ASSUMPTION AND AMENDED AGREEMENT

EXHIBIT 4.3 (iii)

 

BARNES GROUP INC.

 

 

ASSUMPTION AND AMENDMENT AGREEMENT

 

 

Dated as of August 26, 2005

 

re:

U.S. $24,500,000 7.66% Amended and Restated Senior

Notes due November 12, 2007

U.S. $45,500,000 7.80% Amended and Restated Senior

Notes due November 12, 2010

 

BARNES GROUP INC.

123 Main Street

Bristol, Connecticut 06010

 

ASSUMPTION AND AMENDMENT AGREEMENT

 

re:

U.S. $24,500,000 7.66% Amended and Restated Senior

Notes due November 12, 2007

U.S. $45,500,000 7.80% Amended and Restated Senior

Notes due November 12, 2010

 

As of August 26, 2005

 

To the Persons identified on

Schedule A and Schedule B attached hereto

 

Ladies and Gentlemen:

 

BARNES GROUP INC ., a Delaware corporation (together with its successors and assigns, “ Barnes ”), and 3031786 NOVA SCOTIA COMPANY , a Nova Scotia company (together with its successors and assigns, “ 3031786 ”), hereby agree with you as follows:

 

1.	BACKGROUND; SUCCESSION AND ASSUMPTION; AMENDMENTS AND RESTATEMENTS; CONSENT.

 

1.1. Background .

 

(a) Issuance and Sale of 1999 Existing Notes . Pursuant to that certain Note Purchase Agreement dated as of November 12, 1999 (as amended up to, but excluding, the Effective Date, the “ Existing Note Purchase Agreement ”), entered into by 3031786 with each of the institutions named on Schedule A thereto, 3031786 issued its

 

(i) 7.66% Senior Notes due November 12, 2007 in the original aggregate principal amount of U.S.$24,500,000 (collectively, as amended up to, but excluding, the Effective Date, the “ Existing 7.66% Notes ”); and

 

(ii) 7.80% Senior Notes due November 12, 2010 in the original aggregate principal amount of U.S.$45,500,000 (collectively, as amended up to, but excluding, the Effective Date, the “ Existing 7.80% Notes ”). The Existing 7.66% Notes and the Existing 7.80% Existing Notes are referred to, collectively, herein as the “ Existing Notes ”.

 

One hundred percent of the original aggregate principal amount of the Existing Notes is outstanding and is held by the institutions identified as “1999 Noteholders” on the signature pages to this Assumption Agreement (collectively, the “ 1999 Noteholders ”).

(b) Relationship between 3031786 and Barnes . 3031786 is, and since prior to the Original Closing Date has been, a direct wholly-owned subsidiary of Barnes. Barnes has guaranteed the obligations of 3031786 pursuant to that certain Guaranty Agreement dated November 12, 1999.

 

1.2. 3031786 and Barnes’ Request for Consent.

 

3031786 and Barnes hereby request that each of you grant your consent to the following, as further provided in this Assumption Agreement:

 

(a) the assumption by Barnes of the obligations of 3031786 under the Existing Notes and the Existing Note Purchase Agreement;

 

(b) the release of 3031786 of its obligations under the Existing Notes and the Existing Note Purchase Agreement (such release is referred to herein as the “ Release ”);

 

(c) the amendment of certain terms and provisions of the Existing Note Purchase Agreement; and

 

(d) the amendment and restatement of the Existing Notes,

 

1.3. Assumption by Barnes.

 

Barnes has authorized its assumption of, and (subject to the effectiveness of your Consent as provided in Section 1.6 hereof) hereby assumes and shall be fully liable for, all of the obligations and undertakings of 3031786, whether now existing or hereafter arising, provided for in the Existing Note Purchase Agreement (as amended by this Assumption Agreement) and the Existing Notes (as amended and restated pursuant to this Assumption Agreement), including, without limitation, the obligation to duly and punctually pay the principal of, and the interest and Make-Whole Price, if any, on, the Existing Notes (as amended and restated by this Assumption Agreement) in accordance with the terms of the Existing Note Purchase Agreement (as amended by this Assumption Agreement) and the Existing Notes (as amended and restated by this Assumption Agreement). Such assumption and agreement by Barnes is referred to herein as the “ Assumption. ”

