SEC Filing Html Data
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of the earliest event reported)
October
16, 2007
CompX
International Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-13905
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57-0981653
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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5430
LBJ Freeway, Suite 1700, Dallas, Texas
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75240-2697
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
(972)
448-1400
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(Former
name or former address, if changed since last report.)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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On
October 16, 2007, the registrant entered into a Stock Purchase Agreement (the
“Stock Purchase Agreement”) with TIMET Finance Management Company, a
Delaware corporation that is a wholly owned subsidiary of Titanium Metals
Corporation and related to the registrant (“TFMC”). The
Stock Purchase Agreement provides for the sale to the registrant of 483,600
shares of the registrant’s class A common stock, par value $0.01 per share
(“CompX Class A Common Stock”), for a purchase price of $19.50 per
share to be paid in the form of an unsecured subordinated term loan promissory
note in the original principal amount of $9,430,200 payable by the registrant
to
TFMC (the “Stock Purchase Promissory Note”). The Stock
Purchase Agreement provides for a closing date on the same day as the merger
(the “Merger”) of CompX Group, Inc., a Delaware corporation that is a
parent of CompX (“CGI”), with and into CompX KDL LLC, a Delaware
limited liability company of which the registrant is the sole member (“CompX
KDL”). When issued, the Stock Purchase Promissory Note
would:
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·
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mature
in seven years;
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·
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bear
interest at a rate of LIBOR plus
1.00%;
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·
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require
quarterly principal payments of $44,800 beginning on September 30,
2008;
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·
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not
have prepayment penalties; and
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·
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be
subordinated to the Credit Agreement (the “Credit Agreement”)
dated as of December 23, 2005 among the registrant, CompX Security
Products, Inc., CompX Precision Slides Inc., CompX Marine Inc., Custom
Marine Inc., Livorsi Marine Inc. (each of these wholly owned subsidiaries
of the registrant are collectively referred to herein as the
“Subsidiaries”), Wachovia Bank, National Association as
administrative agent for itself, Compass Bank and Comerica Bank
(collectively, the
(“Banks”).
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Also
on
October 16, 2007, the registrant, CGI and CompX KDL entered into an Agreement
and Plan of Merger (the “Merger Agreement”). NL Industries,
Inc., a New Jersey corporation that is an indirect parent of the registrant
(“NL”), and TFMC are the only stockholders of CGI. Pursuant
to the Merger Agreement, upon the effectiveness of the Merger:
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·
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CGI
would merge into CompX KDL with CompX KDL surviving the
Merger;
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·
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each
share of the CGI common stock outstanding immediately prior to the
Merger
would automatically be canceled and retired and shall cease to
exist;
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·
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2,586,820
shares of CompX Class A Common Stock and 10.0 million shares of the
registrant’s class B common stock, par value $0.01 per share (the
“CompX Class B Common Stock”), owned by CGI immediately prior to
Merger would automatically be
canceled;
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·
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TFMC
would receive an unsecured subordinated term loan promissory note
(the
“Merger Promissory Note”) executed by CompX payable to the order
of TFMC in the original principal amount of $43,149,990 that would
have
similar terms as the Stock Purchase Promissory Note;
and
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·
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the
registrant would issue to NL 374,000 new shares of CompX Class A
Common
Stock (the “New CompX Class A Shares”) and 10,000,000 new shares
of CompX Class B Common Stock (the “New CompX Class B
Shares”).
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The
Merger is conditioned upon the satisfaction of all applicable material
regulatory approvals, including the approval for listing upon official notice
of
issuance by the New York Stock Exchange of the issuance of the New CompX Class
A
Shares and 10,000,000 shares of CompX Class A Common Stock reserved for issuance
upon the conversion of the New CompX Class B Shares.
As
of
October 16, 2007, the registrant, the Subsidiaries and the Banks entered into
a
First Amendment to Credit Agreement (the “Credit Agreement
Amendment”). The Credit Agreement Amendment provides for, among
other things:
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·
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certain
amendments to the Credit Agreement to allow for the issuance of the
Stock
Purchase Promissory Note and the Merger Promissory Note, which notes
would
promptly be combined (the “Combined Note”);
and
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·
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TFMC,
the registrant, the Subsidiaries and Wachovia Bank, National Association,
as administrative agent for the Banks, to enter into a Subordination
Agreement whereby upon the issuance of the Combined Note TFMC
would:
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o
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agree
that the registrant’s obligations under the Combined Note would be
subordinate to the registrant’s obligations under the Credit Agreement;
and
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o
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grant
to Wachovia Bank, National Association, as administrative agent for
the
Banks, a security interest in the Combined Note to the extent of
the
outstanding principal and accrued interest due thereon (the
“Subordination
Agreement”).
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TIMET’s
independent directors approved the Stock Purchase Agreement, the Merger
Agreement and the Subordination Agreement. The registrant’s
independent directors approved the Stock Purchase Agreement, the Merger
Agreement, the Credit Agreement Amendment and the Subordination
Agreement.
The
descriptions of the Stock Purchase Agreement and the Stock Purchase Promissory
Note (the form of which is attached as Exhibit A to the Stock Purchase
Agreement) are qualified in their entirety by the terms of the Stock Purchase
Agreement filed as Exhibit 10.1 to this current report and which terms are
incorporated herein by reference. The descriptions of the Merger
Agreement and the Merger Promissory Note (the form of which is attached as
Exhibit A to the Merger Agreement) are qualified in their entirety by the terms
of the Merger Agreement filed as Exhibit 10.2 to this current report and which
terms are incorporated herein by reference. The descriptions of the
Credit Agreement Amendment and the Subordination Agreement are qualified in
their entirety by the terms of the Credit Agreement Amendment and the form
of
Subordination Agreement filed as Exhibits 10.3 and 10.4 to this current
report.
Item
9.01 Financial
Statements and Exhibits.
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(d)
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Exhibits
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Item
No.
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Description
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10.1*
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Stock
Purchase Agreement dated as of October 16, 2007 between TIMET Finance
Management Company and CompX International Inc.
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10.2*
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Agreement
and Plan of Merger dated as of October 16, 2007 among CompX International
Inc., CompX Group, Inc. and CompX KDL LLC
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10.3*
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First
Amendment to Credit Agreement dated as of October 16, 2007 among
CompX
International Inc., CompX Security Products, Inc., CompX Precision
Slides
Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc.,
Wachovia
Bank, National Association for itself and as administrative agent
for
Compass Bank and Comerica Bank.
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10.4*
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Form
of Subordination Agreement among TIMET Finance Management Company,
CompX
International Inc., CompX Security Products, Inc., CompX Precision
Slides
Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc.,
Wachovia
Bank, National Association as administrative agent for itself, Compass
Bank and Comerica Bank.
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*
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Filed
herewith
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CompX
International Inc.
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(Registrant)
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By: /s/
A. Andrew R. Louis
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Date: October
22, 2007
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A.
Andrew R. Louis, Secretary
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INDEX
TO EXHIBITS
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Item
No.
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Description
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10.1*
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Stock
Purchase Agreement dated as of October 16, 2007 between TIMET Finance
Management Company and CompX International Inc.
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10.2*
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Agreement
and Plan of Merger dated as of October 16, 2007 among CompX International
Inc., CompX Group, Inc. and CompX KDL LLC
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10.3*
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First
Amendment to Credit Agreement dated as of October 16, 2007 among
CompX
International Inc., CompX Security Products, Inc., CompX Precision
Slides
Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc.,
Wachovia
Bank, National Association for itself and as administrative agent
for
Compass Bank and Comerica Bank.
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||
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10.4*
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Form
of Subordination Agreement among TIMET Finance Management Company,
CompX
International Inc., CompX Security Products, Inc., CompX Precision
Slides
Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc.,
Wachovia
Bank, National Association as administrative agent for itself, Compass
Bank and Comerica Bank.
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*
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Filed
herewith
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STOCK
PURCHASE AGREEMENT
This
Stock Purchase Agreement (the “Agreement”) is made and entered into as
of October 16, 2007 between TIMET Finance Management Company, a Delaware
corporation (“Seller”), and CompX International Inc., a Delaware
corporation (“CompX”).
Recitals
A. Seller
wishes to sell to CompX, and CompX wishes to purchase from Seller, on the terms
and subject to the conditions of this Agreement (collectively, the
“Transaction”) 483,600 shares (the “Shares”) of the class A
common stock, $0.01 par value per share, of CompX.
B. The
parties do not wish to close the Transaction until the effectiveness of the
merger (the Merger”) of CompX Group, Inc., a Delaware corporation that
is a parent of CompX, with and into CompX KDL LLC, a Delaware limited liability
company of which CompX is the sole member.
Agreement
The
parties agree as follows:
ARTICLE I.
THE
TRANSACTION
Section 1.1. Purchase
and Sale of Shares. On the effective date of the Merger
(the “Closing Date”) and against payment of the purchase price therefor
as specified in Section 1.2, Seller shall sell, transfer,
assign and deliver to CompX the Shares. The Shares shall be delivered
electronically to an account designated by CompX.
Section 1.2. Purchase
Price and Payment. On the Closing Date, CompX shall
purchase the Shares for a purchase price of $19.50 per Share or an aggregate
purchase price of $9,430,200.00. The aggregate payment for the Shares
shall be made substantially on the terms of the promissory note set forth on
Exhibit A attached to this Agreement (the “Promissory
Note”).
ARTICLE II.
