Exhibit 10.2.5
AGREEMENT
This Agreement ("Agreement") is entered into as of the 23rd day of March,
1998 by and between Numatics, Incorporated (the "Company") and Harvard Private
Capital Holdings, Inc. ("Harvard");
WITNESSETH:
WHEREAS, Harvard and the Company did enter into a certain Securities
Purchase Agreement ("Purchase Agreement") dated as of January 3, 1996 pursuant
to which the Company did execute and deliver to Harvard a Senior Subordinated
Note (as defined in the Purchase Agreement) in the face amount of
$30,000,000.00; and
WHEREAS, the Company has also executed and delivered the PIK Notes (as
defined in the Purchase Agreement) (the PIK Notes and the Senior Subordinated
Note, collectively, the "Harvard Notes"); and
WHEREAS, the Company, in accordance with the Purchase Agreement, has
executed and delivered to Harvard the Warrants (as defined in the Purchase
Agreement); and
WHEREAS, the Company has agreed pursuant to the Purchase Agreement and,
specifically, as set forth in Exhibit 7 ("Exhibit 7") to the Purchase Agreement
to purchase upon notice to the Company at the Put Purchase Price (as defined in
the Purchase Agreement) the Warrants or shares of Common Stock (as defined in
the Purchase Agreement") which constitute Investor Securities (as defined in the
Purchase Agreement) if certain conditions described in Exhibit 7 occur on the
terms and conditions set forth in the Purchase Agreement; and
WHEREAS, the Company, together with certain of its subsidiaries, intends to
enter into an Indenture ("Indenture") with First Trust National Association
(together with any successors, the "Trustee") pursuant to which Indenture it
will issue certain subordinated notes ("Subordinated Notes") in the aggregate
amount of $110,000,000; and
WHEREAS, the Company intends to use $46,365,636.47 of the proceeds of the
Subordinated Notes to pay in full the Harvard Notes; and
WHEREAS, the Company (together with certain subsidiaries of the Company)
either simultaneously with or before issuing the Subordinated Notes intends to
enter into an Amended and Restated Loan Agreement ("Loan Agreement") (the Loan
Agreement and documents related thereto, the "Loan Documents") with NBD Bank, as
Administrative Agent and a lender thereunder, BancBoston as Documentation Agent
and a lender thereunder, and certain other lenders to be a signatory thereto;
and
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WHEREAS, the Company and Harvard have agreed to the amendments and other
matters set forth herein;
NOW, THEREFOR, for good and valuable consideration and in consideration of
the covenants set forth herein, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms as used herein are set forth in
Section 11 hereof. In addition, capitalized terms used herein which are not
defined herein, unless the context clearly requires otherwise, are used as
defined in the Purchase Agreement.
2. Representations and Warranties in Regard to the Harvard Notes. Harvard
hereby represents and warrants, as of the date hereof and as of the
Effectiveness Date, as follows:
(a) that it is the owner and holder of, and has in its possession, the
Harvard Notes and the Warrant, and that no other Person has any interest
(including without limitation any beneficial or legal interest arising by way of
sale, conveyance, pledge, security interest, hypothecation, mortgage, or other
type of lien or encumbrance) in the Harvard Notes or the Warrant.
(b) that on the Harvard Notes, March 23, 1998, the aggregate of principal,
interest, and prepayment premium will be $46,365,637.47 and on March 24, 1998,
absent previous payment, the aggregate of principal, interest, and prepayment
premium will be $46,387,916.93.
3. Payment of the Harvard Notes and Amended Guarantees. Upon a payment to
Harvard by the Company of $46,365,637.47 if made on March 23, 1998 or of
$46,387,916.93 if made on March 24, 1998, (the payment of which shall be made in
accordance with Exhibit A hereto) the Harvard Notes will be paid in full. Upon
receipt of either of the foregoing payments on the date set forth above
applicable thereto, Harvard agrees that it shall immediately xxxx the Harvard
Notes "Paid In Full" and return said Harvard Notes to the Company at its address
set forth under its signature line hereto by recognized overnight courier
service.
In addition, each Guarantee Subsidiary (as defined in the Purchase
Agreement) (which Guarantee Subsidiaries are Microsmith, Inc., Ultra Air
Products, Inc., Numatech, Inc., Numation, Inc., and Micro-Filtration, Inc.) have
previously executed and delivered to Harvard certain guarantees (the "Subsidiary
Guarantees"). Simultaneously with the execution and delivery hereof, each
Guarantee Subsidiary is executing and delivering to Harvard an Amended and
Restated Guarantee ("Amended Guarantee") substantially in the form of Exhibit B
hereto. Harvard agrees that, upon the payment set forth in the immediately
preceding paragraph from the Company on the applicable date, the Amended and
Restated Guarantees shall be effective, without the necessity of any further
action, Harvard will xxxx each of the existing Subsidiary Guarantees as "Amended
and Restated", and the Subsidiary Guarantees will be
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amended and restated thereby. Furthermore, I.A.E. Incorporated will issue and
deliver to Harvard its guarantee substantially in the form and substance of the
Amended Guarantees.