 

1.4. Amendments.

 

(a) Amendment of Existing Note Purchase Agreement . Effective as of the Effective Date, the Existing Note Purchase Agreement is hereby amended (as so amended, the “ Amended Note Agreement ”) as follows:

 

(i) Amendments to Sections 4, 5 and 6. Sections 4, 5 and 6 of the Existing Note Purchase Agreement are hereby amended by deleting all references to “the Company” or “The Company”, as applicable in such Sections and substituting “Barnes” in lieu thereof.

 

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(ii) Amendments to Section 7. Section 7 of the Existing Note Purchase Agreement is deleted in its entirety and replaced in its entirety, for all purposes of the Amended Note Agreement, with the following:

 

“SECTION 7. COMPANY BUSINESS COVENANTS.

 

Barnes covenants that on and after the date of the Assumption Agreement until the Notes are paid in full:

 

7.1 Payment of Taxes and Claims.

 

Except in situations where the failure to pay would not result in a material adverse impact on Barnes and its Subsidiaries taken as a whole, Barnes and each such Subsidiary, will pay, before they become delinquent,

 

(a)

all taxes, assessments and governmental charges or levies imposed upon it or its Property, and

 

(b)

all claims or demands of any kind (including, but not limited to, those of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons) which, if unpaid, might result in the creation of a Lien upon its Property not permitted by Section 7.6,

 

provided that items of the foregoing description need not be paid while being contested in good faith and by appropriate proceedings, if and for so long as book reserves reasonably believed by Barnes and independent certified public accountants of recognized national standing to be adequate have been established with respect thereto; provided further that, unless contesting in good faith in accordance with the provisions hereof, notwithstanding the foregoing provisions of this Section 7.1, Barnes and each such Subsidiary will pay all taxes known by Senior Management to be due and payable no later than fifteen days after the date such taxes are due.

 

7.2 Maintenance of Properties and Corporate Existence.

 

(a) Except where the failure to do so would not have a material adverse impact on Barnes and its Subsidiaries taken as a whole, Barnes will and will cause each of its Subsidiaries to:

 

(i)

Property — maintain its Property in good condition and make all necessary renewals, replacements, additions, betterments and improvements thereto required to keep such Property in good condition and in compliance with all requirements of law;

 

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(ii)

Insurance — keep its properties adequately insured at all times, by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage as is customary with companies in the same or similar businesses located or operating in areas with similar geological conditions; maintain in full force and effect public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it, in such amounts as Barnes or any Subsidiary, as the case may be, shall reasonably deem necessary; and maintain such other insurance as may be required by law;

 

(iii)

Financial Records — keep true books of records and accounts in which full and correct entries will be made of all of its business transactions, and will reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with generally accepted accounting principles, consistently applied; and

 

(iv)

Corporate Existence and Rights — do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises, except as otherwise permitted by Section 7.4, provided , however , that Barnes may liquidate or sell any Subsidiary if the transaction is permitted by Section 7.4.

 

(b) Barnes will and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and except as disclosed on Exhibit D, will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective business, in each case to the extent failure to so comply, maintain or obtain could, individually or in the aggregate, reasonably be expected to have a material adverse effect on Barnes or any Subsidiary.

 

7.3 Maintenance of Office.

 

Barnes will maintain an office in the State of Connecticut where notices, presentations and demands in respect of the Assumption Agreement or the Notes may be made upon it. The office shall be maintained at 123 Main Street, Bristol, Connecticut 06010, until such time as Barnes shall notify the holders of the Notes of a change of location.

 

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7.4 Sale of Assets or Merger.