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
Seller
hereby represents and warrants to CompX as of the date of this Agreement, and
as
of the Closing Date as if made at such time, as follows:
Section 2.1. Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and
authority, without the consent or approval of any other person, to execute
and
deliver this Agreement and to consummate the Transaction. All
corporate action required to be taken by or on behalf of it to authorize the
execution, delivery and performance of this Agreement has been duly and properly
taken.
Section 2.2. Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the Transaction
by it are not prohibited by, do not violate or conflict with any provision
of,
and do not result in a default under (a) its charter or bylaws; (b) any material
contract, agreement or other instrument to which it is a party or by which
it is
bound; (c) any order, writ, injunction, decree or judgment of any court or
governmental agency applicable to it; or (d) any law, rule or regulation
applicable to it, except in each case for such prohibitions, violations,
conflicts or defaults that would not have a material adverse consequence to
the
Transaction.
Section 2.3. Ownership
of Shares. It is the record and beneficial owner of the
Shares and upon consummation of the transactions contemplated by this Agreement,
CompX will acquire good and marketable title to the Shares, free and clear
of
any liens, encumbrances, security interests, restrictive agreements, claims
or
imperfections of any nature whatsoever, other than restrictions on transfer
imposed by applicable securities laws.
ARTICLE III.
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
CompX
hereby represents and warrants to the Seller as of the date of this Agreement,
and as of the Closing Date as if made at such time, as follows:
Section 3.1. Authority. It
is a corporation validly existing and in good standing under the laws of the
State of Delaware. It has full corporate power and authority, without
the consent or approval of any other person, to execute and deliver this
Agreement and the Promissory Note and to consummate the
Transaction. All corporate and other actions required to be taken by
or on behalf of it to authorize the execution, delivery and performance of
this
Agreement and the Promissory Note have been duly and properly
taken.
Section 3.2. Validity. This
Agreement and the Promissory Note are duly executed and delivered by CompX
and
constitute lawful, valid and binding obligations of CompX, each enforceable
in
accordance with its terms. The execution and delivery of this
Agreement and the Promissory Note and the consummation of the Transaction by
CompX are not prohibited by, do not violate or conflict with any provision
of,
and do not result in a default under (a) its charter or bylaws; (b) any material
contract, agreement or other instrument to which it is a party or by which
it is
bound; (c) any order, writ, injunction, decree or judgment of any court or
governmental agency applicable to it; or (d) any law, rule or regulation
applicable to it, except in each case for such prohibitions, violations,
conflicts or defaults that would not have a material adverse consequence to
the
Transaction.
ARTICLE IV.
GENERAL
PROVISIONS
Section 4.1.
Survival. The representations and warranties set forth
in this Agreement shall survive the execution of this Agreement and the
consummation of the transactions contemplated herein. The covenants
and other agreements set forth in this Agreement shall terminate on the tenth
anniversary of this Agreement.
Section 4.2. Amendment
and Waiver. No amendment or waiver of any provision of
this Agreement shall in any event be effective unless the same shall be in
a
writing referring to this Agreement and signed by the parties hereto, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 4.3. Parties
and Interest. This Agreement shall bind and inure to
the benefit of the parties named herein and their respective heirs, successors
and assigns.
Section 4.4. Entire
Transaction. This Agreement contains the entire
understanding among the parties with respect to the transactions contemplated
hereby and supersedes all other agreements and understandings among the parties
with respect to the subject matter of this Agreement.
Section 4.5. Applicable
Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the
State of Delaware or any other jurisdiction) that would cause the application
of
the laws of any jurisdiction other than the State of Delaware.
Section 4.6. Severability. If
any provision of this Agreement is found to violate any statute, regulation,
rule, order or decree of any governmental authority, court, agency or exchange,
such invalidity shall not be deemed to effect any other provision hereof or
the
validity of the remainder of this Agreement and such invalid provision shall
be
deemed deleted to the minimum extent necessary to cure such
violation.
Section 4.7. Notice. All
notices, requests, demands and other communications hereunder shall be in
writing and shall be sent by registered or certified mail, postage prepaid
as
follows:
If
to the
Seller: TIMET
Finance Management Company
Nemours
Building, Suite 1414
1007
Orange Street
Wilmington,
Delaware 19801
Attention: Secretary
If
to the
Purchaser: CompX
International Inc.
5430
LBJ
Freeway
Three
Lincoln Centre, Suite 1700
Dallas,
Texas 75240-2697
Attention: General
Counsel
Section 4.8. Headings. The
sections and other headings contained in this Agreement are for reference
purposes only and shall not effect in any way the meaning or interpretation
of
this Agreement.
Section 4.9. Expenses. Except
as otherwise expressly provided herein, each party to this Agreement shall
pay
its own costs and expenses in connection with the transactions contemplated
hereby.
The
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.
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TIMET
Finance Management Company
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By:
/s/ Joan Yori
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Joan Yori, President and
Secretary
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CompX
International, Inc.
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By:
/s/ Darryl R. Halbert
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Darryl R. Halbert, Vice
President
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EXHIBIT A
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$9,430,200.00
; October
[__],
2007
For
and
in consideration of value received, the undersigned, COMPX INTERNATIONAL
INC., a corporation duly organized under the laws of Delaware
(“Maker”), promises to pay to the order of TIMET FINANCE MANAGEMENT
COMPANY, a corporation duly organized under the laws of Delaware
(“Payee”), at its address 1007 Orange Street, Suite 1414, Wilmington, Delaware
19801, in lawful money of the United States of America, the principal sum of
Nine Million Four Hundred Thirty Thousand Two Hundred United States Dollars
($9,430,200.00) together with interest from the date hereof on the amount of
principal from time to time outstanding at a rate equal to the three month
United States LIBOR rate as quoted from time to time by The Wall Street Journal
or other reliable source, plus one percent (1.00%) per annum. Interest shall
be
calculated on the basis of a year of 365/366 days and for the actual number
of
days (including the first, but excluding the last day) elapsed and shall be
paid
in arrears quarterly on the last day of each March, June, September and
December, commencing December 31, 2007.
Principal
payments of $44,800 will be due and payable quarterly on the last day of each
March, June, September and December commencing September 30, 2008, with any
and
all remaining outstanding principal and any accrued unpaid interest due on
September 30, 2014 (the “Maturity Date”). All payments on this Note shall be
applied first to accrued and unpaid interest, next to accrued interest not
yet
payable, and then to principal against the scheduled principal payments from
earliest to latest. Maker may prepay principal at any time without penalty.
In
the event that principal or interest is not paid within five days of when due
or
declared due, interest shall thereafter accrue on the full amount of such
payment at the rate of United States LIBOR plus three percent (3%) per
annum.
Notice
of
written demand for payment shall be made by Payee to Maker by certified mail,
postage prepaid and return receipt requested to Maker’s address as set forth
under its signature below. The demand for payment or any other communication
shall be deemed given and effective as of the date of delivery or upon receipt
as set forth on the return receipt.
Upon
the
occurrence and during the continuation of an Event of Default (as defined
below), Payee shall have all of the rights and remedies provided in the
applicable Uniform Commercial Code, this Note or any other agreement between
Maker and in favor of Payee, as well as those rights and remedies provided
by
any other applicable law, rule or regulation. In conjunction with and in
addition to the foregoing rights and remedies of Payee, Payee may declare all
indebtedness due under this Note, although otherwise unmatured, to be due and
payable immediately without notice or demand whatsoever. All rights and remedies
of the holder are cumulative and may be exercised singly or concurrently. The
exercise of any right or remedy will not be a waiver of any other right or
remedy.
For
purposes of this Note, an Event of Default shall mean any one of the following
events:
(a) Maker
fails to pay quarterly principal payments when due or interest payments within
30 days of becoming due;
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$9,430,200.00 <
font id="TAB2" style="LETTER-SPACING: 9pt;"> October
[__],
2007
(b) Maker
otherwise fails to perform or observe any other provision contained in this
Note
and such breach or failure to perform shall continue for a period of thirty
days
after notice thereof shall have been given to Makers by the holder
hereof;
(c) Maker
defaults under any loan, extension of credit, security agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
Maker’s ability to repay this Note or perform Maker’s obligations under this
Note; or
(d) Maker
becomes insolvent, a receiver is appointed for any part of Maker’s property,
Maker makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Maker or against Maker under any bankruptcy or insolvency
laws.
In
the
event Payee incurs costs in collecting on this Note, this Note is placed in
the
hands of any attorney for collection, suit is filed on this Note or if
proceedings are had in bankruptcy, receivership, reorganization, or other legal
or judicial proceedings for the collection of this Note, Maker agrees to pay
on
demand to Payee all expenses and costs of collection, including, but not limited
to, reasonable attorneys’ fees incurred in connection with any such collection,
suit, or proceeding, in addition to the principal and interest then
due.
It
is
agreed that time is of the essence on this Note. The failure of the holder
of
this Note to exercise any remedy shall not constitute a waiver on the part
of
the holder of the right to exercise any remedy at any other time. It is the
intention of Maker and Payee to conform strictly to applicable usury laws,
if
any. Accordingly, notwithstanding anything to the contrary in this Note or
any
other agreement entered into in connection herewith, it is agreed as follows:
(i) the aggregate of all interest and any other charges constituting interest
under applicable law and contracted for, chargeable or receivable under this
Note or otherwise in connection with the obligation evidenced hereby shall
under
no circumstances exceed the maximum amount of interest permitted by applicable
law, if any, and any excess shall be deemed a mistake and canceled automatically
and, if theretofore paid, shall, at the option of Payee, be refunded to Maker
or
credited on the principal amount of this Note; and (ii) in the event that the
entire unpaid balance of this Note is declared due and payable by Payee, then
earned interest may never include more than the maximum amount permitted by
applicable law, if any, and any unearned interest shall be canceled
automatically and, if theretofore paid, shall at the option of Payee, either
be
refunded to Maker or credited on the principal amount of this Note.