4. Consent and Default. Harvard hereby consents to the execution and
delivery of the Loan Documents, the Indenture, the Subordinated Notes, and all
other documents related to or contemplated by the Indenture and the Subordinated
Notes, and hereby waives any default or event of default which may be caused by
the execution and delivery thereof. It shall constitute an Event of Default (as
defined in the Purchase Agreement) under Section 10.1.3 thereof if the Company
fails to perform or observe any covenant, agreement or provision to be performed
or observed by it hereunder and, in the case of such failure (other than a
failure to perform its obligations under Section 5 hereof), such failure shall
not be rectified or cured to the reasonable satisfaction of the Required Holders
within thirty days after the occurrence of such failure.
5. Payment. The Company hereby agrees that it shall immediately upon
receipt of the proceeds of the Subordinated Notes prepay the principal of the
Harvard Notes and all accrued and unpaid interest thereon in the amount of
$46,365,637.47 if such payment is made on March 23, 1998 or in the amount of
$46,387,916.93 if such payment is made on March 24, 1998.
6. Amendments to Purchase Agreement. Effective immediately upon the
payment of the amounts set forth in Section 5 hereof, the Purchase Agreement,
without the necessity of any further action, shall be amended as follows:
(A) Article 9 (encaptioned "Covenants Applicable While Any Notes Are
Outstanding" and consisting of Sections 9.1 through 9.10, inclusive) shall
be deleted in their entirety and shall be replaced with the following:
"9. Certain Covenants Contained in the Indenture and Amendments to
Certain Other Agreements.
During such time as the Put Notes are outstanding, the Company
covenants that it will comply, and will cause its Subsidiaries (as defined
in the Indenture) to comply, with all of the covenants and provisions set
forth in Sections 4.07, 4.08, 4.09, 4.10, 4.12, 4.16 (except for purposes
of this Agreement only, the word "Note" set forth in Sections 4.16 and 4.12
of the Indenture shall be deemed to be replaced with the words "Put Note"
and the words "Subsidiary Guarantees" in Section 4.16 of the Indenture
shall be deemed replaced with the words "Amended Guarantees"), 4.17, and
4.19 as in effect upon initial execution and delivery thereof, all of which
covenants and provisions, together with the definitions of the defined
terms used therein, are hereby incorporated herein by reference as fully as
if set forth herein in their entirety. Each such covenant incorporated
herein by reference (together
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with each related definition) shall remain unmodified, notwithstanding any
modification or termination of such covenant (or such definition) or the
termination of the Indenture; provided, however, that if the Trustee under
the Indenture and the Company agree to amend any such section or definition
and the Required Holders consent to such amendment in writing, references
in this section shall be deemed to be references to such sections of the
Indenture as and to the extent amended with the consent of the Required
Holders.
In the event that the Company supplies the Trustee with a guarantee
pursuant to Section 4.19, it shall simultaneously therewith supply the Holders
of the Put Note(s) (if and at such time a Put Note is outstanding), with a
guarantee similar in form and substance to the Amended Guarantee.
In addition, the Subject Entities will not at any time consent to any
amendment or modification or assignment of, or grant any waiver of or fail to
enforce any of its rights pursuant to, any of the Related Agreements listed in
Sections 4.3.2.2 and 4.3.2.3 if such amendment, modification, waiver or failure
has or poses a material risk of having, directly or indirectly, any Material
Adverse Effect or any material adverse effect on any then outstanding Investor
Securities or on the rights, remedies or interest of any such holder hereunder
or any of the other Related Agreements other than the Bank Credit Agreement. For
purposes of this paragraph, the Indenture and the Subordinated Notes shall be
considered to be Related Agreements as if they were listed in Section 4.3.2.3
hereof.
(B) Section 7.2 contained in Exhibit 7 is hereby amended as follows:
The sentences contained in Section 7.2 which read as follows:
"The Put Purchase Price shall be paid in cash. However, if Senior
Indebtedness remains outstanding on the Put/Call Closing Date, to the
extent that the terms of both such Senior Indebtedness and the terms
of the Original Senior Indebtedness prohibit such payment in cash, the
Company may pay the Purchase Price by issuing to you, or such other
holder of Warrants or shares of Common Stock as shall have exercised
its rights under this Section 7.2, a promissory note (each a "Put
Note") in the original principal amount equal to the entire amount due
on such Put/Call Closing Date. The Put Note shall have the same terms
as the Senior Subordinated Notes except that all interest due on such
Put Note must be paid currently in cash."