 

(a) Sale of Assets — Barnes will not, nor will it permit any of its Subsidiaries to, directly or indirectly, except in the ordinary course of business, sell, lease, transfer or otherwise dispose of any of its Property or assets, now owned or hereafter acquired, if, as a result of such sale, lease, transfer or disposition, the aggregate net book value or fair market value , whichever shall be higher, of all Property and assets sold, leased, transferred or otherwise disposed of by Barnes and its Subsidiaries in the then current fiscal year of Barnes would exceed an amount equal to 10% of the book value (computed in accordance with GAAP) of all Property and assets of Barnes and its Consolidated Subsidiaries at the end of the preceding year.

 

(b) Consolidation; Merger — Barnes will not, nor will it permit any of its Subsidiaries to, directly or indirectly, consolidate with or merge into any other corporation, or permit another corporation to merge into it, provided , however , that (i) any Subsidiary of Barnes may be merged into Barnes or another wholly-owned Subsidiary, (ii) Barnes or any Subsidiary of Barnes may merge or consolidate with another Person or business, if Barnes or such Subsidiary, as the case may be, is the surviving corporation, (iii) Barnes or any Subsidiary may consolidate with or merge with another Person or business in a transaction where Barnes or the Subsidiary is not the surviving entity if (1) the continuing or surviving entity shall assume in writing all of the obligations of Barnes under this Agreement, the Assumption Agreement and the Notes, (2) the continuing or surviving entity shall not, immediately after such merger or consolidation, be in default of any of Barnes’ obligations under this Agreement, the Assumption Agreement or the Notes, (3) the continuing or surviving entity shall be a corporation organized under the laws of the United States or any state thereof, and (4) after giving effect to such consolidation or merger, the continuing or surviving entity could incur $1 of additional Indebtedness under Section 7.7.

 

7.5 Leases.

 

Barnes will not, nor will it not permit any of its Subsidiaries, directly or indirectly, to incur, create or assume any commitment to make any direct or indirect payment, whether as rent or otherwise, under any lease, rental or other arrangement for the use of real or personal Property or both of any other Person unless (a) after giving effect to such lease the aggregate rental obligations of Barnes and its Subsidiaries (exclusive of obligations to pay taxes and rental increments attributable to escalator clauses) during any fiscal year shall not exceed an amount equal to 15% of the book value (computed in accordance with GAAP) of all Properties and assets of Barnes and its Consolidated Subsidiaries at the end of the

 

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preceding fiscal year or (b) such lease was in existence as of the Closing Date and disclosed on Schedule I hereto.

 

7.6 Liens and Encumbrances.

 

(a) Negative Pledge . Barnes will not, nor will it permit any of its Subsidiaries to, directly or indirectly, incur, create, assume or permit to exist any mortgage, pledge, security interest, lien, charge or other encumbrance of any nature whatsoever (including conditional sales or other title retention agreements) on any of its Property or assets, whether owned at the date hereof or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, except:

 

(i) liens incurred or pledges and deposits made in connection with worker’s compensation, unemployment insurance, old-age pensions, social security and public liability and similar legislation;

 

(ii) liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, surety and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business;

 

(iii) statutory liens of landlords and other liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s and vendors’ liens incurred in good faith in the ordinary course of business;

 

(iv) liens securing the payment of taxes, assessments and governmental charges or levies, either (1) not delinquent, or (2) being contested in good faith by appropriate proceedings;

 

(v) zoning restrictions, easements, licenses, reservations, restrictions on the use of real property or minor irregularities incident thereto which do not in the aggregate materially detract from the value of the Property or assets of Barnes or such Subsidiary, as the case may be, or impair the use of such Property in the operation of its business;

 

(vi) purchase money liens on real Property or equipment (which are filed against the real Property or equipment within 180 days of purchase) that do not exceed 100% of the fair market value of the related Property;

 

(vii) liens existing on any Property prior to the acquisition thereof by Barnes or any Subsidiary, provided such lien was not created in contemplation of such acquisition, the amount

 

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secured thereby does not exceed the fair market value of the Property and such lien does not extend to any other Property of Barnes or such Subsidiary;

 

(viii) other liens, that in the aggregate, do not exceed 15% of the book value (computed in accordance with GAAP) of all Properties and assets of Barnes and its Consolidated Subsidiaries at the end of the preceding fiscal year.