Maker
expressly waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of intention to
accelerate, notice of acceleration, bringing of suit and diligence in taking
any
action to collect amounts called for hereunder and is and shall be liable for
the payment of all sums owing and to be owing hereon, regardless of and without
any notice, diligence, act or omission as or with respect to the collection
of
any amount called for hereunder or in connection with any right, lien, interest
or property at any and all times had or existing as security for any amount
called for hereunder.
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$9,430,200.00 October
[__],
2007
If
any
payment of principal on this Note shall become due on a Saturday, Sunday or
public holiday under the laws of Delaware, United States of America, on which
banks are not open for business, such payment shall be made on the next
succeeding business day in which banks are open for business.
Pursuant
to the terms of that certain Subordination Agreement dated October [__], 2007, executed
by
the Payee, the Maker and certain subsidiaries of the Maker, the indebtedness
evidenced by this Note is subordinate and junior in right of payment, to all
principal, interest, charges, expenses and attorneys’ fees arising out of or
relating to all indebtedness, liabilities and obligations of Maker arising
under
that certain Credit Agreement dated December 23, 2005, as amended by that
certain First Amendment to Credit Agreement dated October
[__],
2007, by and between Maker and the Administrative Agent and Lenders set forth
therein and all other amendments and modifications thereto, and the Loan
Documents (as defined in such Credit Agreement), whether outstanding on the
date
of this Note or subsequently incurred to renew, extend, modify, or otherwise
amend such superior indebtedness (the “Superior Debt”). Superior Debt shall
continue to be Superior Debt and entitled to the benefits of these subordination
provisions irrespective of any amendment, modification, or waiver of any term
of
the Superior Debt or extension or renewal of the Superior Debt.
This
Note
shall be governed by and construed in accordance with the domestic laws of
the
state of Delaware, without giving effect to any choice of law or conflict of
law
provision or rule (whether of the state of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
state of Delaware..
MAKER:
COMPX
INTERNATIONAL INC.
By:
Name:
Title:
Address:
Agreement
and Plan of Merger
Among
CompX
International Inc.
CompX
Group, Inc.
and
CompX
KDL LLC
Dated
as of October 16, 2007
TABLE
OF CONTENTS
Page
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TABLE
OF CONTENTS
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ARTICLE I. THE
MERGER
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Section 1.1. The
Merger
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Section 1.2. Effective
Time
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Section 1.3. Succession
of Surviving Company
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Section 1.4. Certificate
of Formation and Limited Liability Company
Agreement
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Section 1.5. Officers
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Section 1.6. Continuation,Cancellation
or Issuance of Membership Interests, Stock or
Note
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Section 1.7. Taking
of Necessary Action
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ARTICLE II. REPRESENTATIONS
AND WARRANTIES
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Section 2.1. Representations
and Warranties of CompX
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Section 2.1. Representations
and Warranties of KDL
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Section 2.2. Representations
and Warranties of CGI
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ARTICLE III. CONDITION
TO THE MERGER
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ARTICLE IV. TERMINATION,
WAIVER AND AMENDMENT
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Section 4.1. Right
of Termination
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Section 4.2. Effect
of Termination
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ARTICLE V. MISCELLANEOUS
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Section 5.1. Survival
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Section 5.2. Sole
Agreement of Parties
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Section 5.3. Waiver;
Modification or Amendment
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Section 5.4. Further
Assurances
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Section 5.5. Exhibit;
Cross-References; Headings
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Section 5.6. Severability
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Section 5.7. Counterparts
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Section 5.8. Applicable
Law
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SIGNATURE
PAGE
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EXHIBIT A SUBORDINATED
TERM LOAN PROMISSORY NOTEA
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AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (this “Agreement”) is made as of October
16, 2007 among CompX International Inc., a Delaware corporation
(“CompX”), CompX KDL LLC, a Delaware limited liability company of which
CompX is the sole member (“KDL”), and CompX Group, Inc., a Delaware
corporation (“CGI”).
Recitals
A. On
the date of this Agreement:
(1) the
authorized capital stock of CGI consists of 13,000 shares of common stock,
par
value $0.01 per share (the “CGI Common Stock”), of which 12,586.82
shares are outstanding;
(2) CGI
is
the record holder of 2,586,820 shares (the “CGI CompX Class A Common Stock
Shares”) of class A common stock, par value $0.01 per share (the “CompX
Class A Common Stock”), of CompX and 10.0 million shares (collectively with
the CGI CompX Class A Common Stock Shares, the “CGI CompX Common Stock
Shares”) of the class B common stock, par value $0.01 per share, of CompX
(the “CompX Class B Common Stock” and collectively with the CompX Class
A Common Stock, the “CompX Common Stock”);
(3) NL
Industries, Inc., a New Jersey corporation that is a parent of CompX
(“NL”), is the record holder of 10,374 shares of CGI Common
Stock;
(4) Titanium
Metals Corporation, a Delaware corporation that is related to CompX, is the
sole
stockholder of TIMET Finance Management Company, a Delaware corporation
(“TFMC”);
(5) TFMC
is
the record holder of 2,212.82 shares of CGI Common Stock; and
(6) NL
and
TFMC are the only stockholders of CGI.
B. CGI
and KDL desire to merge upon the terms set forth in this Agreement.
C. NL
and TFMC, as the only stockholders of CGI, and CompX, as
the sole member of KDL, have each approved and adopted this
Agreement.
D. The
parties to this Agreement desire to consummate the merger in accordance with
the
provisions of section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended.
Agreement
In
consideration of the premises and the covenants and agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties to this Agreement hereby agree as follows.
ARTICLE I.
THE
MERGER
Section 1.1. The
Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the relevant provisions of the Delaware
General Corporation Law and the Delaware Limited Liability Act, each as amended
(each, as applicable, the “Applicable Delaware Entity Law”), CGI shall
merge with and into KDL (the “Merger”) at the Effective Time (as
defined below).
Section 1.2. Effective
Time. The Merger requires the filing of documents with
the Secretary of State of the state of Delaware. The Merger shall be
effective as of the filing of a certificate of merger with the Secretary of
State of the state of Delaware or such later time as the certificate of merger
states the effective time of the Merger shall be (the “Effective
Time”).
Section 1.3. Effects
of the Merger. As of the Effective Time, the separate
corporate existence of CGI shall cease and it shall merge with and into KDL
as
the surviving company (the “Surviving Company”). The Merger
shall have the effects set forth in this Agreement and in the Applicable
Delaware Entity Law.
Section 1.4. Certificate
of Formation and Limited Liability Company
Agreement. Upon the Effective Time, the certificate of
formation and limited liability company agreement of KDL shall be the
certificate of formation and limited liability company agreement of the
Surviving Company.
Section 1.5. Officers. At
the Effective Time, the officers of KDL immediately prior to the Effective
Time
shall be the officers of the Surviving Company. Subject to the
limited liability company agreement of the Surviving Company and the Delaware
Limited Liability Act, as amended, each of the Surviving Company’s officers
shall serve until his or her successor is elected or appointed and qualified
or
until his or her earlier death, incapacity, resignation or removal.
Section 1.6. Continuation, Cancellation
or Issuance of Membership Interests, Stock or Note. At
the Effective Time, by virtue of the Merger and without any action on the part
of any party to this Agreement, the following shall occur:
(a) each
limited liability company interest in KDL outstanding prior to the Effective
Time shall upon the Effective Time remain unchanged and continue to remain
outstanding as a limited liability company interest in the Surviving
Company;
(b) each
share of the CGI Common Stock outstanding immediately prior to the Effective
Time shall upon the Effective Time automatically be canceled and retired and
shall cease to exist.
(c) each
CGI CompX Common Stock Share outstanding immediately prior to the Effective
Time
shall upon the Effective Time automatically be canceled;
(d) CompX
shall issue to NL upon the Effective Time 374,000 new shares of CompX Class
A
Common Stock and 10,000,000 new shares of CompX Class B Common Stock
(collectively, the “New NL CompX Common Stock Shares”);
and
(e) CompX
shall execute and deliver to TFMC a subordinated term loan promissory note
substantially on the terms set forth on Exhibit A attached to
this Agreement (the “Promissory Note”).
The
other
parties agree that CompX has joined this Agreement to accommodate the structure
of the Transaction as expressed by the other parties and all the parties agree
that the cancellation of the CGI CompX Common Stock Shares shall not be deemed
an “acquisition” by CompX under paragraph B(v)(g) of Article Four of CompX’s
restated certificate of incorporation.
Section 1.7. Taking
of Necessary Action. In case at any time after the
Effective Time any further action is necessary to carry out the purposes of
this
Agreement or to vest the Surviving Company with full title to all assets,
rights, approvals, immunities and franchises of CGI, the officers and directors,
or the former officers and directors, as the case may be, of CGI and the
Surviving Company shall take all such action, at the expense of the Surviving
Company.
ARTICLE II.
