Exhibit 4.3.1
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NOTE PURCHASE AGREEMENT
by and among
NUMATICS, INCORPORATED,
NUMATICS, GMBH,
NUMATICS LTD.,
the OTHER Loan Parties signatory hereto,
and
AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
AS AGENT
and
THE PURCHASERS IDENTIFIED ON
ANNEX A HERETO
November 28, 2001
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS........................................................2
1.1 Certain Definitions................................................2
1.2 Accounting Principles.............................................12
1.3 Other Definitional Provisions; Construction.......................12
ARTICLE 2 ISSUE AND SALE OF NOTES...........................................13
2.1 Authorization and Issuance of the Notes...........................13
2.2 Sale and Purchase.................................................14
2.3 The Closing.......................................................14
ARTICLE 3 REPAYMENT OF THE NOTES............................................14
3.1 Interest Rates and Interest Payments..............................14
3.2 Repayment of the Notes............................................15
3.3 Optional Prepayment of Notes......................................15
3.4 Notice of Optional Prepayment.....................................16
3.5 Mandatory Prepayment..............................................16
3.6 Home Office Payment...............................................16
3.7 Taxes.............................................................17
3.8 Maximum Lawful Rate...............................................17
3.9 Capital Adequacy..................................................18
3.10 Certain Waivers...................................................18
ARTICLE 4 CONDITIONS........................................................18
4.1 Conditions to Purchase of Notes...................................18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES................23
5.1 Representations and Warranties of Loan Parties....................23
5.2 Absolute Reliance on the Representations and Warranties...........29
ARTICLE 6 TRANSFER OF NOTES.................................................29
6.1 Restricted Notes..................................................29
6.2 Legends; Purchaser's Representations..............................29
6.3 Transfer of Notes.................................................30
6.4 Replacement of Lost Notes.........................................30
6.5 No Other Representations Affected.................................30
ARTICLE 7 COVENANTS.........................................................31
7.1 Affirmative Covenants.............................................31
7.2 Negative Covenants................................................37
7.3 Financial Covenants...............................................43
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ARTICLE 8 EVENTS OF DEFAULT.................................................44
8.1 Events of Default.................................................44
8.2 Consequences of Event of Default..................................46
8.3 Security..........................................................47
ARTICLE 9 THE AGENT.........................................................47
9.1 Authorization and Action..........................................47
9.2 Delegation of Duties..............................................47
9.3 Exculpatory Provisions............................................47
9.4 Reliance..........................................................48
9.5 Non-Reliance on Agent and Other Purchasers........................48
9.6 Agent in its Individual Capacity..................................48
9.7 Successor Agent...................................................48
9.8 Collections and Disbursements.....................................49
9.9 Reporting.........................................................50
9.10 Consent of Purchasers.............................................50
9.11 This Article Not Applicable to Loan Parties.......................51
ARTICLE 10 SUBORDINATION OF LIENS...........................................51
10.1 Lien Priorities...................................................51
10.2 Distribution of Proceeds of Collateral............................51
ARTICLE 11 MISCELLANEOUS....................................................52
11.1 Successors and Assigns............................................52
11.2 Modifications and Amendments......................................52
11.3 No Implied Waivers; Cumulative Remedies; Writing Required.........52
11.4 Reimbursement of Expenses.........................................52
11.5 Holidays..........................................................53
11.6 Notices...........................................................53
11.7 Survival..........................................................54
11.8 Governing Law.....................................................54
11.9 Jurisdiction, Consent to Service of Process.......................54
11.10 Jury Trial Waiver.................................................55
11.11 Severability......................................................56
11.12 Headings..........................................................56
11.13 Indemnity.........................................................56
11.14 Environmental Indemnity...........................................56
11.15 Counterparts......................................................57
11.16 Integration.......................................................57
11.17 Confidentiality...................................................57
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NOTE PURCHASE AGREEMENT
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$14,354,000 Aggregate Principal Amount of
Senior Secured Term A Notes
of the Company, Numatics Canada, and Numatics Germany
Due November 27, 2006
$17,000,000 Aggregate Principal Amount of
Senior Secured Term B Notes
of the Company
Due November 27, 2006
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of November 28,
2001, is by and among NUMATICS, INCORPORATED, a Michigan corporation (the
"Company"), NUMATICS, GMBH, a corporation organized under the laws of the
Federal Republic of Germany ("Numatics Germany"), NUMATICS LTD., a Canadian
corporation ("Numatics Canada", and together with the Company and Numatics
Germany, the "Borrowers"), the U.S. Subsidiaries of the Company signatory hereto
(the "Subsidiary Guarantors" and together with the Borrowers, the "Loan
Parties"), the securities purchasers that are now and hereafter at any time
parties hereto and are listed in Annex A (or any amendment or supplement
thereto) attached hereto (each a "Purchaser" and collectively, "Purchasers"),
and AMERICAN CAPITAL FINANCIAL SERVICES, INC., a Delaware corporation ("ACFS"),
as administrative agent for Purchasers (in such capacity "Agent"). Capitalized
terms used and not defined elsewhere in this Agreement are defined in Article 1
hereof.
RECITALS
The Company, Numatics Canada and Numatics Germany has proposed selling Term
A Notes in the aggregate amount of $14,354,000 to Purchasers and the Company has
proposed selling Term B Notes in the aggregate amount of $17,000,000 to
Purchasers for the purpose of refinancing the Existing Senior Debt.
NOW, THEREFORE, the parties hereto, in consideration of the premises and
their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Certain Xxxxxxxxxxx.Xx addition to other words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
meanings set forth below (and such meanings shall be equally applicable to both
the singular and plural form of the terms defined, as the context may require):
"ACAS" shall mean American Capital Strategies, Ltd., a Delaware
corporation.
"ACFS" shall mean American Capital Financial Services, Inc., a Delaware
corporation.
"Adjusted Net Income" shall mean, with respect to any period, the
consolidated net income of the Company and its Subsidiaries after taxes for such
period (excluding any after-tax gains or losses on the sale of assets (other
than the sale of Inventory in the ordinary course of business) and excluding
other after-tax extraordinary gains or losses), plus depreciation and
amortization deducted in determining net income for such period, plus interest
deducted in determining net income for such period, minus Capital Expenditures
for such period not financed, minus any cash dividends paid or accrued and cash
withdrawals paid or accrued to shareholders or other Affiliates for such period
which were not calculated in determining net income after taxes, plus unrealized
foreign exchange losses deducted in determining net income for such period, and
minus unrealized foreign exchange gains included in determining net income for
such period.
"Affiliate" shall mean with respect to any Person, any other Person that is
directly or indirectly controlling, controlled by or under common control with
such Person or entity or any of its Subsidiaries, and the term "control"
(including the terms "controlled by" and "under common control with") means
having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. Without limiting the foregoing, the
ownership of ten percent (10%) or more of the voting securities of a Person
shall be deemed to constitute control and notwithstanding anything to the
contrary herein, neither Purchasers nor any of their respective Affiliates shall
be deemed to be Affiliates of the Loan Parties by virtue of the transactions
contemplated in this Agreement.
"Agent" shall have the meaning assigned to such term in the preamble hereto
and any successor agent provided for hereunder.
"Agreement" shall mean this Note Purchase Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Business" shall mean the principal business of the Loan Parties as set
forth in Section 5.1(b) herein and as such shall continue to be conducted
following the purchase and sale of the Notes.
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"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in New York are authorized or required by law
to close.
"By-laws" shall mean the by-laws, partnership agreement, operating
agreement or analogous instrument governing the operations of each of the Loan
Parties, as applicable, including all amendments and supplements thereto.
"Canadian Pension Plans" means each of the pension plans, if any,
registered in accordance with the Income Tax Act (Canada) that any Loan Party
sponsors or administers or into which any other Loan Party makes contributions.
"Capital Expenditures" shall mean for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
expenditures for Capitalized Lease obligations) by the Company and its
Subsidiaries during such period that are required by GAAP, consistently applied,
to be included in or reflected by the property, plant and equipment or similar
fixed asset accounts (or intangible accounts subject to amortization) on the
balance sheet of the Company.
"Capitalized Leases" shall mean, with respect to any Person, leases of (or
other agreements conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP (as
defined in Section 1.2 hereof), either would be required to be classified and
accounted for as capital leases on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (42 X.X.X.xx. 9601, et seq.), as amended, and rules,
regulations, standards guidelines and publications issued thereunder.