are hereby deleted and are hereby replaced by the following:
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"The Put Purchase Price shall be paid in cash. However,
notwithstanding the foregoing, if (a) any Senior Indebtedness remains
outstanding on the Put/Call Closing Date, and if the terms of both
such Senior Indebtedness and the terms of the Original Senior
Indebtedness prohibit such payment in cash or (b) if the Indenture
prohibits such payment in cash, the Company shall pay the amount (if
any) of the Put Purchase Price to the extent that it is not prohibited
by the foregoing in cash and pay the amount of the Put Purchase Price
which it is so prohibited from paying in cash (such amount of the Put
Purchase Price which the Company is prohibited in paying in cash, the
"Deferred Put Purchase Price") by issuing to you, or such other holder
of Warrants or shares of Common Stock as shall have exercised its
rights under this Section 7.2, a promissory note (each a "Put Note")
in the amount of the Deferred Put Purchase Price. The Put Note shall
be substantially in the form of Exhibit 7.2A hereto with the blanks
suitably filled in and the Deferred Put Purchase Price, and the terms
and conditions thereof, including the subordination thereof, shall be
as set forth in said Exhibit 7.2A.
(C) Exhibit 7.2A hereto is hereby attached to the Purchase Agreement
as Exhibit 7.2A thereto.
(D) Section 10.1.2 shall be deleted and replaced with the following:
"10.1.2 Any Subject Entity shall fail to perform or observe any
of the covenants, agreements or provisions set forth or incorporated
by reference in Section 8.1, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.11 or
Section 9 hereof and, in the case of covenants, agreements or
provisions incorporated by reference in Section 9 hereof, such failure
shall continue beyond the period of grace, if any, specified in the
Indenture (provided, however, that no such period shall exceed thirty
days after such failure unless the Required Holders of the Notes in
their sole discretion shall specifically agree in writing); or"
(E) The following amendments shall be effective on the first day
("First Day") that (a) one or more Put Notes are outstanding and (b)
no Holder of any Put Note is also the Holder of any Investor
Securities other than a Put Note.
(i) On the First Day, Section 8.4 shall be deleted and
replaced with the following:
"8.4 Conduct of Business. So long as the Subordinated Notes
are outstanding, each Subject Entity will not engage in any
business other than Permitted Business (as defined in
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the Indenture), except to such extent as would not be
material to the Company and its Subsidiaries (as defined in
the Indenture) taken as a whole, and, during such time as
the Subordinated Notes are not outstanding, each Subject
Entity will engage only in the business conducted by it on
January 3, 1996 or in businesses that are logical extensions
of or ancillary to the fluid power business.
(ii) On the First Day, the period at the end of Section
8.5.2 shall be deleted and shall be replaced with the following:
"except that during such times as the Subordinated Notes are
outstanding, any Subject Entity shall be able to pay any salary,
bonus or other compensation to Xxxx X. Xxxxxx which it is
permitted to pay pursuant to the Indenture."
(iii) On the First Day, the period at the end of Section
8.5.3 shall be deleted and shall be replaced with the following:
"except that during such times as the Subordinated Notes are
outstanding, any Subject Entity shall be permitted to do any or
all of the foregoing to the extent that doing so does not violate
a term or condition of the Indenture.
(iv) On the First Day, Section 8.6 shall be amended to add,
between the phrase "Equity Securities to any Person;" and the
phrase "provided, however, that the Company", the following
phrase: "provided, however, that during such times as the
Subordinated Notes are outstanding, the Company may issue any of
its Equity Securities to any Person if it is permitted to do so
pursuant to the Indenture, and further".
(v) On the First Day, Section 8.9 shall be amended to add,
between the phrase "by the Stock Transfer Agreement;" and the
phrase "provided, however, that the aggregate amount of all
payments", the following phrase: "provided, however, that during
such times as the Subordinated Notes are outstanding, the Company
may do any or all of the foregoing if, and to the extent,
permitted by the Indenture, and further".
(F) Section 4.3.2.1 (a) and 4.3.2.1 (b) are hereby deleted in their
entirety and replaced, respectively, with the following:
"(a) loan Agreement dated as of January 3, 1996 between Numatics,
Incorporated and certain of its
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Subsidiaries party thereto from time to time, the lenders party
thereto from time to time, and the First National Bank of Boston as
Managing Agent and NBD Bank, as Administrative Agent, as amended by
four amendments, prior to the amendment and restatement thereof, and
the Amended and Restated Loan Agreement dated as of March 23, 1998,
the Lenders a party thereto, and NBD Bank, as Administrative Agent,
and BancBoston, N.A., as Documentation Agent, as amended, restated, or
otherwise modified from time to time, including without limitation any
increases in the amount thereof and including all agreements,
documents, and instruments executed in connection therewith at any
time ("Amended and Restated Credit Agreement").