REPRESENTATIONS
AND WARRANTIES
Section 2.1. Representations
and Warranties of CompX. CompX hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and
authority, without the consent or approval of any other person, to execute
and
deliver this Agreement and the Promissory Note and to consummate the
transactions contemplated by this Agreement (collectively, the
“Transactions”). All corporate action required to be taken
by or on behalf of it to authorize the execution, delivery and performance
of
this Agreement has been duly and properly taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
Promissory Note when executed will be duly executed and delivered by it and
shall constitute its lawful, valid and binding obligation, enforceable in
accordance with its terms. The execution and delivery of this
Agreement and the Promissory Note and the consummation of the Transactions
by it
are not prohibited by, do not violate or conflict with any provision of, and
do
not result in a default under (a) its charter or bylaws; (b) any material
contract, agreement or other instrument to which it is a party or by which
it is
bound; (c) any order, writ, injunction, decree or judgment of any court or
governmental agency applicable to it; or (d) any law, rule or regulation
applicable to it, except in each case for such prohibitions, violations,
conflicts or defaults that would not have a material adverse consequence to
the
Transactions.
(c) Title
to New NL CompX Common Stock Shares. At the Effective Time, the
New NL CompX Common Stock Shares shall be validly issued and non-assessable
and
NL will acquire good and marketable title to the New NL CompX Common Stock
Shares, free and clear of any liens, encumbrances, security interests,
restrictive agreements, claims or imperfections of any nature whatsoever, other
than restrictions on transfer imposed by applicable securities
laws.
Section 2.1. Representations
and Warranties of KDL. KDL hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a limited liability company validly existing and in good standing under
the
laws of the state of its formation. It has full power and authority,
without the consent or approval of any other person, to execute and deliver
this
Agreement and to consummate the Transactions. All action required to
be taken by or on behalf of it to authorize the execution, delivery and
performance of this Agreement has been duly and properly taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the
Transactions by it are not prohibited by, do not violate or conflict with any
provision of, and do not result in a default under (a) its certificate of
formation or limited liability company agreement; (b) any material contract,
agreement or other instrument to which it is a party or by which it is bound;
(c) any order, writ, injunction, decree or judgment of any court or governmental
agency applicable to it; or (d) any law, rule or regulation applicable to it,
except in each case for such prohibitions, violations, conflicts or defaults
that would not have a material adverse consequence to the
Transactions.
Section 2.2. Representations
and Warranties of CGI. CGI hereby represents and
warrants to each other party to this Agreement as of the date of this Agreement,
and as of the Effective Time as if made at such time, as follows:
(a) Authority. It
is a corporation validly existing and in good standing under the laws of the
state of its incorporation. It has full corporate power and
authority, without the consent or approval of any other person, to execute
and
deliver this Agreement and to consummate the Transactions. All
corporate action required to be taken by or on behalf of it to authorize the
execution, delivery and performance of this Agreement has been duly and properly
taken.
(b) Validity. This
Agreement is duly executed and delivered by it and constitutes its lawful,
valid
and binding obligation, enforceable in accordance with its terms. The
execution and delivery of this Agreement and the consummation of the
Transactions by it are not prohibited by, do not violate or conflict with any
provision of, and do not result in a default under (a) its charter or bylaws;
(b) any material contract, agreement or other instrument to which it is a party
or by which it is bound; (c) any order, writ, injunction, decree or judgment
of
any court or governmental agency applicable to it; or (d) any law, rule or
regulation applicable to it, except in each case for such prohibitions,
violations, conflicts or defaults that would not have a material adverse
consequence to the Transactions.
(c) Title
to CGI CompX Common Stock Shares. It has, and at all times
immediately prior to the Effective Time will have, good and marketable title
to
the CGI CompX Common Stock Shares free and clear of any liens, encumbrances,
security interests, restrictive agreements, claims or imperfections of any
nature whatsoever, other than restrictions on transfer imposed by applicable
securities laws.
ARTICLE III.
CONDITION
TO THE MERGER
The
obligation of each party to consummate the transactions to be performed by
it
pursuant to this Agreement is subject to the satisfaction of all applicable
material regulatory approvals.
ARTICLE IV.
TERMINATION,
WAIVER AND AMENDMENT
Section 4.1. Right
of Termination. This Agreement and the transactions
contemplated herein may be terminated and abandoned at any time prior to the
Effective Time by the mutual consent of all of the parties to this
Agreement.
Section 4.2. Effect
of Termination In the event of the termination and
abandonment hereof, pursuant to the provisions of
Section 4.1, this Agreement shall become void and have no
effect, without any liability on the part of any party to this Agreement, or
its
respective directors, officers, stockholders or members, as applicable, with
respect to this Agreement, except for liability of the party for its respective
expenses.
ARTICLE V.
MISCELLANEOUS
Section 5.1.
Survival. The representations and warranties set forth
in this Agreement shall survive the execution of this Agreement and the
consummation of the transactions contemplated herein.
Section 5.2. Sole
Agreement of Parties. This Agreement and the documents
referred to herein constitute the full understanding of the parties and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersede any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto.
Section 5.3. Waiver;
Modification or Amendment. Any of the terms or
conditions of this Agreement may be waived at any time by the party that is
entitled to the benefits thereof. This Agreement may not be modified
or amended except in a writing signed by all of the parties.
Section 5.4. Further
Assurances. Each party hereto agrees to execute any and
all documents, and to perform such other acts, whether before or after the
Effective Time, that may be reasonably necessary or expedient to further the
purposes of this Agreement or to further assure the benefits intended to be
conferred hereby.
Section 5.5. Exhibit;
Cross-References; Headings. The exhibit to this
Agreement is incorporated herein and made a part hereof for all
purposes. All sections and articles referred to herein are sections
and articles of this Agreement and the exhibit referred to herein is the exhibit
attached to this Agreement. Descriptive headings as to the contents
of particular articles and sections are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
Section 5.6. Severability. In
the event that any provision of this Agreement is held to be illegal, invalid
or
unenforceable under present or future laws, then (i) such provision shall be
fully severable and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision were not a part hereof; (ii) the
remaining provisions of this Agreement shall remain in full force and effect
and
shall not be affected by such illegal, invalid or unenforceable provision or
by
its severance from this Agreement; and (iii) there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
Section 5.7. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute on and the same
instrument.
Section 5.8. Applicable
Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the state of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the
state of Delaware or any other jurisdiction) that would cause the application
of
the laws of any jurisdiction other than the state of Delaware.
SIGNATURE
PAGE
The
parties hereto have executed this Agreement as of the date first above
written.
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CompX
International Inc.
By: /s/
Darryl R. Halbert
Darryl
R. Halbert, Vice President
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CompX
Group, Inc.
By: /s/
Gregory M. Swalwell
Gregory
M. Swalwell, Vice President
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CompX
KDL LLC
By: /s/
Kelly D. Luttmer
Kelly
D. Luttmer, Vice President
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EXHIBIT A
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
For
and
in consideration of value received, the undersigned, COMPX INTERNATIONAL
INC., a corporation duly organized under the laws of Delaware
(“Maker”), promises to pay to the order of TIMET FINANCE MANAGEMENT
COMPANY, a corporation duly organized under the laws of Delaware
(“Payee”), at its address 1007 Orange Street, Suite 1414, Wilmington, Delaware
19801, in lawful money of the United States of America, the principal sum of
Forty Three Million One Hundred Forty Nine Thousand Nine Hundred and Ninety
United States Dollars ($43,149,990.00) together with interest from the date
hereof on the amount of principal from time to time outstanding at a rate equal
to the three month United States LIBOR rate as quoted from time to time by
The
Wall Street Journal or other reliable source, plus one percent (1.00%) per
annum. Interest shall be calculated on the basis of a year of 365/366 days
and
for the actual number of days (including the first, but excluding the last
day)
elapsed and shall be paid in arrears quarterly on the last day of each March,
June, September and December, commencing December 31, 2007.
Principal
payments of $205,200 will be due and payable quarterly on the last day of each
March, June, September and December commencing September 30, 2008, with any
and
all remaining outstanding principal and any accrued unpaid interest due on
September 30, 2014 (the “Maturity Date”). All payments on this Note shall be
applied first to accrued and unpaid interest, next to accrued interest not
yet
payable, and then to principal against the scheduled principal payments from
earliest to latest. Maker may prepay principal at any time without penalty.
In
the event that principal or interest is not paid within five days of when due
or
declared due, interest shall thereafter accrue on the full amount of such
payment at the rate of United States LIBOR plus three percent (3%) per
annum.
Notice
of
written demand for payment shall be made by Payee to Maker by certified mail,
postage prepaid and return receipt requested to Maker’s address as set forth
under its signature below. The demand for payment or any other communication
shall be deemed given and effective as of the date of delivery or upon receipt
as set forth on the return receipt.
Upon
the
occurrence and during the continuation of an Event of Default (as defined
below), Payee shall have all of the rights and remedies provided in the
applicable Uniform Commercial Code, this Note or any other agreement between
Maker and in favor of Payee, as well as those rights and remedies provided
by
any other applicable law, rule or regulation. In conjunction with and in
addition to the foregoing rights and remedies of Payee, Payee may declare all
indebtedness due under this Note, although otherwise unmatured, to be due and
payable immediately without notice or demand whatsoever. All rights and remedies
of the holder are cumulative and may be exercised singly or concurrently. The
exercise of any right or remedy will not be a waiver of any other right or
remedy.