 

(b) Equal and Ratable Lien; Equitable Lien . In case any Property is subjected to a Lien in violation of Section 7.6(a), Barnes will make or cause to be made provision whereby the Notes will be secured pursuant to documents reasonably satisfactory to the holders of at least 51% in outstanding principal amount of the Notes (exclusive of Notes owed by Barnes, Subsidiaries and Affiliates) equally and ratably, with all other obligations secured thereby, and in any case the Notes shall have the benefit, to the full extent that, and with such priority as, the holders may be entitled thereto under applicable law, of an equitable Lien on such Property securing the Notes. Such violation of Section 7.6(a) shall constitute an Event of Default hereunder, whether or not any such provision is made pursuant to this Section 7.6(b).

 

7.7 Indebtedness.

 

Except to the extent permitted under Section 7.7(e) and (f), Barnes will not, nor will it permit any of its Subsidiaries to, directly or indirectly incur, create, assume or permit to exist any Indebtedness other than:

 

(a)

Indebtedness incurred by Barnes Group under the Revolving Credit Agreement;

 

(b)

the Notes;

 

(c)

Indebtedness outstanding on the date hereof under Barnes Group Inc.’s $25,000,000, 7.13% Senior Notes due December 5, 2005;

 

(d)

Indebtedness outstanding on the date hereof under Barnes Group Inc.’s $60,000,000, 8.59% Senior Notes due November 21, 2008;

 

(e)

Indebtedness which constitutes extensions, renewals or replacements on substantially the same terms and conditions (and does not increase the amount outstanding) of (a) through (c) above; and

 

(f)

additional Indebtedness of Barnes and its Subsidiaries; provided , however , that (i) the total Indebtedness of

 

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Barnes’ Subsidiaries shall not at any time exceed $100 million; (ii) total Indebtedness of Barnes’ Domestic Subsidiaries shall not at any time exceed $10 million (excluding from the calculation thereof for all purposes except compliance with Section 7.4(b)(4) any preexisting indebtedness of a newly acquired Domestic Subsidiary for a period not exceeding 90 days after acquisition of such Domestic Subsidiary), and (iii) the aggregate amount of all Indebtedness of Barnes and its Subsidiaries at any time outstanding shall not exceed an amount equal to 155% of Consolidated Net Worth at such time; provided further that if any Subsidiary shall have aggregate Indebtedness of at least $50,000,000, then the Company shall cause such Subsidiary’s lenders to enter into an intercreditor agreement with the holders of the Notes in form and substance satisfactory to the Required Holders.

 

7.8 Net Worth.

 

Barnes will not permit Consolidated Net Worth of Barnes and its Subsidiaries at any time to be less than $201 million plus 50% of Consolidated Net Income for each fiscal year beginning December 31, 1999 (but without duplication for any fiscal year in which Consolidated Net Income is a negative amount), with the annual adjustments to be applicable as of December 31, 1999 and as of the end of each subsequent fiscal year.

 

7.9 ERISA Compliance.

 

Neither Barnes nor any Related Person will at any time permit any Pension Plan maintained by it to:

 

(i) engage in any “prohibited transaction” as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, or described in Section 406 of ERISA;

 

(ii) incur any “accumulated funding deficiency” as such term is defined in Section 302 of ERISA, whether or not waived; or

 

(iii) terminate under circumstances which could result in the imposition of a Lien on the Property of Barnes or any Subsidiary pursuant to Section 4068 of ERISA.

 

7.10 Transactions with Affiliates.

 

Neither Barnes nor any Subsidiary will enter into any transaction (except transactions which do not in any one calendar year involve in the

 

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aggregate an amount in excess of $500,000), including, without limitation, the purchase, sale or exchange of Property or the rendering of any service, with any Affiliate except in the ordinary course of and pursuant to the reasonable requirements of Barnes or such Subsidiary’s business and upon fair and reasonable terms no less favorable to Barnes or such Subsidiary than would be obtained in a comparable arm’s-length transaction with a Person not an Affiliate.