(b) all Promissory Notes executed by the Company or any of the
Subsidiaries referred to in (a) above, plus all documents referenced
in the Amended and Restated Credit Agreement which were or are to be
executed by Numatics, Incorporated or a subsidiary thereof."
(G) The following phrase contained at the end of Section 4.3.2.1 "in
accordance with Section 9.2.2 hereof." is hereby deleted and replaced
with a period.
(H) Section 7.5.4 contained in Exhibit 7 to the Purchase Agreement is
hereby deleted and is replaced in its entirety with the following:
"7.5.4 Original Senior Indebtedness. The term "Original Senior
Indebtedness" shall mean the Indebtedness of the Company outstanding
under the Amended and Restated Credit Agreement as in effect on March
23, 1998."
(I) The following defined term shall be added to the Purchase
Agreement as Section 13.23A immediately after Section 13.23 thereof:
"13.23A. Indenture. The term "Indenture" shall mean that certain
Indenture by and among the Company, certain subsidiaries of the
Company, and First Trust National Association dated March 23, 1998."
(J) The following defined term shall be added to the Purchase
Agreement as Section 13.40A immediately after Section 13.40 thereof:
"Subordinated Notes" shall mean those certain notes issued by the
Company in accordance with the Indenture in the original
aggregate principal amount of $110,000,000.
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(K) A new Section 8.12 shall be, and hereby is, added to the Purchase
Agreement, which section will be placed immediately after Section 8.11
thereof:
"8.12 Prepayment. In the event that the Company prepays the
Subordinated Notes in whole or in part (whether such prepayment
is voluntary or required under the terms of the Indenture), the
Company agrees that simultaneously with any such prepayment it
will prepay principal of the Put Notes then outstanding in an
aggregate amount outstanding equal to the Prorata Amount. The
"Prorata Amount" shall mean the amount derived by multiplying the
principal amount of the Put Notes outstanding immediately prior
to the prepayment required under this section by the Percentage.
The "Percentage" shall mean the percentage that the amount so
prepaid on the Subordinated Notes is of the entire principal
amount of the Subordinated Notes outstanding immediately prior to
the relevant prepayment of principal thereof."
7. Harvard hereby relinquishes and terminates any and all, and terminates
any right which it may presently have to obtain in the future any, security
interests, pledges, mortgages, collateral assignments, liens and other
encumbrances which it has (and all of the foregoing which it would have in the
future based on instruments, agreements, mortgages or other documents in
existence on the date hereof) in the assets or other property, whether real,
personal, or mixed, tangible or intangible, of any and all conceivable types and
kinds, of the Company or of any subsidiary of the Company (including without
limitation, each Guarantee Subsidiary) and furthermore releases NBD Bank as
collateral agent for Harvard from any and all obligations which it may owe
Harvard in its capacity as such collateral agent. In furtherance of the
foregoing, Harvard relinquishes and discharges its rights under the agreements
and other documents listed on Exhibit C hereto, and terminates that certain
Intercreditor Agreement dated January 3, 1996 by and between Harvard, NBD Bank,
as collateral agent for the Subordinated Lenders, The First National Bank of
Boston, NBD Bank, Canada, and Massachusetts Mutual Life Insurance Company,
provided, however, the foregoing termination of the Intercreditor Agreement
shall be effective only upon receipt by Harvard of a termination thereof
executed by the other parties thereto. Harvard agrees to execute such further
documents, including discharges or amendments of mortgages, security agreements,
and financing statements, as the Company shall reasonably request.
8. The Company hereby represents and warrants to Harvard as follows:
(a) Neither the execution and delivery of this Agreement or of any
document contemplated hereby, nor the performance in accordance herewith,
constitutes or will constitute or result in a
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breach of the provisions of any Contractual Obligation to which it is a party or
by which it is bound or of its Charter or By-laws, (b) no approval,
authorization, or other action by any Governmental Authority or any other Person
is required to be obtained by it in connection with the execution, delivery, and
performance of this Agreement or any document contemplated hereby or the
transactions contemplated hereby, except for such approvals as will have been
obtained and which are in full force and effect, (c) this Agreement, upon
execution and delivery hereof by both of the parties hereto, will be valid,
binding, and enforceable obligations of the Company, and (d) the copies of the
Indenture and the Amended and Restated Credit Agreement which the Company has or
is simultaneously herewith providing to Harvard are full, complete, and accurate
copies thereof as executed or as they will be executed (except that if there are
subsequent changes thereto prior to execution, the Company shall immediately
supply to Harvard full, complete, and accurate copies of such changes).
9. Harvard hereby represents and warrants to the Company as follows:
(a) Neither the execution and delivery of this Agreement or of any
document contemplated hereby, nor the performance in accordance herewith,
constitutes or will constitute or result in a breach of the provisions of any
Contractual Obligation to which it is a party or by which it bound or of its
Charter or By-laws, (b) no approval, authorization, or other action by any
Governmental Authority or any other Person is required to be obtained by it in
connection with the execution, delivery, and performance of this Agreement or
any document contemplated hereby or the transactions contemplated hereby, except
for such approvals as have been obtained and which are in full force and effect,
and (c) this Agreement, upon execution and delivery hereof by both of the
parties hereto, will be valid, binding, and enforceable obligations of Harvard.