For
purposes of this Note, an Event of Default shall mean any one of the following
events:
(a) Maker
fails to pay quarterly principal payments when due or interest payments within
30 days of becoming due;
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
(b) Maker
otherwise fails to perform or observe any other provision contained in this
Note
and such breach or failure to perform shall continue for a period of thirty
days
after notice thereof shall have been given to Makers by the holder
hereof;
(c) Maker
defaults under any loan, extension of credit, security agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
Maker’s ability to repay this Note or perform Maker’s obligations under this
Note; or
(d) Maker
becomes insolvent, a receiver is appointed for any part of Maker’s property,
Maker makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Maker or against Maker under any bankruptcy or insolvency
laws.
In
the
event Payee incurs costs in collecting on this Note, this Note is placed in
the
hands of any attorney for collection, suit is filed on this Note or if
proceedings are had in bankruptcy, receivership, reorganization, or other legal
or judicial proceedings for the collection of this Note, Maker agrees to pay
on
demand to Payee all expenses and costs of collection, including, but not limited
to, reasonable attorneys’ fees incurred in connection with any such collection,
suit, or proceeding, in addition to the principal and interest then
due.
It
is
agreed that time is of the essence on this Note. The failure of the holder
of
this Note to exercise any remedy shall not constitute a waiver on the part
of
the holder of the right to exercise any remedy at any other time. It is the
intention of Maker and Payee to conform strictly to applicable usury laws,
if
any. Accordingly, notwithstanding anything to the contrary in this Note or
any
other agreement entered into in connection herewith, it is agreed as follows:
(i) the aggregate of all interest and any other charges constituting interest
under applicable law and contracted for, chargeable or receivable under this
Note or otherwise in connection with the obligation evidenced hereby shall
under
no circumstances exceed the maximum amount of interest permitted by applicable
law, if any, and any excess shall be deemed a mistake and canceled automatically
and, if theretofore paid, shall, at the option of Payee, be refunded to Maker
or
credited on the principal amount of this Note; and (ii) in the event that the
entire unpaid balance of this Note is declared due and payable by Payee, then
earned interest may never include more than the maximum amount permitted by
applicable law, if any, and any unearned interest shall be canceled
automatically and, if theretofore paid, shall at the option of Payee, either
be
refunded to Maker or credited on the principal amount of this Note.
Maker
expressly waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of intention to
accelerate, notice of acceleration, bringing of suit and diligence in taking
any
action to collect amounts called for hereunder and is and shall be liable for
the payment of all sums owing and to be owing hereon, regardless of and without
any notice, diligence, act or omission as or with respect to the collection
of
any amount called for hereunder or in connection with any right, lien, interest
or property at any and all times had or existing as security for any amount
called for hereunder.
SUBORDINATED
TERM LOAN PROMISSORY
NOTE
$43,149,990.00 October
[__],
2007
If
any
payment of principal on this Note shall become due on a Saturday, Sunday or
public holiday under the laws of Delaware, United States of America, on which
banks are not open for business, such payment shall be made on the next
succeeding business day in which banks are open for business.
Pursuant
to the terms of that certain Subordination Agreement dated October [__], 2007, executed
by
the Payee, the Maker and certain subsidiaries of the Maker, the indebtedness
evidenced by this Note is subordinate and junior in right of payment, to all
principal, interest, charges, expenses and attorneys’ fees arising out of or
relating to all indebtedness, liabilities and obligations of Maker arising
under
that certain Credit Agreement dated December 23, 2005, as amended by that
certain First Amendment to Credit Agreement dated October [__], 2007, by
and
between Maker and the Administrative Agent and Lenders set forth therein and
all
other amendments and modifications thereto, and the Loan Documents (as defined
in such Credit Agreement), whether outstanding on the date of this Note or
subsequently incurred to renew, extend, modify, or otherwise amend such superior
indebtedness (the “Superior Debt”). Superior Debt shall continue to be Superior
Debt and entitled to the benefits of these subordination provisions irrespective
of any amendment, modification, or waiver of any term of the Superior Debt
or
extension or renewal of the Superior Debt.
This
Note
shall be governed by and construed in accordance with the domestic laws of
the
state of Delaware, without giving effect to any choice of law or conflict of
law
provision or rule (whether of the state of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
state of Delaware..
MAKER:
COMPX
INTERNATIONAL INC.
By:
Name:
Title:
Address:
CERTIFICATE
OF SECRETARY
OF
CompX
Group, Inc.
The
undersigned, being the secretary of CompX Group, Inc., a Delaware corporation
(“CompX Group”), does hereby certify pursuant to Section 251 of the
General Corporation Law of the state of Delaware that the stockholders of CompX
Group duly adopted this Agreement and Plan of Merger by a written consent to
action without a meeting pursuant to and in accordance with Section 228 of
the
General Corporation Law of the state of Delaware.
/s/
A.
Andrew R.
Louis
A.
Andrew R. Louis, Secretary
Date: October
16, 2007
FIRST
AMENDMENT TO CREDIT AGREEMENT
THIS
FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the 16th
day of October, 2007, by and among COMPX INTERNATIONAL, INC., COMPX SECURITY
PRODUCTS, INC., COMPX PRECISION SLIDES, INC., COMPX MARINE, INC., CUSTOM MARINE,
INC. (f/k/a CUSTOM MARINE ACQUISITION, INC.), LIVORSI MARINE, INC., WACHOVIA
BANK, NATIONAL ASSOCIATION, as Administrative Agent and a Lender, COMPASS BANK
and COMERICA BANK (collectively referred to herein as the
“Lenders”).
R
E C
I T A L S:
The
Borrower, the Administrative Agent and the Lenders have entered into a certain
Credit Agreement dated as of December 23, 2005 (referred to herein as the
“Credit Agreement”). Capitalized terms used in this Amendment which
are not otherwise defined in this Amendment shall have the respective meanings
assigned to them in the Credit Agreement. In connection with the
Credit Agreement, the Subsidiary Guarantors have executed the Subsidiary
Guaranty Agreement in favor of the Administrative Agent, for the ratable benefit
of the Administrative Agent and the Lenders.
The
Borrower and Subsidiary Guarantors have requested the Administrative Agent
and
the Lenders to: (1) amend Sections 9.1, 10.1, 10.3 and 10.6 of
the Credit Agreement as set forth herein; (2) amend the definition of
“Consolidated Net Worth” as set forth herein; and (3) modify certain
additional provisions of the Credit Agreement as more fully set forth
herein.
The
Lenders, the Administrative Agent, the Subsidiary Guarantors and the Borrower
desire to amend the Credit Agreement upon the terms and conditions hereinafter
set forth.
NOW,
THEREFORE, in consideration of the Recitals and the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lenders, intending to be legally
bound hereby, agree as follows:
SECTION
1. Recitals. The Recitals are incorporated herein
by reference and shall be deemed to be a part of this Amendment.
SECTION
2. Amendments. The Credit Agreement is hereby
amended as set forth in this Section 2.
SECTION
2.01. Amendment to Section 1.1. (a) The definition
of “Consolidated Net Worth” set forth in Section 1.1 of the Credit Agreement is
amended and restated to read in its entirety as follows:
“Consolidated
Net Worth” means, with respect to the Borrower and its Subsidiaries, on any
date of determination, the total stockholders’ equity (including capital stock,
additional paid-in capital and retained earnings after deducting the treasury
stock) of the Borrower and its Subsidiaries appearing on a Consolidated balance
sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP
(excluding on a cumulative basis any adjustments for foreign currency
translation); provided, however, for purposes of Section 9.2 the term
“Consolidated Net Worth”: (1) shall be calculated without regard to the
Affiliate Loans permitted pursuant to Section 10.3(h); and (2) shall be
increased by the principal amount of the Permitted TIMET Debt relating to the
Permitted TIMET Redemption.
(a) Section
1.1 of the Credit Amendment is amended to add the following
definitions:
“Permitted
TIMET Debt” shall mean that certain unsecured term loan not to exceed
$55,000,000.00 made by TIMET Finance Management Company to the Borrower and
incurred to finance the Permitted TIMET Redemption, which is subordinate to
the
repayment of the Obligations upon terms and conditions satisfactory to the
Administrative Agent.
“Permitted
TIMET Redemption” shall mean the redemption by the Borrower of 2,696,420 shares
of the Borrower’s Class A common stock, whether directly or indirectly through
the purchase of shares of CompX Group, Inc. stock, from TIMET Finance Management
Company the purchase price of which shall be paid by the Borrower by issuance
of
the Permitted TIMET Debt.
SECTION
2.02. Amendment to Section 9.1. Section 9.1 of the
Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
9.1. Leverage Ratio. As of any fiscal quarter end,
permit the ratio of (a) Total Funded Debt (excluding the Permitted TIMET Debt)
on such date, to (b) EBITDA for the period of four (4) consecutive fiscal
quarters ending on or immediately prior to such date, to be greater than 2.50
to
1.00.