"Change of Control" shall mean the occurrence of any of the following
without Agent's prior written consent:
(a) Xxxx X. Xxxxxx shall cease to own and have voting control of at
least fifty-one (51%) of the issued and outstanding voting securities of
the Company on a fully diluted basis (provided that any such failure
resulting from the death or disability of Xxxx X. Xxxxxx shall not be a
Change of Control if such stock continues to be owned and subject to the
voting control of Persons acceptable to Agent) and the receipt of any
consideration in connection therewith;
(b) a merger, consolidation, reorganization, recapitalization or share
exchange in which the stockholders of the Company immediately prior to such
transaction receive, in exchange for securities of the Company owned by
them, cash, property or securities of the resulting or surviving entity and
as a result thereof Persons who were holders of voting securities of the
Company hold less than 50% of the capital stock, calculated on a fully
diluted basis, of the resulting corporation entitled to vote in the
election of directors;
(c) a sale, transfer or other disposition of 30% or more of the assets
of the Loan Parties on a consolidated basis or the sale, transfer or other
disposition of the IP Assets of the Loan Parties;
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(d) the initial public offer of securities by the Company other than
an offering of securities for an employee benefit plan on SEC Form S-8 or a
successor form;
(e) Xxxx X. Xxxxxx shall cease to be the president and chief executive
officer of the Company (provided that any such cessation resulting from the
death or disability of Xxxx X. Xxxxxx shall not be a Change of Control if
the Company appoints a new president and chief executive officer of the
Company acceptable to Agent within 120 days of such cessation); and
(f) Xxxx X. Xxxxxx sells or transfers any capital stock of any Loan
Party owned by him or any of his Affiliates as of the Closing Date
(provided that any such transfer resulting from the death or disability of
Xxxx X. Xxxxxx shall not be a Change of Control if such stock continues to
be owned and subject to the voting control of Persons reasonably acceptable
to Agent).
"Charter Documents" shall mean the Articles of Incorporation, Certificate
of Incorporation, declaration or certificate of limited partnership, certificate
of limited liability company, charter, constating documents or analogous organic
instrument filed with the appropriate Governmental Authorities of each of the
Loan Parties, as applicable, including all amendments and supplements thereto.
"Closing" shall mean the closing of the purchase and sale of the Notes
pursuant to this Agreement.
"Closing Date" shall mean the date and time for delivery and payment of the
Notes as finally determined pursuant to Section 2.3 hereof.
"Closing Processing Fee" shall mean a fee in an amount equal to $910,620
payable by the Loan Parties to ACFS in consideration of the structuring of the
financing contemplated hereby.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all property and interests in property now owned or
hereafter acquired by the Loan Parties in or upon which a security interest,
lien or mortgage is granted to Agent under the Security Documents, including
without limitation the accounts, intellectual property, inventory, equipment and
real estate, and the proceeds and products thereof.
"Company" shall mean Numatics, Incorporated, a Michigan corporation.
"Condition" shall mean any condition that results in or otherwise relates
to any Environmental Liabilities.
"Controlled Group" shall mean the "controlled group of corporations" as
that term is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Loan Parties are a part from time to time.
"Debt Service Coverage" shall mean, with respect to any period, the ratio
of the (i) the consolidated net income of the Company and its Subsidiaries after
taxes for such period
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(excluding any after-tax gains or losses on the sale of assets (other than the
sale of inventory in the ordinary course of business) and excluding other
after-tax extraordinary gains or losses), plus depreciation and amortization
deducted in determining net income for such period, plus interest deducted in
determining net income for such period, minus Capital Expenditures for such
period not financed, minus any cash dividends paid or accrued and cash
withdrawals paid or accrued to shareholders or other Affiliates for such period
which were not calculated in determining net income after taxes, plus the
after-tax increase in LIFO reserves, or minus the after tax decrease in LIFO
reserves all on a consolidated basis, plus unrealized foreign exchange losses
included in determining net income for such period, and minus unrealized foreign
exchange gains included in determining net income for such period, to (ii) the
Company's and its Subsidiaries' current principal maturities of long term debt
and Capitalized Leases paid or scheduled to be paid during such period, plus any
prepayments on indebtedness owed to any Person (except trade payables and
revolving loans) and paid during such period, plus scheduled payments of
interest and fees, to the extent carried as Interest Expense on the Company's
and its Subsidiaries' consolidated financial statements, with respect to
indebtedness for borrowed money (including the interest component payments with
respect to Capitalized Leases) all determined on a consolidated basis.
"Default" shall mean any event or condition that, but for the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Environmental Laws" shall mean any Laws which address, are related to or
are otherwise concerned with environmental, health or safety issues, including
any Laws relating to any emissions, releases or discharges of Pollutants into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, clean-up or control of Pollutants or any exposure or impact
on worker health and safety.
"Environmental Liabilities" shall mean any obligations or liabilities
(including any claims, suits or other assertions of obligations or liabilities)
that are:
(a) related to environmental, health or safety issues (including
on-site or off-site contamination by Pollutants of surface or subsurface
soil or water, and occupational safety and health); and
(b) based upon or related to (i) any provision of past, present or
future United States or foreign Environmental Law (including CERCLA and
RCRA) or common law, or (ii) any judgment, order, writ, decree, permit or
injunction imposed by any court, administrative agency, tribunal or
otherwise.
The term "Environmental Liabilities" includes: (i) fines, penalties, judgments,
settlements, awards, losses, damages (including foreseeable and unforeseeable
consequential damages), costs, fees (including legal and consulting fees),
expenses and disbursements; (ii) defense and other responses to any
administrative or judicial action (including claims, notice letters, complaints,
and other assertions of liability); and (iii) financial responsibility for (1)
cleanup costs and injunctive relief, including any Removal, Remedial or other
Response actions, and natural resource damages, and (2) any other compliance or
remedial measures.
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"EPA" shall mean the United States Environmental Protection Agency and any
governmental body or agency succeeding to the functions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
governmental agency or authority, as from time to time in effect, promulgated
thereunder.
"Event of Default" shall mean any of the events of default described in
Section 8.1 hereof.
"Excess Cash Flow" shall mean, for any fiscal period of the Company and its
Subsidiaries, the sum of the following to the extent accruing after the Closing
Date: Adjusted Net Income for such period, minus Interest Expense, minus
scheduled payments or any voluntary prepayment of debt, minus scheduled
principal payments under all other Indebtedness made during such period.
"Existing Senior Debt" shall mean all Indebtedness of the Company and its
Subsidiaries evidenced by the Existing Senior Loan Agreement.
"Existing Senior Loan Agreement" that certain Amended and Restated Loan
Agreement, dated as of March 23, 1998, by and among the Loan Parties, Bank One,
Michigan, as administrative agent, Fleet National Bank, as documentation agent
and the Lenders signatory thereto, as amended from time to time.
"Financing Statements" shall have the meaning assigned to such term in
Section 4.1(c) hereof.
"Fiscal Year" or "fiscal year" shall mean each twelve month period ending
on December 31 of each year.
"Foreign Subsidiary" shall mean any Subsidiary incorporated or formed in
any jurisdiction other than any State of the United States of America.
"GAAP" shall have the meaning assigned to such term in Section 1.2 hereof.
"Governmental Authorities" shall mean any federal, state, provincial, or
municipal court or other governmental department, ministry, council, commission,
board, bureau, agency or instrumentality, governmental or quasi-governmental,
domestic or foreign.
"Guaranty" shall mean any guaranty of the payment or performance of any
Indebtedness or other obligation and any other arrangement whereby credit is
extended to one obligor on the basis of any promise of another Person, whether
that promise is expressed in terms of an obligation to pay the Indebtedness of
such obligor, or to purchase an obligation owed by such obligor, or to purchase
goods and services from such obligor pursuant to a take-or-pay contract, or to
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not any such arrangement is reflected on the balance
sheet of such other Person, firm or corporation, or referred to in a footnote
thereto, but shall not include endorsements of items for collection in the
ordinary course of business. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation
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shall be deemed to be equal to the maximum aggregate amount of such obligation
or, if the Guaranty is limited to less than the full amount of such obligation,
the maximum aggregate potential liability under the terms of the Guaranty.
"Guaranty Agreements" shall have the meaning assigned to such term in
Section 4.1(k)(xii).
"Harvard Capital" shall mean Harvard Private Capital Holdings, Inc.
"Harvard Put" shall mean Harvard Capital's right to put to the Company its
shares of capital stock of the Company pursuant to that certain Securities
Purchase Agreement dated as of January 3, 1996, as amended by that certain
Agreement dated March 23, 1998 between the Company and Harvard Capital.
"Hypothec" shall mean that certain agreement dated as of the date hereof
entered into between Numatics Canada and the Agent.
"Indebtedness" shall mean, for any Person at the time of any determination,
without duplication, all obligations, contingent or otherwise, of such Person
that, in accordance with GAAP, should be classified upon the balance sheet of
such Person as indebtedness, but in any event including: (i) all obligations for
borrowed money, (ii) all obligations arising from installment purchases of
property or representing the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business on terms customary in the trade), (iii) all
obligations evidenced by notes, bonds, debentures, acceptances or instruments,
or arising out of letters of credit or bankers' acceptances issued for such
Person's account, (iv) all obligations, whether or not assumed, secured by any
Lien or payable out of the proceeds or production from any property or assets
now or hereafter owned or acquired by such Person, (v) all obligations for which
such Person is obligated pursuant to a Guaranty, (vi) the capitalized portion of
lease obligations under Capitalized Leases, (vii) all obligations for which such
Person is obligated pursuant to any Interest Rate Protection Agreements or
derivative agreements or arrangements, and (viii) all obligations of such Person
upon which interest charges are customarily paid or accrued.