10. In the event there is an inconsistency between a term and condition of
the Purchase Agreement or any other agreement between the Company and Harvard
which is not amended hereby and the terms and conditions of the Purchase
Agreement as amended hereby ("Amended Terms"), the Amended Terms shall control
absolutely.
11. The following capitalized terms are defined in the places set forth
below:
"Agreement" is defined in the introductory paragraph.
"Amended Terms" is defined in Section 10.
"Common Stock" is defined in the fourth "Whereas" clause.
"Company" is defined in the introductory paragraph.
"Event of Default" is defined in Section 4.
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"Exhibit 7" is defined in the fourth "Whereas" clause.
"Guarantee Subsidiary" is defined in Section 3.
"Harvard" is defined in the introductory paragraph.
"Harvard Notes" is defined in the second "Whereas" clause.
"Indenture" is defined in the fifth "Whereas" clause.
"Investor Securities" is defined in the fourth "Whereas" clause.
"Loan Agreement" is defined in the seventh "Whereas" clause.
"Loan Documents" is defined in the seventh "Whereas" clause.
"PIK Notes" is defined in the second "Whereas" clause.
"Purchase Agreement" is defined in the first "Whereas" clause.
"Put Purchase Price" is defined in the fourth "Whereas" clause.
"Subordinated Notes" is defined in the fifth "Whereas" clause.
"Subsidiary Guarantees" is defined in Section 3.
"Trustee" is defined in the fifth "Whereas" clause.
"Warrants" is defined in the fourth "Whereas" clause.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the 23rd day of March, 1998.
NUMATICS, INCORPORATED
By /S/ XXXXXX X. XXXXXXX
--------------------------------------
Title: VICE PRESIDENT
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /S/ XXXX X. XXXXX
--------------------------------------
Title: MANAGING DIRECTOR
By /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Title: PRESIDENT AND CEO
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EXHIBIT A
[PRINTED ON HARVARD PRIVATE CAPITAL GROUP, INC. LETTERHEAD]
Bank: State Street Bank & Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
ABA#: 000-000-000
Attn: Harvard College/Private Capital Group
Credit DDA: 0000-000-0
Prior advisement to: Xxxx Xxxxx at 000-000-0000
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Xxxxx 00, 0000
Xxxxxxx Private Capital Holdings, Inc.
c/o Harvard Management Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier Number (000) 000-0000
Re: Securities Purchase Agreement between Numatics,
Incorporated (the "Company") and Harvard Private Capital Holdings,
Inc. ("Harvard") dated as of January 3, 1996 ("Purchase Agreement")
Gentlemen,
This letter is being sent to you to comply with certain notice requirements
set forth in the Purchase Agreement. Capitalized terms, unless the content
clearly requires otherwise, are used as defined in the Agreement.
Section 8.8 of the Agreement requires that the Company give Harvard advance
written notice prior to filing any registration statement under the Securities
Act covering any offering of debt. The Company hereby gives you notice that it
intends to file a registration statement under the Securities Act as described
in that certain Offering Memorandum ("OM") relating to the issuance by the
Company of $115,000,000 Senior Subordinated Notes due 2008, a copy of which OM
was previously supplied to you. The Purchase Agreement provides that the
foregoing notice must be given to you 60 days prior to the filing of said
Registration Statement. By your signature below, you (a) waive the requirement
that the foregoing notice be given you 60 days prior to the filing of the
Registration Statement, (b) agree that the foregoing notice satisfies the
requirements set forth in Section 8.8, and (c) as to the foregoing Registration
only, waive your rights under the second sentence in Section 8.8 (which sentence
begins with the words "Each holder of Investor Securities shall have the
right").
Section 3.5 of the $30,000,000 Senior Subordinated Note due January, 2004
(the "Senior Subordinated Note") and Section 3.5 of the PIK Notes outstanding
require that the Company give you notice in the event that it intends to prepay
principal, interest, and prepayment premium on the Senior Subordinated Note and
the PIK Notes. The Company hereby gives you notice that it intends to prepay in
full on Monday, March 23, 1998 (but, if because of the shortage of time, payment
cannot be made on said date, then on Tuesday, March 24, 1998) the Senior
Subordinated Note and all PIK Notes which will be paid in connection with the
aforesaid prepayment will be $46,365,637.47 on Monday, March 13, 1998 and
$46,387,916.93 on Tuesday, March 24, 1998. The Senior Subordinated Note and the
PIK Notes provide that the foregoing notice must be given not less than three
(3) days prior to the date of such
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prepayment. By your signature below, you (a) waive the requirement that the
foregoing notice be given you 3 days prior to the date of prepayment and (b)
agree that the foregoing note satisfies the requirements set forth in Section
3.5 of the Senior Subordinated Note and the PIK Notes.