SECTION
2.03. Amendment to Section 10.1. Section 10.1 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.1. Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the
Obligations (excluding any Hedging Obligations);
(b) Debt
incurred in connection with a Hedging Agreement with a counterparty and upon
terms and conditions (including interest rate) reasonably satisfactory to the
Administrative Agent; provided, that any counterparty that is a Lender or
the Bank of Montreal shall be deemed satisfactory to the Administrative
Agent;
(c) Debt
existing on the Closing Date and not otherwise permitted under this Section
10.1, as set forth on Schedule 6.1(q), and the renewal, refinancing,
extension and replacement (but not the increase in the aggregate principal
amount) thereof;
(d) Guaranty
Obligations in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(e) unsecured
Debt of the Borrower and the Domestic Subsidiaries in an aggregate amount not
to
exceed $5,000,000 on any date of determination (provided that such Debt
may be secured to the extent that any such Debt is created, incurred, assumed
or
suffered to exist in connection with Capital Leases and purchase money
financing);
(f) Debt
of the Foreign Subsidiaries in an aggregate amount not to exceed $10,000,000
on
any date of determination;
(g) intercompany
Debt between the Borrower and any Subsidiary of the Borrower or between any
Subsidiary of the Borrower and any other Subsidiary of the
Borrower;
(h) the
Permitted TIMET Debt; or
(i) Debt
of any Person acquired in accordance with Section 10.3(c), including any
renewal, extension or refinancing, but not any increase in the aggregate
principal amount, thereof (provided that such Debt was not incurred in
connection with such acquisition);
provided,
that no agreement or instrument with respect to Debt permitted to be incurred
by
this Section shall restrict, limit or otherwise encumber (by covenant or
otherwise) the ability of any Subsidiary of the Borrower to make any payment
to
the Borrower or any of its Subsidiaries (in the form of dividends, intercompany
advances or otherwise) for the purpose of enabling the Borrower to pay the
Obligations.
SECTION
2.04. Amendment to Section 10.3. Section 10.3 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.3. Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any capital stock, interests in any partnership or
joint
venture (including, without limitation, the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security, substantially
all
or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit
to,
or any investment in cash or by delivery of property in, any Person
except:
(a) investments
(i) existing on the Closing Date in Subsidiaries, (ii) in Subsidiaries
formed or acquired after the Closing Date so long as the Borrower and its
Subsidiaries comply with the provisions of Section 8.10 and (iii) existing
on the Closing Date in the form of loans, advances and investments described
on
Schedule 10.3;
(b) investments
in (i) marketable direct obligations issued or unconditionally guaranteed
by the United States of America or any agency thereof maturing within three
hundred sixty-five (365) days from the date of acquisition thereof,
(ii) commercial paper maturing no more than one hundred twenty (120) days
from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor’s Ratings Services, a division
of The McGraw-Hill Companies, Inc. or Moody’s Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one hundred twenty
(120) days from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of “A” or better by a nationally recognized rating agency;
provided, that the aggregate amount invested in such certificates of
deposit shall not at any time exceed $5,000,000 for any one such certificate
of
deposit and $10,000,000 for any one such bank, (iv) time deposits maturing
no more than thirty (30) days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations each having
membership either in the FDIC or the deposits of which are insured by the FDIC
and in amounts not exceeding the maximum amounts of insurance thereunder, (v)
tax-exempt municipal bonds maturing within one hundred twenty (120) days from
the date of acquisition thereof, (vi) any money market or bank fund investing
only in the investments set forth above or (vii) investments held in trust
or
escrow accounts subject to government regulation, legal settlements, collateral
requirements or other similar arrangements; and
(c) investments
by the Borrower or any of its Subsidiaries in the form of acquisitions of all,
substantially all or a majority of the stock or assets of the business or a
line
of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person (each, a “Permitted
Acquisition”); provided that:
(i) the
Person to be acquired shall be a going concern, engaged in a business, or the
assets to be acquired shall be used in a business which is similar, related
or
complimentary to the line of business of the Borrower and its Subsidiaries
as
required pursuant to Section 10.12;
(ii) the
Borrower or such Subsidiary (unless the Person to be acquired complies with
Section 8.10), as applicable, shall be the surviving Person and no Change in
Control shall have been effected thereby;
(iii) with
respect to any Material Acquisition, the Borrower shall have delivered written
notice of such proposed acquisition to the Administrative Agent (for delivery
by
the Administrative Agent to the Lenders) and the Lenders, which notice shall
include the proposed closing date of such proposed acquisition, not less than
twenty (20) calendar days prior to such proposed closing date;
(iv) with
respect to any Material Acquisition, the Borrower shall have delivered to the
Administrative Agent copies of the Permitted Acquisition Documents;
(v) with
respect to any Material Acquisition, the Borrower shall have certified on or
before the closing date of such proposed acquisition, in writing and in a form
reasonably acceptable to the Administrative Agent and the Lenders, that such
proposed acquisition has been approved by the board of directors or equivalent
governing body of the Person to be acquired;
(vi) no
Default or Event of Default shall have occurred and be continuing both before
and after giving effect to such proposed acquisition;
(vii) the
Borrower shall have complied with Section 8.10;
(viii) with
respect to any Material Acquisition, the Borrower shall have delivered to the
Administrative Agent and the Lenders an Officer’s Compliance Certificate dated
as of the closing date of such proposed acquisition demonstrating, in form
and
substance reasonably satisfactory thereto, proforma compliance
with each covenant contained in Article IX (both before and after giving effect
to such proposed acquisition) (it being agreed by the Borrower, the
Administrative Agent and the Lenders that such calculations shall assume that
all Debt assumed or incurred in conjunction with such proposed acquisition
was
incurred at the beginning of the applicable calculation period and that all
income and expenses associated with such proposed acquisition shall be treated
as earned and included in the pro-forma calculations (both on a consolidated
and
consolidating basis));
(ix) the
Borrower shall have at least $10,000,000 in Liquidity both before and after
giving effect to such proposed acquisition; and
(x) the
Person to be acquired is not subject to material pending litigation which could
reasonably be expected to have a Material Adverse Effect;
(d) investments
by the Borrower or any of its Subsidiaries in the form of acquisitions of less
than a majority of the capital stock or other ownership interests of any other
Person; provided that:
(i) the
Person to be invested in shall be a going concern, engaged in a business which
is similar, related or complimentary to the line of business of the Borrower
and
its Subsidiaries;
(ii) the
amount of the investment (regardless of the form of consideration), together
with the aggregate amounts of all other investments pursuant to this Section
10.3(d), shall not exceed $10,000,000 during the term of this
Agreement;
(iii) neither
the Borrower nor any Material Domestic Subsidiary or Material Foreign Subsidiary
shall make any investment in which such party’s potential liability is not
limited to the amount of its investment (i.e., investments as a general partner,
in joint ventures, etc.);
(iv) no
Default or Event of Default shall have occurred and be continuing both before
and after giving effect to such proposed investment;
(v) the
Borrower shall have complied with Section 8.10;
(vi) the
Borrower shall have at least $10,000,000 in Liquidity both before and after
giving effect to such proposed investment; and
(vii) the
Person to be invested in is not subject to material pending litigation which
could reasonably be expected to have a Material Adverse Effect.
(e) intercompany
loans and advances in connection with intercompany Debt permitted under Section
10.1(g);
(f) Hedging
Agreements permitted pursuant to Section 10.1;
(g) purchases
of assets in the ordinary course of business; and
(h) loans
to Affiliates, the aggregate outstanding principal amount of which shall not
exceed at any time $15,000,000 on terms that are no less favorable than would
be
obtained in a comparable arm’s length transaction (“Affiliate
Loans”).
SECTION
2.05. Amendment to Section 10.6. Section 10.6 of
the Credit Agreement is amended and restated to read in its entirety as
follows:
SECTION
10.6. Limitations on Dividends and Distributions. Declare
or pay any dividends upon any of its capital stock or any other ownership
interests; purchase, redeem, retire or otherwise acquire, directly or
indirectly, any shares of its capital stock or other ownership interests, or
make any distribution of cash, property or assets among the holders of shares
of
its capital stock or other ownership interests, or make any change in its
capital structure; provided that:
(a) the
Borrower or any Subsidiary may pay dividends in shares of its own capital
stock;
(b) any
Subsidiary may pay cash dividends to the Borrower;
(c) the
Borrower may pay cash dividends on its capital stock, purchase, redeem, retire
or otherwise acquire, directly or indirectly, shares of its capital stock
(including purchases of treasury stock), or make distributions of cash, property
or assets among its shareholders in an aggregate amount not to exceed the lesser
of (i) twelve and one-half cents ($0.125) per share in any calendar quarter,
or
(ii) $8,000,000 in any calendar year;
(d) the
Borrower may redeem shares of its capital stock pursuant to the Permitted TIMET
Redemption; and
(e) in
addition to transactions permitted under subsection (c) above, the Borrower
may
pay cash dividends on its capital stock, purchase, redeem, retire or otherwise
acquire, directly or indirectly, shares of its capital stock (including
purchases of treasury stock), or make distributions of cash, property or assets
among its shareholders in an aggregate amount not to exceed, during the term
of
this Agreement, the sum of (i) $20,000,000 plus (ii) an amount equal to
fifty percent (50%) of aggregate Net Income of the Borrower and its Subsidiaries
since September 30, 2005. The Borrower, Administrative Agent and
Lenders acknowledge and agree that Affiliate Loans made pursuant to Section
10.3(h) shall not be construed as a purchase, redemption, retirement or other
acquisition by Borrower of its capital stock prohibited by this Section
10.6.
SECTION
3. Conditions to Effectiveness. The effectiveness
of this Amendment and the obligations of the Lenders hereunder are subject
to
the following conditions, unless the Required Lenders waive such
conditions:
(a) receipt
by the Administrative Agent from each of the parties hereto of a duly executed
counterpart of this Amendment signed by such party;
(b) receipt
by the Administrative Agent of all documents which the Administrative Agent
may
reasonably request;
(c) the
fact
that the representations and warranties of the Borrower and Subsidiary
Guarantors contained in Section 5 of this Amendment shall be true on and as
of
the date hereof except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and
warranties were true on and as of such earlier date; and
(d) All
other
documents and legal matters in connection with the transactions contemplated
by
this Amendment shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.