"Indenture" shall mean that certain 9-5/8% Senior Subordinated Notes Due
2008 Indenture, dated as of March 23, 1998, by and among the Company, the
guarantors signatory thereto and First Trust National Association.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement,
dated as of Closing Date, by and among Agent, the Loan Parties and Revolving
Financing Lender.
"Interest Expense" means, with respect to the Company and its Subsidiaries
determined on a consolidated basis, for any period the total interest expense
(net of cash interest income) for such period determined in conformity with GAAP
and including any interest expense attributable to Capitalized Leases.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
interest rate cap, interest rate collar or other interest rate hedging agreement
or arrangement.
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"Investment" as applied to any Person shall mean the amount paid or agreed
to be paid or loaned, advanced or contributed to other Persons, and in any event
shall include (i) any direct or indirect purchase or other acquisition of any
notes, obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) and (ii) any
capital contribution to any other Person.
"IP Assets" shall mean all intellectual property of the Loan Parties
including copyrights, trademarks, service marks and trade names, trade secrets,
inventions, production methods, industrial designs, and patents related to the
Business regardless whether such are registered with any Governmental
Authorities, and all physical manifestations thereof, including without
limitation, all books, manuals, software, disks, computer tapes and electronic
and electromagnetic representations and reproductions thereof.
"IP Security Agreement" shall have the meaning assigned to such term in
Section 4.1(c).
"IRS" shall mean the Internal Revenue Service and any governmental body or
agency succeeding to the functions thereof.
"Key Management" shall mean Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, and Xxxxx
Xxxxx.
"Laws" shall mean all U.S., Canadian, German and foreign federal, state,
provincial or local statutes, laws, rules, regulations, ordinances, by-laws,
codes, policies, rules of common law, and the like, now or hereafter in effect,
including any judicial or administrative interpretations thereof, and any
judicial or administrative orders, consents, decrees or judgments.
"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, now owned or
hereafter acquired, whether such interest is based on common law, statute or
contract.
"Life Insurance" shall have the meaning assigned to such term in Section
4.1(j).
"Loan Parties" shall have the meaning assigned to such term in the Preamble
hereto.
"Manage" and "Management" shall mean generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation,
recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and
other Environmental Laws (including as those terms are further defined,
construed, or otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such
Environmental Laws).
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities or condition (financial or otherwise)
of the Loan Parties, taken as a whole.
"Material Event of Default" shall mean the occurrence of an Event of
Default under subsections (a), (d) (as a result of a breach of Section 7.3),
(g), (h), and (l) of Section 8.1 hereof.
"Measurement Date" shall have the meaning assigned to such term in Section
7.3 hereof.
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"Measurement Period" shall mean the twelve month period ending on a
Measurement Date.
"Mortgage" has the meaning assigned to such term in Section 4.1(d) hereof.
"Multiemployer Plan" shall mean a multiemployer plan (within the meaning of
Section 3(37) of ERISA) that is maintained for the benefit of the employees of
the Loan Parties or any member of the Controlled Group.
"Notes" shall mean, collectively, the Term A Notes issued pursuant to
Section 2.1(a) hereof and the Term B Notes issued pursuant to Section 2.1(b)
hereof.
"Organizational Schedule" shall mean Schedule 5.1(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any other governmental agency,
department or instrumentality succeeding to the functions thereof.
"Permitted Indebtedness" shall have the meaning assigned to such term in
Section 7.2(a).
"Permitted Liens" shall have the meaning assigned to such term in Section
7.2(b).
"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"PIK Interest" shall have the meaning assigned to such term in Section 3.1.
"Plan" shall mean any employee benefit plan (within the meaning of Section
3(3) of ERISA), other than a Multiemployer Plan, established or maintained by
any of the Loan Parties or any member of the Controlled Group.
"Pledge Agreement" shall have the meaning assigned to such term in Section
4.1(c).
"Pollutant" shall include any "hazardous substance" and any "pollutant or
contaminant" as those terms are defined in CERCLA; any "hazardous waste" as that
term is defined in RCRA; and any "hazardous material" as that term is defined in
the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), as
amended (including as those terms are further defined, construed, or otherwise
used in rules, regulations, standards, guidelines and publications issued
pursuant to, or otherwise in implementation of, said Environmental Laws); any
harmful or potentially harmful environmental emission which is the subject of
any other applicable Environmental Law and including without limitation any
petroleum product or byproduct, solvent, flammable or explosive material,
radioactive material, asbestos, polychlorinated biphenyls (PCBs), dioxins,
dibenzofurans, heavy metals, and radon gas; and including any other substance or
material that is reasonably determined to present a threat, hazard or risk to
human health or the environment.
"PPSA" means the Personal Property Security Act (Ontario) and any
applicable personal property security legislation as such legislation now exists
or may from time to time hereafter be
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amended, modified, recodified, supplemented or replaced, together with all
rules, regulations and interpretations thereunder or related thereto. Reference
to sections of the PPSA shall be construed to also refer to any successor
sections.
"Prime Rate" means the rate of interest that under current practice is
listed as such under the heading "Money Rates" in the Eastern Edition of the
Wall Street Journal, and if a range of rates is listed, the highest such rate,
and should such practice change, such other indication of the prevailing prime
rate of interest as may reasonably be chosen by Required Purchasers.
"Properties and Facilities" shall have the meaning assigned to such term in
Section 5.1(q).
"Proprietary Rights" shall mean all patents, trademarks, trade names,
industrial designs, service marks, copyrights, inventions, production methods,
licenses, formulas, know-how and trade secrets, regardless of whether such are
registered with any Governmental Authorities, including applications therefor.
"Purchase Documents" shall mean this Agreement, the Notes, the Security
Documents, the Guaranty Agreements and all other agreements, instruments and
documents delivered in connection therewith as any or all of the foregoing may
be supplemented or amended from time to time.
"Purchaser" shall have the meaning assigned to such term in the preamble
hereto and Section 6.2 hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act (42 X.X.X.xx.
6901 et seq.), as amended, and all rules, regulations, standards, guidelines,
and publications issued thereunder.
"Removal," "Remedial" and "Response" actions shall include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those which might be taken by a government entity or
those which a government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.
"Reportable Event" shall mean any of the events which are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. ss.
2615.3(a) is waived.
"Required Purchasers" shall mean, at any time, Purchasers holding a pro
rata percentage of the outstanding principal amount of the Notes aggregating at
least 66-2/3% at such time.
"Revolving Credit Agreement" shall mean collectively, that certain Loan and
Security Agreement by and among the Loan Parties and the Revolving Financing
Lender and that certain Credit Agreement between Numatics Canada and LaSalle
Business Credit, a division of ABN AMRO Bank Canada dated as of the date hereof,
as such may be amended or modified from time to time.
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"Revolving Financing" shall mean a secured revolving line of credit
facility of the Company in an aggregate principal amount not to exceed
$30,000,000.
"Revolving Financing Lender" shall collectively mean LaSalle Business
Credit, Inc. and any of its Affiliates and the banks party to the Revolving
Credit Agreement.
"SEC" shall mean the Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Security Agreement" shall have the meaning assigned to such term in
Section 4.1(c) hereof.
"Security Documents" shall mean the Security Agreement, the Hypothec, the
Mortgage, the Pledge Agreement, the IP Security Agreement, the Collateral
Assignment, the Financing Statements, and all other documents, instruments and
other materials necessary to create, perfect, maintain or continue the security
interests created pursuant to the Security Agreement.
"Senior Debt" shall mean collectively, the Indebtedness under this
Agreement and the Revolving Credit Agreement.
"Senior Permitted Liens" shall have the meaning assigned to such term in
Section 7.2(b)(v).
"Shareholder Agreements" shall mean collectively, those certain shareholder
and voting rights agreements set forth on the "Shareholder Agreements Schedule"
attached hereto, as in effect on the Closing Date without giving effect to any
amendment, modification or restatement thereto.
"Stock Option Plan" shall mean collectively, that certain Incentive Plan
with respect to the issuance of options to purchase up to 200,000 shares of
capital stock of the Company, and form of stock option agreement and form of
shareholder agreement thereto adopted by the Company on May 8, 2000, a copy of
each of which is attached hereto on the "Stock Option Plan Schedule", as in
effect on the Closing Date without giving effect to any amendment, modification
or restatement thereto, and any additional stock option agreements and
shareholder agreements entered into in the future in accordance with the Stock
Option Plan and in the form set forth on Exhibit G hereto.