Please execute below to set forth your agreement to the foregoing.
Numatics, Incorporated
By: /S/ XXXXXX X. XXXXXXX
----------------------------------
Title: Vice President
Accepted and Agreed To:
Harvard Private Capital Holdings, Inc.
By: /S/ XXXX X. XXXXX
----------------------------------
Title: Managing Director
By: /S/ XXXXXXX X. XXXXXXXX
----------------------------------
Title: President and CEO
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EXHIBIT B
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Micro-Filtration, Inc., a Michigan corporation (together with
its successors and assigns, the "Guarantor"), and Harvard Private Capital
Holdings, Inc. (together with its successors and assigns, the "Noteholder"). The
parties agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other
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of the Related Agreements notwithstanding the fact that the collection or
enforcement thereof may be stayed or enjoined under the Bankruptcy Code or other
applicable law.
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
-15-
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which xxxxx or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed
-16-
Obligations, together with all suretyship defenses, which could otherwise
be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of
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such power shall be of a character or value the same as or different from
the character or value of any property disposed of, and to obtain, modify
or release any present or future Guarantees of the Guaranteed Obligations
and to proceed against any property on which a Lien is created under any
Security Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
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(d) it will not be rendered insolvent as a result of entering into
this Agreement;
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
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3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under the laws of Michigan, with
all power and authority, corporate or otherwise, necessary (a) to enter into and
perform this Agreement and each other Related Agreement to which it is a party
and (b) to own its properties and carry on the business now conducted or
proposed to be conducted by it. Certified copies of the Charter and By-laws of
the Guarantor have been previously delivered to the Noteholder and are correct
and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by
-20-
this Agreement or any other Related Agreement. No judgment, decree or order of
any Governmental Authority has been issued against or binds the Guarantor which
has resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business. assets, financial condition, income or
prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 0000 Xxxxx
Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding
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brought in any of the above-named courts, any claim that they are not
subject personally to the jurisdiction of such court, that their property
is exempt or immune from attachment or execution, that such proceeding is
brought in an inconvenient forum, that the venue of any such proceeding is
improper, or that this Agreement or any other Related Agreement, or the
subject matter hereof or thereof, may not be enforced in or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
-22-
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by The
Noteholder, notwithstanding any investigation made by the Noteholder or its
counsel, and shall survive the execution and delivery to The Noteholder hereof
and thereof. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only and
shall not limit, alter or otherwise affect the meaning hereof. This Agreement
and the other Related Agreements constitute the entire understanding of the
parties with respect to the subject matter hereof and thereof and supersede all
prior and current understandings and agreements, whether written or oral. This
Agreement is intended to take effect as a sealed document and may be executed in
any number of counterparts, which together shall constitute one instrument. This
Agreement shall be governed by and construed in accordance with the domestic
substantive laws of The Commonwealth of Massachusetts without regard to any
choice or conflict of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
MICRO-FILTRATION, INC.
By
-------------------------------------
Title:
---------------------------------
HARVARD PRIVATE CAPITAL HOLDINGS. INC.
By
-------------------------------------
Title:
---------------------------------
By
-------------------------------------
Title:
---------------------------------
-23-
EXHIBIT 7.2A
This Note has not been registered under the Securities
Act of 1933, as amended, or under the securities laws of
any state, and may not be sold or otherwise transferred
in the absence of such registration or an exemption
therefrom under such Act and under such applicable state
laws. Furthermore, this Note may be sold or otherwise
transferred only in compliance with the conditions
specified in the Securities Purchase Agreement (as
defined below), a complete and correct copy of which is
available for inspection at the principal office of the
issuer of this Note and will be furnished without charge
to the Holder of this Note upon written request.
NUMATICS, INCORPORATED
SENIOR SUBORDINATED NOTE
DUE March __, 2009
$________________ ________________, ____
FOR VALUE RECEIVED, the undersigned NUMATICS, INCORPORATED, a Michigan
corporation (the "Company"), hereby promises to pay to HARVARD PRIVATE CAPITAL
HOLDINGS, INC. or registered assigns, at the address set forth in Section 15 of
the Securities Purchase Agreement (as defined below), or at such other place as
the Holder of this Note shall from time to time have designated to the Company
in writing, on or before the last Business Day (as defined in said Securities
Purchase Agreement) in March, 2009 (the "Maturity Date"), $____________
(__________________________________ Dollars) (the "principal amount"), with
interest as provided in Section 2 hereof.
