (payable monthly in arrears on the first day of each month) at an annual rate equal to twenty five percent (25%)." (xi) The Forbearance Agreement shall be deemed amended to include capitalized defined terms used in this Agreement to the extent not defined in the Forbearance Agreement. (b) The Forbearance Agreement is hereby amended with effect from the closing date of the Engineered Components Sale as follows: (i) Section 3(a) of the Forbearance Agreement is amended by deleting the words "; provided, however, Modified Consolidated EBITDA for periods after June 1, 2001 shall not include any amounts relating to or otherwise attributed to the Breeze Assets" and substituting the words "; provided, however, Modified Consolidated EBITDA for periods after (i) June 1, 2001 shall not include any amounts relating to or otherwise attributed to the Breeze Assets, and (ii) October 1, 2001 shall not include any amounts relating to or otherwise attributed to the Engineered Components Assets." (ii) Schedule 3(a) of the Forbearance Agreement is deleted in its entirety and replaced with Schedule 3(a) attached hereto as Exhibit B. (iii) Section 3(b) of the Forbearance Agreement is amended by deleting the dollar amount "$153,045,000" contained in the first sentence thereof and replacing it with the words "$43,500,000 minus the amount by which the Engineered Components Sale Proceeds exceed $115,000,000 (rounded to the nearest $1,000)". SECTION 3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement shall be conditioned upon the satisfaction of the following conditions precedent: SECTION 3.1. DELIVERY OF DOCUMENTS. (a) This Agreement shall have been executed and delivered to the Administrative Agent by each of the Borrowers, each of the Guarantors, and the requisite Lenders. (b) The Company and the holders of all of the Senior Subordinated Loans shall have executed and delivered to the Administrative Agent an agreement in substantially the form of Exhibit C hereto. -5- SECTION 3.2. LEGALITY OF TRANSACTION. No change in applicable law shall have occurred as a consequence of which it shall have become and continue to be unlawful on the date this Agreement is to become effective (a) for the Administrative Agent or any Lender to perform any of its obligations under any of the Loan Documents or (b) for any of the Borrowers to perform any of its agreements or obligations under any of the Loan Documents. SECTION 3.3. PERFORMANCE. Each of the Borrowers shall have duly and properly performed, complied with and observed in all material respects its covenants, agreements and obligations contained in the Loan Documents required to be performed, complied with or observed by it on or prior to the date this Agreement is to become effective. Except for the Specified Defaults (as defined in the Forbearance Agreement), no event shall have occurred on or prior to the Effective Date, and be continuing, and no condition shall exist on the Effective Date, which constitutes a Default or Event of Default. SECTION 3.4. PROCEEDINGS AND DOCUMENTS. All corporate, governmental and other proceedings in connection with the transactions contemplated by this Agreement and all instruments and documents incidental thereto shall be in form and substance reasonably satisfactory to the Administrative Agent and the Administrative Agent shall have received all such counterpart originals or certified or other copies of all such instruments and documents as the Administrative Agent shall have reasonably requested. SECTION 4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby represents and warrants to the Lenders as follows: (a) Except as set forth on Schedule 6(a) to the Forbearance Agreement, the representations and warranties of such Borrower and of each Guarantor contained in the Credit Agreement, the Forbearance Agreement and the other Loan Documents to which such Borrower or Guarantor, as the case may be, is a party were true and correct in all material respects when made and continue to be true and correct in all material respects on the date hereof, except that the financial statements and projections referred to in the representations and warranties contained in the Credit Agreement shall be the financial statements and projections of TransTechnology and its Subsidiaries most recently delivered to the Administrative Agent, and except as such representations and warranties are affected by the transactions contemplated hereby; (b) The execution, delivery and performance by such Borrower of this Agreement and the consummation of the transactions contemplated hereby: (i) are within the corporate powers of such Borrower and have been duly authorized by all necessary corporate action on the part of such Borrower, (ii) do not require any approval