"Subsidiary" of any corporation shall mean any other corporation or limited
liability company of which the outstanding capital stock possessing a majority
of voting power in the election of directors (otherwise than as the result of a
default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Tangible Net Worth" shall mean the Company's shareholders' equity
(including retained earnings) on a consolidated basis less the book value of all
intangible assets and all
11
"Investments", "Other Current Assets", "Deferred Tax Assets" and "Other Assets"
all as classified on the Company's consolidated balance sheet, including, but
not limited to, transaction costs not amortized, debt issuance costs not
amortized and product drawings, as determined solely by Agent on a consistent
basis less prepaid expenses and obligations due from officers, affiliates and
employees plus the amount of any LIFO reserve plus the amount of any debt
subordinated to the Indebtedness hereunder in a manner satisfactory to Agent
(but excluding the Indebtedness evidenced by the Subordinated Redemption Note
dated January 3, 2001 in the principal amount of $1,089,996 issued by the
Company to Xxxxx X. Xxxxx and, to the extent in excess of $500,000, Indebtedness
consisting of deferred compensation owing to Xxxx X. Xxxxxx) plus deferred tax
liabilities, all as determined for the Company and its Subsidiaries on a
consolidated basis under GAAP applied on a basis consistent with the financial
statement dated September 30, 2001 except as set forth herein.
"Term A Notes" shall have the meaning assigned to such term in Section
2.1(a) hereof.
"Term B Notes" shall have the meaning assigned to such term in subsections
2.1(b) hereof.
"Total Equity" of any Person means the total shareholders' equity
(including additional paid-in capital and retained earnings, after deducting
treasury stock) which would appear as such on a balance sheet of such Person
prepared in accordance with GAAP.
"Transaction Documents" shall have the meaning assigned to such term in
Section 5.1(f) hereof.
"Transactions" shall mean the incurrence of debt, as contemplated by this
Agreement, the Notes and all other agreements contemplated hereby and thereby.
"UST" shall mean an underground storage tank, including as that term is
defined, construed and otherwise used in RCRA and in rules, regulations,
standards, guidelines and publications issued pursuant to RCRA and comparable
state and local laws.
1.2 Accounting Principles. The character or amount of any asset, liability,
capital account or reserve and of any item of income or expense to be
determined, and any consolidation or other accounting computation to be made,
and the construction of any definition containing a financial term, pursuant to
this Agreement shall be determined or made in accordance with generally accepted
accounting principles in the United States of America consistently applied
("GAAP"), unless such principles are inconsistent with the express requirements
of this Agreement.
1.3 Other Definitional Provisions; Construction. Whenever the context so
requires, neuter gender includes the masculine and feminine, the singular number
includes the plural and vice versa. The words "hereof" "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not in any particular provision of this agreement, and
references to section, article, annex, schedule, exhibit and like references are
references to this Agreement unless otherwise specified. A Default or Event of
Default shall "continue" or be "continuing" until such Default or Event of
Default has been cured or waived by Agent and Purchasers, as applicable under
this Agreement. References in this Agreement to any
12
Persons shall include such Persons, successors and permitted assigns. Other
terms contained in this Agreement (which are not otherwise specifically defined
herein) shall have meanings provided in Article 9 of the New York Uniform
Commercial Code on the date hereof to the extent the same are used or defined
therein.
1.4 Currency. Unless otherwise stated herein, all references to currency or
dollar amounts mean U.S. dollar amounts or, if applicable, with respect to
Numatics Canada the Canadian dollar equivalent, and with respect to Numatics
Germany the German Deutschmark equivalent to such U.S. dollar amount.
ARTICLE 2
ISSUE AND SALE OF NOTES
2.1 Authorization and Issuance of the Notes. (a) (i) The Company has duly
authorized the issuance and sale to Purchasers of $11,654,000 in aggregate
principal amount of Senior Secured Term A Notes Due November 27, 2006, to
be substantially in the form as Exhibit A-1, (ii) Numatics Canada has duly
authorized the issuance and sale to Purchasers of $1,000,000 in aggregate
principal amount of Senior Secured Term A Notes due November 27, 2006, to
be substantially in the form as Exhibit A-2, and (iii) Numatics Germany has
duly authorized the issuance and sale to Purchasers of $1,700,000 in
aggregate principal amount of Senior Secured Term A Notes due November 27,
2006, to be substantially in the form as Exhibit A-3 (including any Senior
Secured Term A Notes issued in substitution therefor pursuant to Sections
6.3 and 6.4 hereof, the "Term A Notes").
(b) The Company has duly authorized the issuance and sale to
Purchasers of $17,000,000 in aggregate principal amount of Senior Secured
Term B Notes Due November 27, 2006, to be substantially in the form as
Exhibit B (including any Senior Secured Term B Notes issued in substitution
therefor pursuant to Sections 6.3 and 6.4 hereof, the "Term B Notes").
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2.2 Sale and Purchase. Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein, (a) the
Company shall sell to Purchasers, and Purchasers shall purchase from the
Company, in an amount for each Purchaser as set forth on Annex A, the Term A
Notes in the aggregate principal amount set forth in Section 2.1(a) hereof for
$11,654,000 in the aggregate, (b) Numatics Canada shall sell to Purchasers, and
Purchasers shall purchase from Numatics Canada, in an amount for each Purchaser
as set forth on Annex A, Term A Notes in the aggregate principal amount set
forth in Section 2.1(a)(ii) hereof for $1,000,000 in the aggregate, (c) Numatics
Germany shall sell to Purchasers, and Purchasers shall purchase from Numatics
Germany, in an amount for each Purchaser as set forth on Annex A, Term A Notes
in the aggregate principal amount set forth in Section 2.1(a)(iii) hereof for
$1,700,000 in the aggregate, and (d) the Company shall sell to Purchasers, and
Purchasers shall purchase from the Company, in an amount for each Purchaser set
forth on Annex A, the Term B Notes in the aggregate principal amount set forth
in Section 2.1(b) hereof for $17,000,000 in the aggregate.
2.3 The Closing. Delivery of and payment for the Notes (the "Closing")
shall be made at the offices of Miller, Canfield, Paddock and Stone, P.L.C.,
Detroit, Michigan, commencing at 10:00 a.m., local time, on November 28, 2001 or
at such place or on such other date as may be mutually agreeable to the Company
and Purchasers. The date and time of the Closing as finally determined pursuant
to this Section 2.3 are referred to herein as the "Closing Date." Delivery of
the Notes shall be made to Purchasers against payment of the purchase price
therefor, less the Closing Processing Fee and any other amounts payable pursuant
to Section 4.1(i) hereof, by wire transfer of immediately available funds in the
manner agreed to by the Loan Parties and Purchasers. The Notes shall be issued
in such name or names and in such permitted denomination or denominations as set
forth in Annex A or as Purchasers may request in writing not less than two (2)
Business Days before the Closing Date.
ARTICLE 3
REPAYMENT OF THE NOTES
3.1 Interest Rates and Interest Payments. Each Borrower covenants and
agrees to make payments to Agent for the ratable benefit of Purchasers, of
accrued interest on each of their respective Notes on the first Business Day of
each month commencing on December 1, 2001. The Term A Notes will bear interest
on the outstanding principal amount thereof at a variable rate equal to the
greater of (a) the Prime Rate plus six and one-half of one percent (6.5%) per
annum and (b) twelve percent (12%) per annum. The Term B Notes will bear
interest on the outstanding principal amount thereof (x) payable in cash at a
fixed rate equal to seventeen percent (17%) per annum and (y) payable in kind at
a fixed rate equal to two percent (2%) per annum ("PIK Interest"). The Company
may elect to pay the PIK Interest in cash at any time during the repayment of
the Term B Notes. Unless paid in cash, PIK Interest shall be added to the
principal balance of the Term B Notes and shall be due and payable in full on
November 27, 2006. Interest on the Notes will be computed on the basis of a year
of 360 days, composed of twelve 30-day months, and the actual number of days
elapsed.
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3.2 Repayment of the Notes.
(a) The Company covenants and agrees to repay to Agent, for the
ratable benefit of Purchasers, the unpaid principal balance of (i) the Term
A Notes, in fifty-nine (59) equal monthly payments of $96,819.00, payable
on the last Business Day of each month, commencing on December 31, 2001 and
one (1) final payment of $5,941,679 or such other principal amount as is
then outstanding, together with all accrued and unpaid interest, fees and
other amounts due hereunder with regard thereto on November 27, 2006 and
(ii) its Term B Notes in full, together with all accrued and unpaid
interest, PIK Interest, fees and other amounts due hereunder with regard
thereto, on November 27, 2006.
(b) Numatics Canada covenants and agrees to repay to Agent, for the
ratable benefit of Purchasers, the unpaid principal balance its Term A
Notes, in fifty-nine (59) equal monthly payments of $8,308.00, payable on
the last Business Day of each month, commencing on December 31, 2001 and
one (1) final payment of $509,828 or such other principal amount as is then
outstanding, together with all accrued and unpaid interest, fees and other
amounts due hereunder with regard thereto on November 27, 2006.
(c) Numatics Germany covenants and agrees to repay to Agent, for the
ratable benefit of Purchasers, the unpaid principal balance of its Term A
Note, the unpaid principal balance its Term A Notes, in fifty-nine (59)
equal monthly payments of $14,123, payable on the last Business Day of each
month, commencing on December 31, 2001 and one (1) final payment of
$866,743 or such other principal amount as is then outstanding, together
with all accrued and unpaid interest, PIK Interest, fees and other amounts
due hereunder with regard thereto, on November 27, 2006.