SECTION
4. No Other Amendment. Except for the amendments
set forth above, the text of the Credit Agreement shall remain unchanged and
in
full force and effect. On and after the First Amendment Effective
Date, all references to the Credit Agreement in each of the Loan Documents
shall
hereafter mean the Credit Agreement as amended by this
Amendment. This Amendment is not intended to effect, nor shall it be
construed as, a novation. The Credit Agreement and this Amendment
shall be construed together as a single agreement. This amendment
shall constitute a Loan Document under the terms of the Credit
Agreement. Nothing herein contained shall waive, annul, vary or
affect any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, nor affect nor impair any rights, powers
or
remedies under the Credit Agreement as hereby amended. The Lenders
and the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Notes. The Borrower and Subsidiary Guarantors
promise and agree to perform all of the requirements, conditions, agreements
and
obligations under the terms of the Credit Agreement, as heretofore and hereby
amended, the Credit Agreement, as amended, and the other Loan Documents being
hereby ratified and affirmed. The Borrower and Subsidiary Guarantors
hereby expressly agree that the Credit Agreement, as amended, and the other
Loan
Documents are in full force and effect.
SECTION
5. Representations and Warranties. The Borrower and
Subsidiary Guarantors hereby represent and warrant to each of the Lenders as
follows:
(a) No
Default or Event of Default under the Credit Agreement or any other Loan
Document has occurred and is continuing unwaived by the Lenders on the date
hereof.
(b) The
Borrower and Subsidiary Guarantors have the power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.
(c) This
Amendment has been duly authorized, validly executed and delivered by one or
more authorized officers of the Borrower and Subsidiary Guarantors and
constitutes the legal, valid and binding obligations of the Borrower and
Subsidiary Guarantors enforceable against them in accordance with its terms,
provided that such enforceability is subject to general principles of
equity.
(d) The
execution and delivery of this Amendment and the performance by the Borrower
and
Subsidiary Guarantors hereunder does not and will not, as a condition to such
execution, delivery and performance, require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower, or any Subsidiary Guarantor, nor be in contravention of
or in
conflict with the articles of incorporation, bylaws or other organizational
documents of the Borrower, or any Subsidiary Guarantor or the provision of
any
statute, or any judgment, order or indenture, instrument, agreement or
undertaking, to which the Borrower, or any Subsidiary Guarantor is party or
by
which the assets or properties of the Borrower, and Subsidiary Guarantors are
or
may become bound.
(e) The
Collateral Agreement continues to create a valid security interest in, and
Lien
upon, the Collateral, in favor of the Administrative Agent, for the benefit
of
the Lenders, which security interests and Liens are perfected in accordance
with
the terms of the Collateral Agreement and prior to all Liens other than Liens
permitted under Section 10.2 of the Credit Agreement.
SECTION
6. Counterparts; Governing Law. This Amendment may
be executed in multiple counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
agreement. This Amendment shall be construed in accordance with and
governed by the laws of the State of North Carolina.
SECTION
7. Effective Date. This Amendment shall be
effective as of September, 2007 (the “First Amendment Effective
Date”).
SECTION
8. Expenses. The Borrower and Subsidiary Guarantors
agree to pay all reasonable costs and expenses of the Administrative Agent
in
connection with the preparation, execution and delivery of this Amendment,
including without limitation the reasonable fees and expenses of the
Administrative Agent’s legal counsel.
SECTION
9. Further Assurances. The Loan Parties agree to
promptly take such action, upon the request of the Administrative Agent, as
is
necessary to carry out the intent of this Amendment.
SECTION
10. Consent by Subsidiary Guarantors. The
Subsidiary Guarantors consent to the foregoing amendments. The
Subsidiary Guarantors promise and agree to perform all of the requirements,
conditions, agreements and obligations under the terms of the Subsidiary
Guaranty Agreement, said Subsidiary Guaranty Agreement being hereby ratified
and
affirmed. The Subsidiary Guarantors hereby expressly agree that the
Subsidiary Guaranty Agreement, is in full force and effect.
SECTION
11. Amendment and Extension Fee. On the date
hereof, the Borrower and Subsidiary Guarantors shall pay to the Administrative
Agent for the account of each Lender an amendment and extension fee of $5,000.00
per Lender.
[Remainder
of this page intentionally left blank]
WCSR 3728358v6
IN
WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused
their respective duly authorized officers or representatives to execute and
deliver, this Amendment as of the day and year first above written.
[CORPORATE
SEAL] COMPX
INTERNATIONAL, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Chief
Financial
Officer
[CORPORATE
SEAL] COMPX
SECURITY PRODUCTS, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Vice
President -
Finance
[CORPORATE
SEAL] COMPX
PRECISION SLIDES, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Treasurer
[CORPORATE
SEAL] COMPX
MARINE, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Chief
Financial
Officer
[CORPORATE
SEAL] CUSTOM
MARINE, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Chief
Financial
Officer
[CORPORATE
SEAL] LIVORSI
MARINE, INC.
By: /s/
Darryl R.
Halbert (SEAL)
Name: Darryl
R.
Halbert
Title: Chief
Financial
Officer
ADMINISTRATIVE
AGENT AND
LENDERS:
WACHOVIA
BANK, NATIONAL
ASSOCIATION,
as
Administrative Agent and as a
Lender
By: /s/Thomas
F.
Snider
Name:
Thomas
F.
Snider
Title: Senior
Vice
President
[Signature
pages continued on the following page]
COMPASS
BANK,
as
Lender
By: /s/Key
Coker
Name: Key
Coker
Title: Executive
Vice
President
[Signature
pages continued on the following page]
COMERICA
BANK,
as
Lender
By: /s/William
B.
Dridge
Name: William
B.
Dridge
Title: Vice
President
[Remainder
of this page intentionally left blank]
SUBORDINATION
AGREEMENT
THIS
SUBORDINATION AGREEMENT (this “Agreement” which term shall include all
amendments and modifications thereto) is made as of this ____ day of October,
2007 by TIMET FINANCE MANAGEMENT COMPANY, a Delaware corporation (the
“Subordinate Lender”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative
agent (in such capacity, together with any successor agent, the “Administrative
Agent”) for the benefit of the Lenders (including, without limitation, the
Issuing Lender, the Swing Line Lender and the Alternative Currency Lender)
(as
defined in the Credit Agreement). Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings ascribed to them
in
the Credit Agreement referred to below.
Recitals:
A. CompX
International, Inc., a Delaware corporation (the “Borrower”), CompX Security
Products, Inc., CompX Precision Slides, Inc., CompX Marine, Inc., Custom Marine,
Inc. (f/k/a Custom Marine Acquisition, Inc.), and Livorsi Marine, Inc.
(collectively, the “Guarantors”), the Administrative Agent and the Lenders have
entered into a certain Credit Agreement dated as of December 23, 2005, as
amended by that First Amendment to Credit Agreement dated October, 2007 (as
amended, the “Credit Agreement” which term shall include all amendments and
modifications thereto). As used in this Agreement, (i) the term
“Senior Obligations” means all past, present, and future indebtedness,
liabilities, and obligations of any nature whatsoever of the Borrower to the
Lenders in connection with or arising from the Credit Agreement, and the Loan
Documents (including, without limitation, the Obligations (as defined in the
Credit Agreement)); and (ii) the term “Subordinated Debt” means all past,
present, and future indebtedness, liabilities, and obligations of any nature
whatsoever of the Borrower to the Subordinate Lender, including, without
limitation, any and all indebtedness, liabilities, and obligations of the
Borrower to the Subordinate Lender evidenced by that certain Subordinated Term
Loan Promissory Note dated October ___, 2007 made by Borrower and payable to
Subordinate Lender in the principal amount of $52,580,190.00 (the “Subordinate
Note”).
B. The
Subordinate Lender has requested the Required Lenders to consent to Subordinate
Lender making a term loan to the Borrower evidenced by the Subordinate
Note.
C. The
Required Lenders have required, as a condition to the granting of their consent,
the execution of this Agreement by the Subordinate Lender.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
Subordinate Lender hereby agrees with the Administrative Agent (for the benefit
of the Lenders) as follows:
1. Amount
of Subordinated Debt and Recitals. The Subordinate Lender
represents and warrants that (a) the outstanding principal amount of the
Subordinated Debt shall not at any time exceed $52,580,190.00; (b) the above
Recitals are true, accurate, and correct and are incorporated in this Agreement
by reference; (c) the Subordinate Lender is the lawful owner of the Subordinated
Debt, free and clear of all liens, assignments, security interests and other
encumbrances; and (d) the Subordinate Lender has not previously subordinated
the
Subordinated Debt.