or consent of, or filing with, any governmental agency or authority, or any other person, association or entity, which bears on the validity or enforceability of this Agreement and which is required by law or any regulation or rule of any agency or authority, or other person, association or entity, (iii) do not violate any provisions of any order, writ, judgment, -6- injunction, decree, determination or award presently in effect in which such Borrower is named, any law, regulation or rule binding on or applicable to such Borrower or any provision of the charter documents or by-laws of such Borrower, (iv) do not result in any breach of or constitute a default under any agreement or instrument to which such Borrower is a party or to which it or any of its properties are bound, including without limitation any indenture, credit or loan agreement, lease, debt instrument or mortgage, except for such breaches and defaults which would not have a material adverse effect on such Borrower and its Subsidiaries taken as a whole, and (v) do not result in or require the creation or imposition of any mortgage, deed of trust, pledge or encumbrance of any nature upon any of the assets or properties of such Borrower; (c) This Agreement, the Credit Agreement and the Forbearance Agreement constitute the legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, provided that (i) enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors, and (ii) enforcement may be subject to general principles of equity, and the availability of the remedies of specific performance and injunctive relief may be subject to the discretion of the court before which any proceeding for such remedies may be brought; and (d) As of the date hereof, no "Event of Default" under and as defined in any instrument evidencing any Subordinated Debt has occurred. SECTION 5. REAFFIRMATION. Except as modified hereby, the Borrowers hereby reaffirm in all respects all the covenants, agreements, terms and conditions of the Credit Agreement, the Forbearance Agreement and the other Loan Documents which are incorporated in full herein by reference, and all terms, conditions and provisions thereof shall remain in full force and effect. SECTION 6. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. SECTION 7. RELEASE. In order to induce the Administrative Agent and the Lenders to enter into this Agreement, each Borrower acknowledges and agrees that: (i) no Borrower has any claim or cause of action against the Administrative Agent or any Lender (or any of its respective directors, officers, employees or agents); (ii) no Borrower has any offset right, counterclaim or defense of any kind against any of their respective obligations, indebtedness or liabilities to the Administrative Agent or any Lender; and (iii) each of the Administrative Agent and the Lenders has heretofore properly performed and satisfied in a timely manner all of its obligations to each Borrower. The Borrowers wish to eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any of the Administrative -7- Agent's and the Lenders' rights, interests, contracts, collateral security or remedies. Therefore, each Borrower unconditionally releases, waives and forever discharges (A) any and all liabilities, obligations, duties, promises or indebtedness of any kind of the Administrative Agent or any Lender to any Borrower, except the obligations to be performed by the Administrative Agent or any Lender on or after the date hereof as expressly stated in this Agreement, the Credit Agreement, the Forbearance Agreement and the other Loan Documents, and (B) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which any Borrower might otherwise have against the Administrative Agent, any Lender or any of its directors, officers, employees or agents, in either case (A) or (B), on account of any condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind existing as of the date hereof, or occurring prior to the date hereof. SECTION 8. EFFECTIVE DATE. This Agreement shall be deemed to be effective as of the date of satisfaction of the last conditions precedent set forth in Section 3 hereof (the "Effective Date"). [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the undersigned have duly executed this Consent and Amendment No. 2 to Forbearance Agreement as a sealed instrument as of the date first set forth above. TRANSTECHNOLOGY CORPORATION By: /s/Joseph F. Spanier ---------------------------------------- Name: Joseph F. Spanier Title: Vice President, Chief Financial Officer & Treasurer TRANSTECHNOLOGY SEEGER-ORBIS GMBH By: /s/Michael J. Berthelot ---------------------------------------- Name: Michael J. Berthelot Title: Managing Director TRANSTECHNOLOGY (GB) LIMITED By: /s/Michael J. Berthelot ---------------------------------------- Name: Michael J. Berthelot Title: Director By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Director FLEET NATIONAL BANK, individually, as Administrative Agent and as Sterling Fronting Bank By: /s/Peggy Peckham ---------------------------------------- Name: Peggy Peckham Title: Senior Vice President BHF-BANK AKTIENGESELLSCHAFT, as DM Fronting Bank By: /s/Constanze Neumann ---------------------------------------- Name: Constanze Neumann Title: Treasurer By: /s/Lothar Demuth ---------------------------------------- Name: Lothar Demuth Title: Assistant Treasurer ABN AMRO BANK N.V., individually and as Syndication Agent By: /s/Parker H. Douglas ---------------------------------------- Name: Parker H. Douglas Title: Group Vice President By: /s/Steven C. Wimpenny ---------------------------------------- Name: Steven C. Wimpenny Title: Group Senior Vice President BANK ONE, NA, individually and as Documentation Agent By: /s/Phillip D. Martin ---------------------------------------- Name: Phillip D. Martin Title: Senior Vice President THE BANK OF NEW YORK By: /s/Richard J. Baldwin ---------------------------------------- Name: Richard J. Baldwin Title: Vice President KEY CORPORATE CAPITAL INC. By: /s/Mark Kleinhaut ---------------------------------------- Name: Mark Kleinhaut Title: Vice President THE BANK OF NOVA SCOTIA By: /s/Brian S. Allen ---------------------------------------- Name: Brian S. Allen Title: Managing Director COMERICA BANK By: /s/Jeffrey E. Peck ---------------------------------------- Name: Jeffrey E. Peck Title: Vice President DRESDNER BANK, AG, NEW YORK AND GRAND CAYMAN BRANCHES By: /s/Richard J. Sweeney ---------------------------------------- Name: Richard J. Sweeney Title: Vice President By: /s/Thomas R. Brady ---------------------------------------- Name: Thomas R. Brady Title: Vice President The Guarantors under (and as defined in) the Subsidiary Guaranty hereby acknowledge that they have read and are aware of the provisions of this Agreement and hereby reaffirm their absolute and unconditional guaranty of the Borrowers' payment and performance of their obligations to the Lenders and the Administrative Agent under the Credit Agreement as affected hereby. TRANSTECHNOLOGY ACQUISITION CORPORATION By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary PALNUT FASTENERS, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary INDUSTRIAL RETAINING RING COMPANY By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary RETAINERS, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary RANCHO TRANSTECHNOLOGY CORPORATION By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary TRANSTECHNOLOGY SYSTEMS & SERVICES, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary ELECTRONIC CONNECTIONS AND ASSEMBLIES, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary SSP INDUSTRIES By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary SSP INTERNATIONAL SALES, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary TRANSTECHNOLOGY SEEGER INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary SEEGER INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary TCR CORPORATION By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary AEROSPACE RIVET MANUFACTURERS CORPORATION By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary NORCO, INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary ELLISON RING & WASHER INC. By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary TRANSTECHNOLOGY ENGINEERED COMPONENTS, LLC By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary TRANSTECHNOLOGY CANADA CORPORATION By: /s/Gerald C. Harvey ---------------------------------------- Name: Gerald C. Harvey Title: Vice President & Secretary Exhibit A Schedule 3(a) Financial Covenant
Period Modified Consolidated EBITDA ------ ---------------------------- April 1, 2001 through May 31, 2001 $ 6,700,000 April 1, 2001 through June 30, 2001 $10,400,000 April 1, 2001 through July 31, 2001 $11,600,000 April 1, 2001 through August 31, 2001 $13,650,000 April 1, 2001 through September 30, 2001 $19,000,000 April 1, 2001 through October 31, 2001 $22,000,000 April 1, 2001 through November 30, 2001 $25,000,000 April 1, 2001 through December 31, 2001 $28,000,000
Exhibit B Schedule 3(a) Financial Covenant
Period Modified Consolidated EBITDA ------ ---------------------------- April 1, 2001 through May 31, 2001 $ 6,700,000 April 1, 2001 through June 30, 2001 $10,400,000 April 1, 2001 through July 31, 2001 $11,600,000 April 1, 2001 through August 31, 2001 $13,650,000 April 1, 2001 through September 30, 2001 $19,000,000 April 1, 2001 through October 31, 2001 $20,000,000 April 1, 2001 through November 30, 2001 $21,500,000 April 1, 2001 through December 31, 2001 $23,000,000