3.3 Optional Prepayment of Notes. Subject to the terms of this Section 3.3,
the Borrowers may prepay to Agent, for the ratable benefit of Purchasers, the
outstanding principal amount of the Notes in whole or in part in multiples of
$100,000, or such lesser amount as is then outstanding, at any time at a price
equal to (i) the accrued interest, if any, to the date set for prepayment, plus
(ii) a prepayment fee representing the amortization of certain of Purchasers'
costs incurred in connection with the purchase of the Term B Notes equal to the
principal amount of the Term B Notes prepaid multiplied by the following
percentage:
If Prepaid During
the 12-Month Period
Ending on November 30
of the Following Years: Percentage
----------------------- ----------
2002 3%
2003 2%
2004 1%
provided, however, that no prepayment fee shall apply to any prepayment of the
outstanding principal amount of the Term B Notes in connection with any
prepayment attributable to Life Insurance proceeds or other insurance proceeds
that are payable to Agent or condemnation awards or payments that are payable to
Agent. No prepayment premium or fee shall apply to any prepayment of the Term A
Notes. All such prepayments shall be applied by Agent first to the
15
outstanding principal of the Term A Notes and second to the outstanding
principal of the Term B Notes, each in the inverse order of maturity after
application of such prepayment to any accrued interest and prepayment premium
payable in connection therewith.
3.4 Notice of Optional Prepayment. If any of the Borrowers shall elect to
prepay any Notes pursuant to Section 3.3 hereof, such Borrower shall give notice
of such prepayment to Agent and each holder of the Notes to be prepaid not less
than thirty (30) days or more than ninety (90) days prior to the date fixed for
prepayment, specifying (a) the date on which such prepayment is to be made, (b)
the principal amount of such Notes to be prepaid on such date, and (c) the
premium, if any, and accrued interest applicable to the prepayment. Such notice
shall be accompanied by a certificate of the president of such Borrower that
such prepayment is being made in compliance with Section 3.3. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with accrued interest thereon and the
premium, if any, shall become due and payable on the prepayment date set forth
in such notice.
3.5 Mandatory Prepayment.
(a) The Notes shall be prepaid in full, together with all
interest, fees and expenses plus a prepayment premium on the Term B
Notes computed in accordance with Section 3.3, as if such prepayment
were a voluntary prepayment, in the event of (i) a Change of Control or
(ii) a default under the Indenture that would entitle the holder of
such Indebtedness to accelerate the maturity of such Indebtedness or
could reasonably be expected to have a Material Adverse Effect.
(b) Within ten (10) days of the completion of the quarterly
financial statements on Form 10-Q or Form 10-K for each fiscal quarter,
the Borrowers shall prepay the respective Term A Notes, on a pro rata
basis, in a total amount equal to twenty-five percent (25.0%) of Excess
Cash Flow measured from January 1 of the then current fiscal year
through the end of the most recent fiscal quarter then ended, less the
total of all prepayments made under this Section 3.5(b) for previous
quarters of the same fiscal year (but not less than zero) which shall
be applied to the outstanding principal installments of the Term A
Notes on a pro rata basis in accordance with the respective principal
amounts outstanding at the end of the most recently ended fiscal
quarter in the inverse order of maturity. In the event that the
financial statements are not so delivered within fifty-five (55) days
of the fiscal quarter end for the first three (3) quarters of any
applicable fiscal year or within one hundred (100) days of year end,
then a calculation based upon estimated amounts shall be made by Agent
upon which calculation the Company shall make the prepayment required
by this Section 3.5(b) within ten (10) days of receipt of such
calculation, subject to adjustment when such financial statements are
delivered to Agent as required hereby. The calculation made by Agent
shall not be deemed a waiver of any rights Agent or Purchasers may have
as a result of the failure by the Loan Parties to deliver such
financial statements.
3.6 Home Office Payment. The Borrowers will pay all sums becoming due on
such Notes for principal, premium, if any, and interest to Agent by the method
and at the address specified for such purpose in Annex A, or by such other
method or at such other address as Purchasers shall have from time to time
specified to the Borrowers in writing for such purpose, without the presentation
or surrender of such Notes or the making of any notation thereon, except that
upon written request of the Borrowers made concurrently with or reasonably
promptly after
16
payment or prepayment in full of any Note, each holder of a Note shall surrender
such Note for cancellation, reasonably promptly after such request, to the
Company at its principal executive office.
3.7 Taxes. Any and all payments by the Loan Parties hereunder or under the
Notes or other Purchase Documents that are made to or for the benefit of
Purchasers shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings
and penalties, interests and all other liabilities with respect thereto
(collectively, "Taxes"), excluding taxes imposed on Agent's or Purchasers' net
income, value added taxes, business occupation taxes, or other taxes on the
privilege of doing business in a given jurisdiction, or capital and franchise
taxes imposed on any of them by the jurisdiction under the laws of which any of
them is organized or any political subdivision thereof (all such nonexcluded
Taxes being hereinafter referred to as "Covered Taxes"). If any of the Loan
Parties shall be required by law to deduct any Covered Taxes from or in respect
of any sum payable hereunder or under any Notes or other Purchase Documents to
Agent for the benefit of Purchasers, or to Purchasers, the sum payable shall be
increased as may be necessary so that after making all required deductions of
Covered Taxes (including deductions of Covered Taxes applicable to additional
sums payable under this paragraph), each Purchaser receives an amount equal to
the sum it would have received had no such deductions been made. The Loan
Parties shall make such deductions and the Loan Parties shall pay the full
amount so deducted to the relevant taxation authority or other authority in
accordance with applicable law. In addition, the Loan Parties agree to pay any
present or future stamp, documentary, excise, privilege, intangible or similar
levies that arise at any time or from time to time from any payment made under
any and all Purchase Documents or from the execution or delivery by the Loan
Parties or from the filing or recording or maintenance of, or otherwise with
respect to the exercise by Agent or Purchasers of their respective rights under
any and all Purchase Documents (collectively, "Other Taxes"). The Loan Parties
will indemnify Agent and Purchasers for the full amount of Covered Taxes imposed
on or with respect to amounts payable hereunder and Other Taxes, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Payment of this indemnification shall be made within thirty
(30) days from the date Agent or Purchasers provide the Loan Parties with a
certificate certifying and setting forth in reasonable detail the calculation
thereof as to the amount and type of such Taxes. Any such certificates submitted
by Agent or Purchasers in good faith to the Loan Parties shall, absent manifest
error, be final, conclusive and binding on all parties. The obligation of the
Loan Parties under this Section 3.7 shall survive the payment of the Notes and
the termination of this Agreement. Within thirty (30) days after the Loan
Parties having received a receipt for payment of Covered Taxes and/or Other
Taxes, the Loan Parties shall furnish to Agent, the original or certified copy
of a receipt evidencing payment thereof.
3.8 Maximum Lawful Rate. This Agreement, the Notes and the other Purchase
Documents are hereby limited by this Section 3.8. In no event, whether by reason
of acceleration of the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed to be paid
to Purchasers exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever, interest and fees would otherwise be payable
to Agent or Purchasers in excess of the maximum amount permissible under
applicable law, the interest and fees shall be reduced to the maximum amount
permitted under applicable law. If from any circumstance, Agent or Purchasers
shall have received anything of
17
value deemed interest by applicable law in excess of the maximum lawful amount,
an amount equal to any excess of interest shall be applied to the reduction of
the principal amount of the Notes, in such manner as may be determined by
Purchasers, and not to the payment of fees or interest, or if such excessive
interest exceeds the unpaid balance of the principal amount of the Notes, such
excess shall be refunded to the Loan Parties. To the extent that any payment or
demand under any Purchase Document is determined to be contrary to the Criminal
Code (Canada) or other applicable law, such payment or demand shall be deemed to
have been made by mutual mistake of the Loan Parties, Agent and Purchasers. The
Loan Parties shall not have any action against the Agent or the Purchaser for
any damages whatsoever arising out of the payment or collection of any amounts
in excess of the amounts permitted by the Criminal Code (Canada) or other
applicable law.
3.9 Capital Adequacy. If, after the date hereof, either the introduction of
or any change of the interpretation of any law or the compliance by Purchasers
with any guideline or request from any governmental authority (whether or not
having the force of law) has or would have the effect of reducing the rate of
return on the capital or assets of Purchasers as a consequence of, as determined
by Agent or Purchasers in their sole discretion, the existence of any
Purchaser's obligations under this Agreement or any other Purchase Documents,
then, upon demand by Purchasers, the Loan Parties immediately shall pay to
Purchasers, from the time as specified by Purchasers, additional amounts
sufficient to compensate Purchaser in light of such circumstances. The
obligations of the Loan Parties under this Section 3.9 shall survive the
payments of the Notes and the termination of this Agreement.