2. Subordination
to Senior Obligations. The Subordinate Lender hereby
subordinates and postpones the payment and the time of payment of the
Subordinated Debt to and in favor of the payment and the time of payment of
the
Senior Obligations. So long as all or any part of the Senior
Obligations remain unpaid, the Subordinate Lender shall not, without the prior
written consent of the Required Lenders, ask, demand, sue for, set off, accept,
or receive any payment of all or any part of the Subordinated Debt; provided,
that until the occurrence of an Event of Default (as defined in the Credit
Agreement), the Subordinate Lender may receive payment of that portion of the
Subordinated Debt consisting of scheduled principal payments (including
prepayments) and accrued unpaid interest in accordance with the terms of the
Subordinate Note as in effect on the date hereof, if, after giving pro forma
effect to such payment or prepayment, an Event of Default would not
exist. The Subordinate Lender agrees not to subordinate, grant a
security interest or lien on, assign, or transfer all or any part of the
Subordinated Debt to any other person without the prior written consent of
the
Required Lenders. Subordinate Lender will not, without the prior
written consent of the Required Lenders: (a) commence, or join with any other
creditor in commencing, any bankruptcy, reorganization, insolvency or similar
proceedings with respect to Borrower or any Guarantor; or (b) extend, amend,
modify or renew any of the Borrower's obligations under the Subordinated Debt
or
the documents evidencing or executed or delivered in connection with the
Subordinated Debt, or release any surety or security for such obligations or
obtain collateral security or exercise any other right under the Subordinated
Debt, or the documents evidencing or executed or delivered in connection with
the Subordinated Debt.
3. Distributions,
etc. In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of the Borrower or any Guarantor or the
proceeds thereof to creditors of the Borrower or any Guarantor or to any
indebtedness, liabilities, and obligations of the Borrower or any Guarantor
by
reason of the liquidation, dissolution, or other winding up of the Borrower
or
any Guarantor or the business of the Borrower or any Guarantor or in the event
of any sale, receivership, insolvency, or bankruptcy proceeding, or assignment
for the benefit of creditors, or any proceeding by or against the Borrower
or
any Guarantor for any relief under the Bankruptcy Code or any insolvency law
or
other laws relating to the relief of debtors, readjustment of indebtedness,
reorganizations, compositions, or extensions, then and in any such event,
Lenders shall first be entitled to receive payment in full of all amounts due
and owing under the Senior Obligations before the Subordinate Lender shall
be
entitled to receive any payment in respect of the Subordinated
Debt.
4. Receipt
of Payments by Subordinate Lender. Should any payment or
distribution not permitted by the provisions of this Agreement be received
by
the Subordinate Lender upon or with respect to all or any part of the
Subordinated Debt, the Subordinate Lender will deliver the same to the
Administrative Agent in precisely the form received (except for the endorsement
or assignment of the Subordinate Lender where necessary) for application to
the
Senior Obligations (whether due or not due and in such order and manner as
the
Required Lenders may elect) and, until so delivered, the same shall be held
in
trust by the Subordinate Lender as property of the Administrative Agent (on
behalf of the Lenders). In the event of the failure of the Subordinate Lender
to
make any such endorsement or assignment, the Administrative Agent, or any of
its
officers or employees on behalf of the Lenders, is hereby irrevocably authorized
to make the same.
5. Endorsement,
etc. So as to secure the performance by the Subordinate Lender
of the provisions of this Agreement and the payment of the Senior Obligations,
the Subordinate Lender assigns, pledges, and grants to the Administrative Agent
(on behalf of the Lenders) a security interest in the Subordinated Note to
the
extent of outstanding principal and accrued interest due
thereon. Upon the request of the Required Lenders, the Subordinate
Lender shall endorse, assign, and deliver to the Administrative Agent in a
manner acceptable to the Administrative Agent all notes, instruments, and
agreements evidencing, securing, guaranteeing, or made in connection with the
Subordinated Note. Subordinate Lender will endorse on any and all
instruments evidencing the Subordinated Note a statement satisfactory to
Administrative Agent stating that the obligations evidenced by such instrument
and the rights of the holders thereof are subordinated to the claims of Lenders
as provided in this Agreement. The Subordinate Lender and the
Borrower each will further mark their books of account in such a manner as
shall
be effective to give proper notice of the effect of this
Agreement. Upon the occurrence of an Event of Default under the
Senior Obligations, Lenders shall be entitled to collect and receive payments
of
outstanding principal and accrued interest then due and payable under the
Subordinated Note until such time as all outstanding principal and accrued
interest due and payable to the Lenders under the Senior Obligations has been
repaid. Other than the grant to the Administrative Agent (on behalf
of the Lenders) of a security interest in the Subordinated Note as provided
herein, nothing in this Agreement shall be construed to provide that the
Subordinate Lender is responsible for, or has guaranteed the payment of, the
Senior Obligations.
6. Consents,
Waivers, etc. The Subordinate Lender hereby consents that at any
time and from time to time and with or without consideration, the Administrative
Agent and Lenders may, without further consent of or notice to the Subordinate
Lender and without in any manner affecting, impairing, lessening, or releasing
any of the provisions of this Agreement, renew, extend, change the manner,
time,
place, and terms of payment of, sell, exchange, release, substitute, surrender,
realize upon, modify, waive, grant indulgences with respect to, and otherwise
deal with in any manner: (a) all or any part of the Senior Obligations; (b)
all
or any of the Loan Documents; (c) all or any part of any property at any time
securing all or any part of the Senior Obligations; and (d) any person at any
time primarily or secondarily liable for all or any part of the Senior
Obligations and/or any collateral and security therefor. The Subordinate Lender
hereby waives demand, presentment for payment, protest, notice of dishonor
and
of protest with respect to the Subordinated Debt, notice of acceptance of this
Agreement by the Administrative Agent and Lenders, notice of the making of
any
of the Senior Obligations, and notice of the occurrence of an event of default
under any of the Loan Documents.
7. Notices
and Communications. All notices and other communications
hereunder shall be in writing and shall be effective when sent by certified
mail, return receipt requested: (a) if to the Subordinate Lender at 1007 Orange
Street, Suite 1414, Wilmington, Delaware 19801, or at such other address as
the
Subordinate Lender shall have furnished in writing to the Administrative Agent
or Lender, or (b) if to the Administrative Agent or Lenders, addressed to such
address as set forth in the Credit Agreement.
8. Transfer
or Assignment of Obligations. If any of the Senior Obligations
should be transferred or assigned by the Lenders, this Agreement will inure
to
the benefit of the Lenders’ transferee or assignee to the extent of such
transfer or assignment, provided that the Lenders shall continue to have the
unimpaired right to enforce this Agreement as to any of the Senior Obligations
not so transferred or assigned.
9. Miscellaneous. This
Agreement shall not be affected, impaired, or released by the delay or failure
of the Administrative Agent or any of the Lenders to exercise any of their
respective rights and remedies against the Borrower or any Guarantor or under
any of the Loan Documents or against any collateral or security for the Senior
Obligations. No delay or failure on the part of the Administrative Agent or
any
of the Lenders to exercise any of its rights or remedies hereunder or now or
hereafter existing at law or in equity or by statute or otherwise, or any
partial or single exercise thereof, shall constitute a waiver thereof. All
such
rights and remedies are cumulative and may be exercised singly or concurrently
and the exercise of any one or more of them will not be a waiver of any
other. No waiver of any of its rights and remedies hereunder and no
modification or amendment of this Agreement shall be deemed to be made by the
Administrative Agent and Lenders unless the same shall be in writing, duly
signed by the Administrative Agent on behalf of the Lenders, and each such
waiver, if any, shall apply only with respect to the specific instance involved
and shall in no way impair the rights and remedies of the Administrative Agent
and Lenders hereunder in any other respect at any other time. The Administrative
Agent and Lenders shall have the right to grant participations in the Senior
Obligations to others at any time and from time to time, and the Administrative
Agent and Lenders may divulge to any such participant or potential participant
all information, reports, financial statements, and documents obtained in
connection with this Agreement, any of the Loan Documents, or otherwise. If
any
term of this Agreement or any obligation thereunder shall be held to be invalid,
illegal, or unenforceable, the remainder of this Agreement and any other
application of such term shall not be affected thereby. This
Agreement may be executed in duplicate originals or in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one instrument, and it shall not be necessary in making proof hereof
to produce or account for more than one such duplicate, original, or
counterpart. This Agreement shall be binding upon the heirs, personal
representatives, successors, and assigns of the Subordinate Lender and shall
inure to the benefit of the successors and assigns of the Administrative Agent
and Lenders. As used herein, the singular number shall include the plural,
the
plural the singular, and the use of the masculine, feminine, or neuter gender
shall include all genders, as the context may require, and the term “person”
shall include an individual, a corporation, an association, a partnership,
a
trust, and an organization. The paragraph headings of this Agreement are for
convenience only and shall not limit or otherwise affect any of the terms
hereof. This Agreement shall be governed by and construed in accordance with
the
laws of the State of North Carolina and shall be deemed to be executed,
delivered, and accepted in the State of North Carolina.
[SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the Subordinate Lender has caused this Agreement to be
signed, sealed, and delivered on the day and year first written
above.
SUBORDINATE
LENDER:
TIMET
FINANCE MANAGEMENT COMPANY,
a
Delaware corporation
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
[ADDITIONAL
SIGNATURE PAGES FOLLOW]
The
Borrower and the Guarantors join in the execution of this Agreement so as to
signify their acceptance of and agreement and consent to the provisions of
this
Agreement.
BORROWER:
COMPX
INTERNATIONAL, INC.,
a
Delaware corporation
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
GUARANTORS:
COMPX
SECURITY PRODUCTS, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
COMPX
PRECISION SLIDES, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
COMPX
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
CUSTOM
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
LIVORSI
MARINE, INC.
[CORPORATE
SEAL}
By: (SEAL)
Name:
Title:
ACCEPTED
BY: ADMINISTRATIVE
AGENT:
WACHOVIA
BANK, NATIONAL
ASSOCIATION,
a
national banking
association
By:
Name:
Title: