1
EXHIBIT 10
FOURTH AMENDMENT TO THE
REVOLVING LOAN AND
SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO THE REVOLVING LOAN AND SECURITY AGREEMENT
(the "Fourth Amendment") is entered into by and among NATIONAL CANADA FINANCE
CORP., NATIONAL BANK OF CANADA (New York, New York) (collectively, "Bank"),
TRANSTECHNOLOGY CORPORATION, a Delaware corporation ("TT"), and Electronic
Connectors & Assemblies, Inc., a Delaware corporation ("ECA, Inc." and,
together with TT, sometimes hereinafter referred to collectively in this
Fourth Amendment as "Borrowers").
RECITALS
A. On June 21, 1991, TT and Bank entered into a certain Revolving
Loan and Security Agreement (the "Loan Agreement," all terms defined therein
being used in this Fourth Amendment with the same meaning unless otherwise
stated) under the terms of which Bank loaned to TT $9,000,000 on a
revolving loan basis and $4,000,000 in the form of letters of credit pursuant
to the provisions set forth in the Loan Agreement.
B. On December 18, 1991, TT and Bank entered into a certain First
Amendment To The Revolving Loan And Security Agreement (the "First Amendment")
to provide for (1) the elimination of the $4,000,000 sub-limit imposed on TT by
Bank with respect to funding of the Letter of Credit Facility, (2) the
modification of certain covenants, and (3) the waiver by Bank of TT's
compliance with Section 7.1(N) of the Loan Agreement relating to TT's net worth
for the period ended September 29, 1991.
C. On December 10, 1992, TT and Bank entered into a certain
Second Amendment To The Revolving Loan And Security Agreement (the "Second
Amendment") to provide for (1) an increase in the maximum principal amount of
borrowings under the Revolving Loan from $13,000,000 to $25,000,000 (inclusive
of the issuance by Bank to TT of a maximum of $5,000,000 of standby letters of
credit), (2) a modification to the rate of interest charged on borrowings under
the Revolving Loan to provide for a rate of interest based on the Base Rate or
LIBOR (as defined therein), (3) a modification to the Borrowing Base to permit
loan advances against the Eligible Inventory of TT, (4) the modification of
Bank's Collateral of TT to include machinery and equipment of TT, (5) the
modification of certain financial covenants of TT, (6) the payment by TT of
certain dividends, and (7) the extension of the Termination Date of the Loan
Agreement.
2
D. On December 31, 1992, TT and Bank entered into a letter
agreement (the "Letter Agreement") to permit TT to pay dividends in accordance
with Section 7.2(H) of the Loan Agreement, as amended, commencing with the
quarter ending December 31, 1992.
E. On August 2, 1993, TT and Bank entered into a certain Third
Amendment To The Revolving Loan And Security Agreement (the "Third Amendment")
to provide for (1) an increase in the maximum principal amount of borrowings
under the Revolving Loan from $25,000,000 to $35,000,000 (inclusive of the
issuance by Bank to TT of a maximum of $5,000,000 of standby letters of
credit), (2) a term loan facility in the principal amount of $10,000,000 with
interest accruing at a rate equal to one-quarter (1/4) percentage points above
the Base Rate, (3) the grant to Bank of a mortgage on the Palnut Property (as
defined in the Third Amendment), (4) a modification to the Borrowing Base to
increase the amount of funds TT may borrow against Eligible Inventory from
$13,000,000 to $18,000,000, and (5) the establishment of a termination fee upon
the prepayment by TT of the term loan.
F. TT has established ECA, Inc., a wholly-owned subsidiary of TT,
for the purpose of purchasing and distributing electrical connectors on a
worldwide basis.
G. Borrowers have requested that Bank make available to ECA, Inc.
funds under the Revolving Loan in accordance with the provisions of the Loan
Agreement, as amended.
H. In consideration for Bank agreeing to loan and re-loan funds
to ECA, Inc. under the Revolving Loan in accordance with the provisions of the
Loan Agreement, as amended, ECA, Inc. desires to (1) assume as co-obligor all
obligations and liabilities of Borrowers due and owing to Bank now or hereafter
arising under the Loan Agreement, as amended, and (2) grant to Bank a security
interest in and to its Collateral in accordance with the provisions of this
Fourth Amendment.
I. Borrowers and Bank now desire to amend the Loan Agreement, as
amended, to (1) add ECA, Inc. as a co-obligor for the repayment of all loans to
Borrowers by Bank and (2) provide for such other amendments and modifications
as are set forth in the provisions of this Fourth Amendment.
J. Due to the affiliation and financial interdependence of
Borrowers, Bank and Borrowers have determined that it would be in their
respective best interests for each Borrower to be a joint and several obligor
of each other Borrower's obligations to Bank in accordance with the provisions
set forth in the Loan Agreement, as amended by the First Amendment, the Second
Amendment, the Letter Agreement, the Third Amendment, and this Fourth Amendment.
-2-
3
PROVISIONS
NOW, THEREFORE, in consideration of the foregoing, the parties agree
as follows:
SECTION I. AMENDMENTS TO LOAN AGREEMENT.
The Loan Agreement is amended as follows:
A. On and after the effective date of this Fourth Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder," and "hereof,"
or words of like import referring to the Loan Agreement shall mean and refer to
the Loan Agreement, as amended by the First Amendment, the Second Amendment,
the Letter Agreement, the Third Amendment, and this Fourth Amendment. The Loan
Agreement, as amended by the First Amendment, the Second Amendment, the Letter
Agreement, the Third Amendment, and this Fourth Amendment, is, and shall
continue to be, in full force and effect and hereby is ratified and confirmed
in all respects.
B. On and after the effective date of this Fourth Amendment, each
reference in the Loan Agreement, as amended, to "Borrower" or words of like
import referring to Borrower shall mean, refer to, and include ECA, Inc. and
shall hereinafter be treated as referring to "Borrowers" on a collective basis
and in the aggregate.
C. Grant of Security Interest. To secure the prompt payment and
performance of the Obligations, ECA, Inc. hereby grants to Bank in accordance
with the provisions of Section 4.1 of the Loan Agreement, as amended, a
continuing security interest in and to all of the Property of ECA, Inc.
described in Section 4.1(A) through (G) of the Loan Agreement, as amended,
whether now owned or existing or hereafter acquired or arising and wheresoever
located.
D. Paragraphs (MM) and (JJJ) of Section 1.1 of the Loan Agreement
are amended in their entirety as follows:
(MM) Promissory Note. The Promissory Note executed by TT
and delivered to Bank, dated June 21, 1991, as amended by (1) the
First Amendment To Promissory Note, executed by TT and delivered to
Bank, dated December 10, 1992, (2) the Second Amendment To Promissory
Note, executed by TT and delivered to Bank, dated August 2, 1993, and
(3) the Third Amendment To Promissory Note in the form attached to the
Fourth Amendment as Exhibit A (with such changes or modifications, if
any, to which Borrowers and National Canada Finance Corp. may agree)
evidencing the Revolving Loan made by National Canada Finance Corp.
pursuant to Section 2.1(A) of this Agreement, together with all
amendments thereto and all notes issued in substitution therefor or
replacement thereof.
-3-
4
(JJJ) Term Note. The Term Note executed by TT and
delivered to Bank, dated August 2, 1993, as amended by the First
Amendment To Term Note, in the form attached to the Fourth Amendment
as Exhibit B (with such changes or modifications, if any, to which
Borrowers and National Canada Finance Corp. may agree) evidencing the
Term Loan made by National Canada Finance Corp. pursuant to Section
2.2(A) of this Agreement, together with all amendments thereto and all
notes issued in substitution therefor or replacement thereof.
SECTION II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BORROWERS.
Each Borrower represents, warrants, and covenants that it has good and
marketable title to the Collateral free and clear of all liens, claims,
mortgages, security interests, pledges, charges or encumbrances whatsoever
(other than Permitted Liens or as have otherwise been permitted by Bank
pursuant to the Loan Agreement, as amended), except as have been granted to
Bank.
A. To the extent such representations, warranties and covenants
pertain to or are to be performed by Borrowers, all representations, warranties
and covenants in the Loan Agreement, as amended by the First Amendment, the
Second Amendment, the Letter Agreement, and the Third Amendment, shall continue
and be binding on Borrowers under this Fourth Amendment.
SECTION III. CONDITIONS PRECEDENT.
Each Borrower acknowledges that the effectiveness of this Fourth
Amendment is subject to the receipt by Bank of the following documents on the
date of this Agreement, all in form and substance satisfactory to Bank and its
counsel:
A. A certified copy of resolutions of Members of the
Board of Directors of each Borrower approving this Fourth Amendment
and all of the matters described in this Fourth Amendment, and
authorizing the execution, delivery, and performance by Borrowers of
this Fourth Amendment, the Third Amendment To Promissory Note, the
First Amendment To Term Note, and every other document required to be
delivered pursuant to this Fourth Amendment.
B. The Third Amendment to Promissory Note executed by
Borrowers and accepted by Bank in substantially the same form as is
attached to this Fourth Amendment as Exhibit A.
-4-
5
C. The First Amendment To Term Note executed by
Borrowers and accepted by Bank in substantially the same form as is
attached to this Fourth Amendment as Exhibit B.
D. A certificate signed by a duly authorized officer of
each Borrower to the effect that:
(1) As of the date hereof, no Event of Default
has occurred and is continuing, and no event has occurred and
is continuing that, with the giving of notice or passage of
time or both, would be an Event of Default; and
(2) The representations and warranties set forth
in Section 6.1 of the Loan Agreement are true as of the date
of this Fourth Amendment.
E. A certificate of each Borrower's corporate secretary
certifying (1) to the incumbency and signatures of the officers of
each Borrower signing this Fourth Amendment and every other document
to be delivered pursuant to the Fourth Amendment, (2) to the effect
that TT's Certificate of Incorporation has not been amended since the
execution of the Loan Agreement, (3) to the effect that TT's Bylaws
have not been amended since the execution of the Second Amendment, and
(4) attached thereto is a true, correct and complete copy of the
Certificate of Incorporation and Bylaws of ECA, Inc., and each of
Borrower's Certificate of Incorporation and Bylaws are in full force
and effect as of the date of such certificate.
F. UCC-1 Financing Statements signed by a duly
authorized officer of ECA, Inc.
G. A good standing certificate for ECA, Inc. from the
Secretary of State for each of Delaware and Illinois.
H. Such other documents as Bank may reasonably request
to implement this Fourth Amendment and the transactions described in
this Fourth Amendment.
SECTION IV. APPLICABLE LAW.
This Fourth Amendment shall be deemed to be a contract under the laws
of the State of New Jersey, and for all purposes shall be construed in
accordance with the laws of such State.
-5-
6
SECTION V. COUNTERPARTS.
This Fourth Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any one of the parties hereto may execute this Fourth Amendment by signing any
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Fourth Amendment by
their duly authorized officers this 31 day January, 1994.
-6-