3.10 Certain Waivers. The Loan Parties unconditionally waive (a) any rights
to presentment, demand, protest or (except as expressly required hereby) notice
of any kind, and (b) any rights of rescission, setoff, counterclaim or defense
to payment under the Notes or otherwise that the Loan Parties may have or claim
against any Purchaser, the Agent or any prior Purchaser or Agent.
ARTICLE 4
CONDITIONS
4.1 Conditions to Purchase of Notes. The obligation of Purchasers to
purchase and pay for the Notes is subject to the satisfaction, prior to or at
the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties contained in Article 5 hereof shall be true and correct in all
material respects at and as of the Closing Date as though then made, except
to the extent of changes caused by the transactions expressly contemplated
herein. The representations and warranties of the Loan Parties contained in
the Revolving Credit Agreement shall be true and correct in all material
respects at and as of the Closing Date.
(b) Material Adverse Change. There will have been no material adverse
change in the business or financial condition of the Loan Parties since
September 30, 2001 or the capital markets since October 16, 2001.
18
(c) Security Agreements. The Loan Parties and Agent, for the benefit
of Purchasers, shall have entered into (i) a security agreement or security
agreements (and with respect to Numatics Canada, the Hypothec), in form and
substance as set forth in Exhibit C attached hereto (as the same may be
amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Security Agreement"), (ii) an intellectual property
security agreement in form and substance as set forth in Exhibit D attached
hereto (as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof, the "IP Security Agreement"),
and (iii) a stock pledge agreement dated as of the Closing Date by Company
naming Agent pledgee for the benefit of Purchasers, with respect to the
capital stock of each direct and indirect Subsidiary of the Company (as the
same may be amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pledge Agreement"). The Loan
Parties shall have executed and delivered to Agent, for the benefit of
Purchasers, such financing statements and other instruments (collectively,
"Financing Statements") as Agent shall require in order to perfect and
maintain the continued perfection of the security interest created by the
Security Agreement. Agent shall have received reports of filings with
appropriate government agencies showing that there are no Liens on the
assets of the Loan Parties other than Permitted Liens.
(d) Mortgage and Title Insurance. The Loan Parties shall have executed
and delivered to Agent mortgages (including assignment of rents and
benefits) in form and substance as set forth in Exhibit E attached hereto
encumbering each of the parcels of real property owned by the Loan Parties
(as the same may be amended, modified or supplemented and in effect from
time to time in accordance with the terms thereof, the "Mortgages"). The
Loan Parties shall also have delivered to Agent (i) a survey of each parcel
of real estate owned or leased by the Loan Parties, together with
appropriate certifications as may be requested by Agent and (ii) a marked
up title insurance commitment issued by a title insurance company
acceptable to Agent with such endorsements as Agent may request, insuring
the Lien of the Mortgage and showing only those items shown on the
"Permitted Liens Schedule" contemplated by Section 7.2(b)(iv) as exceptions
to title.
(e) Environmental Reports. Agent shall have received reports covering
the Loan Parties' properties in form and substance satisfactory to Agent
regarding the Loan Parties' compliance with Environmental Laws.
(f) Landlord Waivers. The Loan Parties shall have delivered to Agent a
landlord waiver for each leased property, in form and substance
satisfactory to Purchaser.
(g) Intercreditor Agreement. Agent, the Loan Parties and the Revolving
Financing Lender shall have executed the Intercreditor Agreement on terms
reasonably satisfactory to Agent and Purchasers.
(h) Xxxxxx Subordination Agreement. Xxxx X. Xxxxxx and Agent shall
have executed a subordination agreement in form and substance satisfactory
to Agent subordinating payment of the deferred compensation owed to Xxxx X.
Xxxxxx by the
19
Company, pursuant to that certain Deferred Compensation Plan, adopted
December 28, 1995 between Xxxx X. Xxxxxx and the Company, to payment of the
Notes.
(i) Reserved.
(j) Life Insurance. The Loan Parties shall have delivered to Agent a
paid life insurance policy issued by a carrier reasonably acceptable to
Agent insuring the life of Xxxx Xxxxxx in the minimum amount of
$10,000,000, and naming Agent as the beneficiary (the "Life Insurance") the
proceeds of which shall be applied to the repayment of the Notes.
(k) Closing Documents. The Loan Parties will have delivered or caused
to be delivered to Agent all of the following documents in form and
substance satisfactory to Agent:
(i) the Notes (as designated by Agent and Purchasers pursuant to
Section 2.1 and Annex A hereof) in aggregate original principal
amounts as set forth herein, duly completed and executed by the
parties thereto;
(ii) certificates of good standing dated not more than 30 days
prior to the Closing Date for each of the Loan Parties issued by their
respective jurisdictions of organization and each jurisdiction where
they are qualified to operate as a foreign corporation, or its
equivalent;
(iii) a copy of the Charter Documents of each of the Loan
Parties, certified by the appropriate governmental official of the
jurisdiction of its organization as of a date not more than 30 days
prior to the Closing Date;
(iv) a copy of the By-laws of each of the Loan Parties, certified
as of the Closing Date by the secretary, assistant secretary, manager
or general partner, as applicable, of each respective Loan Party;
(v) a certificate of the secretary, assistant secretary, manager
or general partner of each of the Loan Parties, certifying as to the
names and true signatures of the officers or other authorized person
of the respective Loan Party authorized to sign this Agreement and the
other documents to be delivered by the respective Loan Party
hereunder;
(vi) copies of the resolutions duly adopted by each of the Loan
Party's board of directors, general partners, board of managers or
other governing body, authorizing the execution, delivery and
performance by the respective Loan Party of this Agreement and each of
the other agreements, instruments and documents contemplated hereby to
which the respective Loan Party is a party, and the consummation of
all of the other Transactions, certified as of the Closing Date by the
secretary, assistant secretary, manager or general partner of the
respective Loan Party;
20
(vii) a certificate dated as of the Closing Date from an officer,
general partner or manager of each of the Loan Parties stating that
the conditions specified in this Section 4.1 have been fully
satisfied;
(viii) certificates of insurance evidencing the existence of all
insurance required to be maintained by the Loan Parties pursuant to
Section 7.1(c), and Agent shall be satisfied with the type and extent
of such coverage;
(ix) an opinion of Miller, Canfield, Paddock and Stone, P.L.C.,
and each other counsel to the Loan Parties, in form and substance
satisfactory to Agent;
(x) copies of all material leases to which any of the Loan
Parties is a party;
(xi) copies of the Revolving Credit Agreement and the Security
Documents, with all exhibits and schedules thereto and all collateral
or related agreements, instruments or documents entered into or
delivered in connection therewith, each as in effect at the Closing;
(xii) a Guaranty or Guaranties, in form and substance acceptable
to the Purchasers, executed by (A) each Subsidiary Guarantor with
respect to the obligations of the Company hereunder and (B) each
Subsidiary Guarantor and the Company with respect to the obligations
of Numatics Germany and Numatics Canada hereunder (collectively, the
"Subsidiary Guaranty Agreements");
(xiii) such other documents relating to the Transactions
contemplated by this Agreement as Agent or its special counsel may
reasonably request.
(l) Purchaser's Fees and Expenses.
(i) Closing Processing Fee: On the Closing Date, the Company
shall pay the Closing Processing Fee to ACFS (and the Company hereby
authorizes Agent to deduct from the aggregate proceeds from the sales
of the Notes by the Company, the unpaid amount of such Closing
Processing Fee); and
(ii) Other Fees and Expenses. On the Closing Date, the Company
shall have paid the fees and expenses of Agent and Purchasers, payable
by the Company pursuant to Section 11.4 hereof (and the Company hereby
authorizes Agent to deduct from the aggregate proceeds of the sale of
the Notes by the Company, all such amounts);
(iii) Disbursement Request. Agent shall have received a
disbursement request executed by the Company which sets forth the
amounts to be paid as of the Closing Date pursuant to clause (k)(ii)
above and the net purchase price of the Notes after deducting the
amounts specified in clauses (k)(i) and (k)(ii) above.
21
(m) Legal Investment. On the Closing Date, Purchasers' purchases of
the Notes shall not be prohibited by any applicable law, rule or regulation
of any Governmental Authority (including, without limitation, Regulations
T, U or X of the Board of Governors of the Federal Reserve System) as a
result of the promulgation or enactment thereof or any changes therein, or
change in the interpretation thereof by any Governmental Authority,
subsequent to the date of this Agreement.
(n) Proceedings. All proceedings taken or required to be taken in
connection with the transactions contemplated hereby to be consummated at
or prior to the Closing and all documents incident thereto will be
satisfactory in form and substance to Agent and its special counsel and to
Purchaser and its special counsel.
(o) Background Investigations. Agent shall be satisfied with the
results of background investigations of Key Management.
(p) Total Equity. Total Equity of the Company and its Subsidiaries as
of the Closing Date shall be no less than ($77,000,000).
(q) Consummation of Revolving Financing. The Revolving Financing shall
have been consummated by the execution and delivery of definitive
agreements, instruments and documents related thereto, in form and
substance satisfactory to Agent in its sole but reasonable discretion.
(r) Revolving Financing Advances. The Revolving Financing Lenders
shall have advanced at least $10,000,000 under the Revolving Financing.
(s) Working Capital. The Company and its Subsidiaries shall have
available working capital in an amount no less than $42,000,000 on the
Closing Date after giving effect to the payment of (i) prior Indebtedness,
(ii) all fees payable to Purchasers under the terms of this Agreement and
(iii) all costs and expenses arising as a result of the Transactions
contemplated by this Agreement, the Revolving Credit Agreement and any
other Transaction Document to which the Loan Parties are party, and each
Purchaser shall have received satisfactory evidence thereof.
(t) Lien Searches. Agent shall have received reports of filings with
appropriate government agencies showing that there are no Liens on the
assets of the Loan Parties other than Permitted Liens.
(u) Amendment to Bylaws. On or before the Closing Date, the Loan
Parties shall have amended each of their respective Bylaws to provide that
(i) a Loan Party would not be put into bankruptcy without the consent of
the Agent and (ii) a Loan Party would not take any action or fail to take
any action, the result of which would cause a default under the Indenture,
without consent of the Agent.
(v) Xxxxxx Side Letter. Xxxx X. Xxxxxx shall have entered into a side
letter for the benefit of the Purchasers and binding on all future owners
of the capital stock of the Company held by Xxxx X. Xxxxxx as of the
Closing Date with respect to Sections 4.1(h), 7.1(i) and 7.2(t) herein.
22
(w) Waiver. Any condition specified in this Section 4.1 may be waived
by Agent; provided that no such waiver will be effective against Agent
unless it is set forth in a writing executed by Agent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1 Representations and Warranties of Loan Parties. As a material
inducement to Agent and Purchasers to enter into this Agreement and purchase the
Notes, the Loan Parties, jointly and severally, hereby represent and warrant to
Agent and Purchasers as follows:
(a) Organization and Power. Each of the Loan Parties is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Loan Parties has all requisite
corporate or other organizational power and authority and all material
licenses, permits, approvals and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the Transactions, and
is qualified to do business in the jurisdictions listed on the
"Organizational Schedule" attached hereto as Schedule 5.1(a), which
includes every jurisdiction where the failure to so qualify might
reasonably be expected to have a Material Adverse Effect. Each of the Loan
Parties has its principal place of business as set forth on the
"Organizational Schedule". The copies of the Charter Documents and By-Laws
of the Loan Parties that have been furnished to Agent reflect all
amendments made thereto at any time prior to the date of this Agreement and
are correct and complete.
(b) Principal Business. The Loan Parties are primarily engaged in the
business of manufacturing and marketing pneumatic xxxxx, actuators and
related specialty products (the "Business").
(c) Financial Statements and Financial Projections.
(i) Financial Statements. Historical Statements. The Company and
its Subsidiaries have delivered to Agent (A) copies of their audited
consolidated year-end financial statements for and as of the end of
the fiscal years ended December 31, 2000 (the "Annual Statements"),
(B) copies of their unaudited financial statements for the period
beginning January 1, 2001 and ending September 30, 2001 (the
"Unaudited Statements"), and (C) copies of their financial statements
for the period beginning January 1, 2000 and ending September 30, 2000
(the "Comparable Statements"). The Annual Statements, the Unaudited
Statements and the Comparable Statements were compiled from the books
and records maintained by the Loan Parties' management, are correct
and fairly represent the consolidated financial condition of the
Company and its Subsidiaries as of their dates and the results of
operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied.
23
(ii) Financial Projections. The Company and its Subsidiaries have
delivered to Agent financial projections of the Company and its
Subsidiaries for the period October 1, 2001 through December 31, 2004
derived from various assumptions of the Company's and its
Subsidiaries' management (the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results in light
of the history of the Business and the Company and its Subsidiaries,
present and foreseeable conditions and the intentions of the Company's
and its Subsidiaries' management. The Financial Projections accurately
reflect the liabilities of the Company and its Subsidiaries upon
consummation of the transactions contemplated hereby as of the Closing
Date.
(iii) Accuracy of Financial Statements. The Company and its
Subsidiaries do not have any liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the
Unaudited Statements, Annual Statements or in the notes thereto, and
except as disclosed therein there are no unrealized or anticipated
losses from any commitments of the Company and its Subsidiaries which
may cause a Material Adverse Effect.
(d) Capitalization and Related Matters. As of the Closing Date and
immediately thereafter, the authorized capital stock and the number and
ownership of all outstanding capital stock of the Company and each of its
Subsidiaries is as set forth on the Organizational Schedule. As of the
Closing Date, none of the Loan Parties will have outstanding any capital
stock or securities convertible or exchangeable for any shares of its
capital stock and none will have outstanding any rights or options to
subscribe for or to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock except pursuant to
the Stock Option Plan. As of the Closing Date, none of the Loan Parties
will be subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock, except as
set forth herein and in the Charter Documents, the Shareholder Agreements,
and the Stock Option Plan, respectively, as in effect on the date hereof.
As of the Closing, all of the outstanding shares of each Loan Party's
capital stock will be validly issued, fully paid and nonassessable. None of
the Loan Parties has violated any applicable federal, provincial or state
securities laws (including the Securities Act (Ontario)) in connection with
the offer, sale or issuance of any of its capital stock, and the offer,
sale and issuance of the Notes hereunder do not require registration under
the Securities Act or any applicable state or foreign securities laws.
There are no agreements other than the Shareholder Agreements among
Company's stockholders with respect to the voting or transfer of Company's
capital stock other than as contemplated herein.
(e) Subsidiaries. The Loan Parties do not own, or hold any rights to
acquire, any shares of stock or any other security or interest in any other
Person, and the Loan Parties have no Subsidiaries, except in each case as
set forth on the Organizational Schedule.
(f) Authorization; No Breach. The execution, delivery and performance
of this Agreement, the other Purchase Documents and all other agreements
contemplated hereby and thereby to which each of the Loan Parties is a
party (collectively, the
24
"Transaction Documents"), and the consummation of the Transactions have
been duly authorized by each of the Loan Parties. The execution and
delivery by each of the Loan Parties of the Transaction Documents and the
consummation of the Transactions do not and will not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) except as created pursuant to the
Security Documents, result in the creation of any Lien upon any of the Loan
Parties' capital stock or assets pursuant to, (iv) give any third party the
right to accelerate any obligation under, (v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or other
action by or notice to any Governmental Authority pursuant to, the Charter
Documents of any of the Loan Parties, or any law, statute, rule or
regulation to which any of the Loan Parties is subject, or, any agreement,
instrument, order, judgment or decree to which any of the Loan Parties is a
party or to which they or their assets are subject.
(g) Governmental Approvals. Except as specifically provided by the
Transaction Documents, no registration with or consent or approval of, or
other action by, any Governmental Authority is or will be required in
connection with the consummation of the Transactions by the Loan Parties.
(h) Enforceability. This Agreement constitutes, and each of the other
Transaction Documents when duly executed and delivered by each of the Loan
Parties who are parties thereto will constitute, legal, valid and binding
obligations of each of the Loan Parties enforceable in accordance with
their respective terms.
(i) No Material Adverse Change. Since October 16, 2001, there has been
no event or occurrence that is likely to have a Material Adverse Effect.
(j) Litigation. Except as described in the "Litigation Schedule"
attached hereto as Schedule 5.1(j) there are no actions, suits or
proceedings at law or in equity or by or before any arbitrator or any
Governmental Authority now pending or, to the best knowledge of the Loan
Parties' management after due inquiry, threatened against or filed by or
affecting any of the Loan Parties or any of their directors or officers or
the businesses, assets or rights of any of the Loan Parties. The Loan
Parties and their directors or officers shall promptly provide Agent with a
copy of all pleadings of all lawsuits filed against others and, in the case
of other actions, a letter stating the nature of such suits and a copy of
all pleadings.
(k) Compliance with Laws. The Loan Parties are not in violation in any
material respect of any applicable Law. The Loan Parties are not in default
with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any Governmental Authority. The Loan Parties are not in, and
the consummation of the Transactions will not cause any, default concerning
any judgment, order, writ, injunction or decree of any Governmental
Authority, and there is no investigation, enforcement action or regulatory
action pending or threatened against or affecting any of the Loan Parties
by any Governmental Authority, except as set forth on the Litigation
Schedule. Except as set forth in the Litigation Schedule, there is no
remedial or other corrective action that any of the Loan Parties is
required to take to remain in compliance with any judgment, order, writ,
injunction or decree of any Governmental Authority or to maintain any
material
25
permits, approvals or licenses granted by any Governmental Authority in
full force and effect. During the past ten (10) years, none of the
officers, directors or management of any of the Loan Parties have been
arrested or convicted of any material crime nor have any of them been
bankrupt or an officer or director of a bankrupt company.