 

7.11 Tax Consolidation.

 

Barnes will not file or consent to the filing of any consolidated income tax return with any Person other than a Subsidiary.

 

7.12 Acquisition of Notes.

 

Neither Barnes nor any Subsidiary or any Affiliate will, directly or indirectly, acquire or make any offer to acquire any Notes unless Barnes or such Subsidiary or Affiliate has offered to acquire the Notes, pro rata, from all holders of the Notes upon the same terms. In case any of such parties acquires any Notes, such Notes shall thereafter be cancelled and no Notes shall be issued in substitution therefor.

 

7.13 Lines of Business.

 

Neither Barnes nor any Subsidiary will engage in any line of business if as a result thereof the business of Barnes and its Subsidiaries taken as a whole would be substantially different from what it was at December 31, 1998, as described in the Private Placement Memorandum.

 

7.14 Restricted Payments and Restricted Investments.

 

Barnes will not nor shall it permit any Subsidiary to, at any time make or permit to exist any loans or advances to, or purchase any stock, other securities or evidences of indebtedness of, or make or permit to exist any investment or acquire any interest whatsoever in, any other Person, except (a) the purchase of Barnes’ common or preferred stock, (b) loans or advances of Barnes or any Subsidiary of Barnes (in addition to loans or advances permitted by clauses (d) and (e) of this Section 7.14) not in excess of $10,000,000 aggregate principal amount for Barnes and its Subsidiaries at any time outstanding, (c) investments of its cash by Barnes or any Subsidiary in (i) marketable direct obligations of, or marketable obligations guaranteed by, the United States of America or Canada, or marketable obligations of any instrumentality or agency thereof, the payment of the principal and interest of which is unconditionally guaranteed by the United States of America or Canada, (ii) certificates of deposit or other obligations issued by, or bankers’ acceptances of , any bank or trust company organized under the laws of the Federal Republic of Germany, France, the United Kingdom, Japan, Canada or the United

 

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States of America or any state thereof (including foreign branches of any such bank or trust company) and having capital, surplus and undivided profits in excess of $100,000,000, (iii) open market commercial paper with a maturity not in excess of 270 days form date of acquisition thereof and having the highest credit rating by either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., or (iv) in the case of any foreign Subsidiary of Barnes in a country in which a Subsidiary exists as of the date of the Assumption Agreement, such investments of a comparable quality and term to the other investments permitted by this clause (c) as are usually made in the jurisdiction or jurisdictions in which the business of such foreign Subsidiary is principally conducted by prudent corporate investors in like circumstances, (d) loans or advances of Barnes to any of its Subsidiaries and loans or advances of any Subsidiary of Barnes to Barnes or another such Subsidiary, (e) purchases of stock or other securities of any corporations, associations or other business entities; provided , however , that the aggregate cost to or fair market value of the consideration paid by Barnes and its Subsidiaries for such stock or securities of any such corporation, association or other business entity shall not exceed the sum of: (A) $25,000,000, plus (B) 50% of Consolidated Net Income for the period commencing on October 1, 1999 and ending on the date of such stock or securities purchase (or minus 100% of Consolidated Net Income for such period if Consolidated Net Income for such period is a loss) or (f) such other investments in an aggregate amount not to exceed $250,000 as Barnes or a Subsidiary may elect.