1. THE NOTES. This Note is one of the senior subordinated notes of the
Company (the "Note", and, together with any notes issued in exchange therefor,
the "Notes"), which is issued pursuant to the Securities Purchase Agreement
dated as of January 3, 1996, as amended, between the Company and Harvard Private
Capital Holdings, Inc. (as from time to time in effect, the "Securities Purchase
Agreement"). Terms defined in the Securities Purchase Agreement and not
otherwise defined herein are used herein as so defined. Subject to the terms, of
Section 5.2(b) hereof, in case an Event of Default under the Securities Purchase
Agreement shall occur, the entire principal amount of this Note may become or be
declared to be due and payable in the manner and with the effect provided in the
Securities Purchase Agreement.
-24-
2. INTEREST PROVISIONS. This Note shall accrue daily interest from the date
hereof, computed on the basis of a 360-day year of twelve (12) thirty-day
months, on the principal amount from time to time unpaid to and including the
maturity hereof at a rate per annum equal to the Basic Rate (as hereinafter
defined), and with interest on overdue payments of principal and, to the extent
permitted by applicable law, on overdue payments of interest at a rate per annum
equal to the sum of the Basic Rate plus two percent (2%), said interest being
payable in quarterly installments in arrears on the last Business Day of each
March, June, September and December in each year (each such day, and the day
that is the Maturity Date, being a "Payment Date"), commencing on the Payment
Date occurring in the first such month occurring after the date hereof, and on
the Maturity Date or at any accelerated maturity hereof. For purposes of this
Note, a payment of principal or interest shall be considered to be overdue if
for any reason, including without limitation the receipt of a Blackout Notice
pursuant to Section 5 hereof, such payment is not made on the date specified for
such payment in Sections 2 and 3 hereof.
The "Basic Rate" shall be equal to 18% per cent per annum from and
including the date hereof through, but not including, (insert herein the date
which is one year after the date of this Note) and shall be equal to 25% per
cent per annum from and including (insert herein the date which is one year
after the date of this Note) and at all times thereafter.
Each payment of interest shall be payable in cash.
3. PAYMENT PROVISIONS. The Company covenants that so long as any of the Notes
are outstanding:
3.1. Payment at Maturity of Notes. On the Maturity Date, or on any
accelerated maturity of the Notes, the Company will pay the entire principal
amount of this Note then outstanding (or, if applicable, such lesser principal
amount hereof as has then been declared or become due and payable), together
with all accrued and unpaid interest thereon.
3.2. Voluntary Prepayments.
The Company may at any time prepay all or any part of the Notes then
outstanding, provided that any such prepayment shall be in an amount equal
to $250,000 or an integral multiples of $250,000) unless such prepayment is
a prepayment of the then outstanding balance hereof in which case it may be
in the amount of the then outstanding balance hereof. Any such prepayment
may be made without penalty, premium, or additional charge, notwithstanding
anything contained in the Stock Purchase Agreement or any other agreement.
-25-
3.3. Permanent Retirement of Notes. Notes prepaid in full or otherwise
acquired by the Company shall be permanently retired and canceled and shall not
under any circumstances be reissued or resold.
3.4. Selection of Notes for Prepayment. Each prepayment permitted by
Section 3.2 hereof shall be made so that the Notes then held by each Holder
shall be prepaid in a principal amount which shall bear the same ratio, as
nearly as may be, to the total principal amount being prepaid as the principal
amount of the Notes held by such Holder shall bear to the aggregate principal
amount of all Notes then outstanding.
3.5. Notice of Prepayments. Notice of each voluntary prepayment of Notes
pursuant to Section 3.3 hereof shall be given not fewer than three (3) nor more
than thirty (30) days before the prepayment date, in each case by mailing to
each Holder a notice of intention to prepay specifying the date of prepayment,
the aggregate principal amount of the Notes that will be outstanding immediately
prior to such prepayment, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of the Notes to be prepaid on such
date held by the Holder to whom such notice is sent, and the accrued interest
applicable to such prepayment.
3.6. Payment and Interest Cut-Off. Upon each prepayment of Notes, in
whole or in part, the Company will pay to the Holders thereof the principal
amount of their Notes to be prepaid together with unpaid interest in respect
thereof accrued to the prepayment date. Upon notice of prepayment having been
given in compliance with Section 3.5 hereof, the amount of Notes to be prepaid
shall become due and payable on the prepayment date, and from and after such
date (unless the Company shall default in paying the amounts then due) interest
thereon shall cease to accrue.
3.7. Acquisition of Notes. The Company will not, and will not permit any
of its Subsidiaries or Affiliates to, purchase, redeem, or otherwise acquire any
Note except upon the payment or prepayment thereof in accordance with the terms
of this Note.
4. HOLDER. The term "Holder" shall mean each holder (as such term is used in
the Securities Purchase Agreement) of the Subordinated Indebtedness. The Holder
of this Note by acceptance hereof agrees to comply with the provisions of
Section 12 of the Securities Purchase Agreement applicable to transfers of this
Note.
5. SUBORDINATION TO THE SENIOR DEBT.
The payment of principal and interest on this Note is subordinated in right
of payment to the prior payment in full in cash or Cash Equivalents (as defined
in the Indenture) of all Senior Indebtedness (as defined in the Indenture),
whether outstanding on the date hereof or hereafter incurred.
-26-
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash or Cash Equivalents of all Obligations (as
defined in the Indenture) due in respect of such Senior Indebtedness (including
without limitation, interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Indebtedness) before the Holders of
this Note will be entitled to receive any payment with respect to this Note,
including, until all Obligations with respect to Senior Indebtedness are paid in
full in cash or Cash Equivalents, any distribution to which the Holders of Notes
would be entitled shall be made to the holders of Senior Indebtedness.
The Company also shall not make any payment upon or in respect of this Note
if (i) a default in the payment of the principal of, premium, if any (a "Payment
Default"), or interest on Designated Senior Indebtedness (as defined in the
Indenture) occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Indebtedness that permits holders of the Designated Senior Indebtedness
as to which such default relates to accelerate its maturity and the holder of
this Note receives a notice of such default (a "Payment Blockage Notice") from
the Company or the holders of any Designated Senior Indebtedness. Payments on
the Notes may and shall be resumed (a) in the case of a payment default, upon
the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of the date on which such nonpayment default is
cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior
Indebtedness has been accelerated or a Payment Default has occurred. No new
period of payment blockage pursuant to a Payment Blockage Notice may be
commenced unless and until 360 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
holder of this Note shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been cured or waived for a period
of not less than 90 days.
Terms defined herein by reference to the Indenture are used as originally
defined therein and not as they may be amended subsequently.
6. AMENDMENTS AND WAIVERS. Any term of this Note may be amended and the
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder of this Note. In addition, Section
5 of this Note may be amended only with the written consent of the Company, the
Holder of
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this Note, the holders of the Designated Senior Indebtedness, and the Required
Lenders.
7. MISCELLANEOUS. This Note shall be governed by and construed in accordance
with the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction. The parties hereto, including the undersigned maker and all
guarantors and endorsers, hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided herein or in the Securities Purchase Agreement, and assent to
extensions of the time of payment, or forbearance or other indulgence, without
notice.
NUMATICS, INCORPORATED
BY ____________________________
Title:
[SEAL]
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EXHIBIT C
"Existing Mortgages" shall mean (a) the Tennessee Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Rents, dated as of January 3, 1996,
made by the Company in favor of Xxxxx X. Xxxxxx III, trustee, for the use and
benefit of NBD, for the benefit of the Lenders, recorded on ___________, 1996 in
Book ____, Page _______, in the Register's Office for Xxxxxxxxxx County,
Tennessee, as amended or modified from time to time, (b) the Mortgage, Security
Agreement and Assignment of Rents, dated as of November 30, 1993, made by the
Company in favor of NBD, as collateral agent, recorded on December 16, 1993 in
Liber 14264, Page 839, in the records of the Oakland County Register of Deeds,
as amended or modified from time to time, (c) the Mortgage, Security Agreement
and Assignment of Rents, dated as of November 30, 1993, made by the Company in
favor of NBD, as collateral agent, recorded on December 16, 1993 in Liber 14264,
Page 822, in the records of the Oakland County Register of Deeds, as amended or
modified from time to time, (d) the Mortgage, Security Agreement and Assignment
of Rents, dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 14, 1993 in Liber 777, Page 234, in the
records of the Shiawassee County Register of Deeds, as amended or modified from
time to time, (e) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 13, 1993, in Liber 450, Page 744, in the
records of the Sanilac County Register of Deeds, as amended or modified from
time to time, (f) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 16, 1993, in Liber 14264, Page 805, in
the records of the Oakland County Register of Deeds, as amended or modified from
time to time, and (g) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 10, 1993, in Liber 149, Page 202, in the
records of the Steuben County Register of Deeds, as amended or modified from
time to time.
1. Assignment of Policy as Collateral Security, dated January 3, 1996,
executed by Numatics, Incorporated (Policy No. 77 737 604).
2. Assignment of Policy as Collateral Security, dated January 3, 1996,
executed by Numatics, Incorporated (Policy No. 77 737 891).
3. Security Agreement, dated January 3, 1996, executed by Numatics,
Incorporated, in favor of NBD Bank, as collateral agent.
4. Subsidiary Security Agreement, dated January 3, 1996, executed by Numatech,
Inc., Ultra Air Products, Inc., Microsmith, Inc., and Micro-Filtration, Inc. in
favor of NBD Bank, as collateral agent.
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5. Pledge Agreement and Irrevocable Proxy, dated January 3, 1996, executed by
Numatics, Incorporated in favor of NBD Bank, as collateral agent.
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