 

7.15 Limitation on Restrictions on Dividends by Subsidiaries, etc.

 

Barnes shall not permit any Subsidiary or other entity in which it or any of its subsidiaries has an equity investment (a “Subsidiary Investment”) to be or become subject to any restriction (except restrictions applicable to corporations generally and those restrictions set forth in the Revolving Credit Agreement), whether arising by agreement, its articles of incorporation, by-laws or other constituent documents of such Subsidiary or Subsidiary Investment or otherwise, or the right of such Subsidiary or Subsidiary Investment from time to time to (w) declare and pay Stock Payments with respect to capital stock owned by Barnes from time to time owed to Barnes or any of its Subsidiaries, or (y) make loans or advances to Barnes or any of its Subsidiaries, or (z) transfer any of its properties or assets to Barnes or any of its Subsidiaries; provided , however , that such restriction may be permitted with respect to any Subsidiary or Subsidiary Investment in which Barnes or a Subsidiary directly or indirectly owns less than 80% of the Voting Stock and in which Barnes’ or such Subsidiary’s cumulative investment since the Closing Date (in terms of cash invested in and/or assets contributed to the entity) (i) individually is less than 10% of the book value of the assets of Barnes and its

 

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consolidated Subsidiaries, and (ii) when taken together with all such Subsidiaries and Subsidiary Investments subject to any such restrictions in which Barnes or a Subsidiary directly or indirectly owns less than 80% of the Voting Stock, is less than 15% of the book value of the assets of Barnes and its consolidated Subsidiaries.”

 

(iii) Amendments to Section 8.

 

(1) Sections 8.1(a), (b), (c), (d), (e), (g) and (h) of the Existing Note Purchase Agreement are hereby amended by (i) deleting all references to “the Guarantor” and the words “or the Guarantor”, as applicable, and substituting “Barnes” in lieu thereof and (ii) deleting all references to “the Company” in such Sections in their entirety.

 

(2) Section 8.1(f) of the Existing Note Purchase Agreement is hereby amended by deleting all references to “the Company” and substituting “Barnes” in lieu thereof.

 

(3) Section 8.2 of the Existing Note Purchase Agreement is hereby amended by (i) deleting all references to “the Company” in such Section and substituting “Barnes” in lieu thereof and (ii) deleting the all references the “the Guarantor” and the words “the Guarantor and”, as applicable, in their entirety.

 

(4) Section 8.4 of the Existing Note Purchase Agreement is hereby amended by (i) deleting in the first line of such Section the words “The Guarantor and the Company each” and substituting “Barnes” in lieu thereof, (ii) deleting all remaining references to “the Guarantor” in such Section and substituting “Barnes” in lieu thereof (ii) deleting the words “and the Company each” from such Section and all remaining references to “the Company” in their entirety.

 

(iv) Amendments to Section 9.

 

(1) Sections 9.1(a) through (j), inclusive of the Existing Note Purchase Agreement are hereby amended by (i) deleting in the words “the Company”, “the Company or” and “or the Company” in their entirety and (ii) deleting all references to “the Guarantor” in such Sections and substituting “Barnes” in lieu thereof.

 

(2) The caption and text of Sections 9.1(l) and (m) of the Existing Note Purchase Agreement are hereby deleted and there is substituted therefor “Intentionally Omitted”.

 

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(3) Section 9.2 of the Existing Note Purchase Agreement is hereby amended by (i) deleting all references to “the Guarantor” in their entirety and (ii) deleting all references to “the Company” or “The Company”, as applicable, in their entirety and substituting “Barnes” in lieu thereof.

 

(v) Amendments to Section 10.

 

(1) The following definitions appearing in Section 10 to the Existing Note Purchase Agreement are hereby amended and restated in their entirety to read as follows:

 

“ Business Day - any day other than a Saturday, Sunday or a U.S. national, Connecticut or New York holiday.

 

“ Notes shall mean the Amended 7.66% Notes and the Amended 7.80% Notes.”

 

(2) The definitions of “Change of Control”, “Consolidated Assets”, “Consolidated Net Worth”, “Related Person”, and “Senior Management” appearing in Section 10 to the Existing Note Purchase Agreement are hereby amended by deleting all references to “the Guarantor” or “the Company”, as applicable, and substituting “Barnes” in lieu thereof.

 

(3) Section 10 of the Existing Note Purchase Agreement is amended by adding the following definitions in their appropriate alphabetical order:

 

“ Assumption Agreement shall mean that certain Assumption and Am