(l) Environmental Protection. Except as specified in "Environmental
Schedule" attached hereto as Schedule 5.1(l), and except where failure to
comply would not result in losses in the excess of $100,000 in the
aggregate, and after giving effect to the Transactions: (a) the business of
the Loan Parties, the methods and means employed by the Loan Parties in the
operation thereof (including all operations and conditions at or in the
properties of the Loan Parties), and the assets owned, leased, managed,
used, controlled, held or operated by the Loan Parties, comply in all
material respects with all applicable Environmental Laws; (b) with respect
to the Properties and Facilities, the Loan Parties have obtained, possess,
and are in full compliance with all permits, licenses, reviews,
certifications, approvals, registrations, consents, and any other
authorizations required under any Environmental Laws; (c) the Loan Parties
have not received (i) any claim or notice of violation, lien, complaint,
suit, order, investigation notice or other claim or notice to the effect
that the Loan Parties are or may be liable to any Person as a result of (A)
the environmental condition of any of their Properties or any other
property, or (B) the release or threatened release of any Pollutant, or
(ii) any letter or request for information under Section 104 of the CERCLA,
or comparable applicable state or foreign laws, and to the best of the any
of Loan Parties' knowledge, none of the operations of the Loan Parties is
the subject of any investigation by a Governmental Authority evaluating
whether any remedial action is needed to respond to a release or threatened
release of any Pollutant at the Properties and Facilities or at any other
location, including any location to which the Loan Parties have
transported, or arranged for the transportation of, any Pollutants with
respect to the Properties and Facilities; (d) neither the Loan Parties nor
any prior owner or operator has incurred in the past, or is now subject to,
any Environmental Liabilities; and (e) there are no Liens, covenants, deed
restrictions, notice or registration requirements, or other limitations
applicable to the Properties and Facilities, based upon any Environmental
Laws or other legal obligations; (f) there are no USTs located in, at, on,
or under the Properties and Facilities other than the USTs identified in
the Environmental Schedule as USTs; and each of those USTs is in full
compliance with all Environmental Laws and other legal obligations; and (g)
there are no PCBs, lead paint, asbestos (of any type or form), or
materials, articles or products containing PCBs, lead paint or asbestos,
located in, at, on, under, a part of, or otherwise related to the
Properties and Facilities (including, without limitation, any building,
structure, or other improvement that is a part of the Properties and
Facilities), and all of the PCBs, lead paint, asbestos, and materials,
articles and products containing PCBs, lead paint or asbestos identified in
the Environmental Schedule are in full compliance with all Environmental
Laws and other legal obligations.
(m) Legal Investments; Use of Proceeds. The Loan Parties will use the
proceeds from the sale of the Notes to repay the Existing Senior Debt. The
Loan Parties are not engaged in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" or "margin security"
(within the meaning of Regulations T, U or X issued by the Board of
Governors of the Federal Reserve System), and no proceeds of the sale of
the Notes will be used to purchase or carry any margin stock or margin
26
security or to extend credit to others for the purpose of purchasing or
carrying any margin stock or margin security.
(n) Taxes. Each of the Loan Parties has filed or caused to be filed
all federal, provincial, state, municipal and local tax returns that are
required to be filed by it, and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received
by it, including payroll taxes.
(o) Labor and Employment. The Loan Parties are and each of their Plans
are in compliance in all material respects with those provisions of ERISA,
the Code, the Age Discrimination in Employment Act, and the regulations and
published interpretations thereunder which are applicable to the Loan
Parties or any such Plan. As of the date hereof, no Reportable Event has
occurred with respect to any Plan as to which any of the Loan Parties are
or were required to file a report with the PBGC. No Plan has any material
amount of unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) or any accumulated funding deficiency (within the
meaning of Section 302(a)(2) of ERISA), whether or not waived, and neither
the Loan Parties nor any member of the Controlled Group has incurred or
expects to incur any material withdrawal liability under Subtitle E of
Title IV of ERISA to a Multiemployer Plan. The Loan Parties are in
compliance in all material respects with all labor and employment laws,
rules, regulations and requirements of all applicable domestic and foreign
jurisdictions. There are no pending or threatened labor disputes, work
stoppages or strikes. As to any Canadian Pension Plans of any Loan Party:
(i) the Canadian Pension Plans are duly registered under all applicable
provincial pension benefits legislation; (ii) all obligations of any Loan
Party (including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the Canadian
Pension Plans or the funding agreements therefor have been performed in a
timely fashion. There are no outstanding disputes concerning the assets
held pursuant to any such funding agreement; (iii) all contributions or
premiums required to be made by any Loan Party to the Canadian Pension
Plans have been made in a timely fashion in accordance with the terms of
the Canadian Pension Plans and applicable laws and regulations; (iv) all
employee contributions to the Canadian Pension Plans required to be made by
way of authorized payroll deduction have been properly withheld by any Loan
Party and fully paid into the Canadian Pension Plans in a timely fashion;
(v) all reports and disclosures relating to the Canadian Pension Plans
required by any applicable laws or regulations have been filed or
distributed in a timely fashion; (vi) there have been no improper
withdrawals, or applications of, the assets of any of the Canadian Pension
Plans; (vii) no amount is owing by any of the Canadian Pension Plans under
the Income Tax Act (Canada) or any provincial taxation statute; (viii) the
Canadian Pension Plans are fully funded both on an ongoing basis and on a
solvency basis (using actuarial assumptions and methods which are
consistent with the valuations last filed with the applicable governmental
authorities and which are consistent with generally accepted actuarial
principles); and (ix) the applicable Loan Party, after diligent inquiry,
has neither any knowledge, nor any grounds for believing, that any of the
Canadian Pension Plans is the subject of an investigation, any other
proceeding, an action or a claim. There exists no state of facts which
after notice or lapse of time or both could reasonably be expected to give
rise to any such proceeding, action or claim.
27
(p) Investment Company Act; Public Utility Holding Company Act. None
of the Loan Parties is (a) an "investment company" or "controlled" by an
investment company within the meaning of the Investment Company Act of
1940, as amended, or (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(q) Properties; Security Interests. The Loan Parties have good and
marketable title to, or valid leasehold interests in, all of the material
assets and properties used or useful by the Loan Parties in the Business
(collectively, the "Properties and Facilities"), subject to no Liens except
for Permitted Liens. All of the Properties and Facilities are in good
repair, working order and condition and all such assets and properties are
owned or leased by the Loan Parties free and clear of all Liens except for
Permitted Liens. The Properties and Facilities constitute all of the
material assets, properties and rights of any type used in or necessary for
the conduct of the Business. The Security Agreements create and grant to
Agent a valid and perfected first priority security interest in all the
collateral thereunder, subject only to Senior Permitted Liens. All real
estate owned or leased by any of the Loan Parties is listed on the
"Properties Schedule," attached hereto as Schedule 5.1(q).
(r) Intellectual Property; Licenses. Each of the Loan Parties
possesses all Proprietary Rights necessary to conduct the Business as
heretofore conducted or as proposed to be conducted by it. All Proprietary
Rights registered in the name of any of the Loan Parties and applications
therefor filed by any of the Loan Parties are listed on the "Intellectual
Property Schedule," attached hereto as Schedule 5.1(r). No event has
occurred that permits, or after notice or lapse of time or both would
permit, the revocation or termination of any of the foregoing, which taken
in isolation or when considered with all other such revocations or
terminations could have a Material Adverse Effect. None of the Loan Parties
has notice or knowledge of any facts or any past, present or threatened
occurrence that could preclude or impair the Loan Parties' ability to
retain or obtain any authorization necessary for the operation of the
Business.
(s) Solvency. After giving effect to the Transactions, (i) the fair
value of the assets of the Loan Parties, at a fair valuation, will exceed
their debts and liabilities, subordinated, contingent or otherwise, (ii)
the present fair saleable value of the property of the Loan Parties will be
greater than the amount that will be required to pay the probable liability
of their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured,
(iii) the Loan Parties will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, and (iv) the Loan Parties will not have unreasonably
small capital with which to conduct the business in which they are engaged
as such business is now conducted and is proposed to be conducted following
the Closing Date.
(t) Complete Disclosure. All factual information furnished by or on
behalf of the Loan Parties to Agent for purposes of or in connection with
this Agreement or the Transactions is, and all other such factual
information hereafter furnished by or on behalf
28
of the Loan Parties will be, true and accurate in all material respects on
the date as of which such information is furnished and not incomplete by
omitting to state any fact necessary to make such information not
misleading at such time in light of the circumstances under which such
information was provided.
(u) Side Agreements. Neither the Loan Parties nor any Affiliate of the
Loan Parties nor any director, officer or employee of the Loan Parties or
any of their Affiliates, respectively, has entered into, as of the date
hereof, any side agreement, either oral or written, with any individual or
business, pursuant to which the director, officer, employee, Loan Parties
or Affiliate agreed to do anything beyond the requirements of the formal,
written contracts executed by the Loan Parties and disclosed to Purchasers
and Agent herein other than in the ordinary course of business.
(v) Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged
by the Loan Parties or any of its officers, directors or agents with
respect to the issue of the Notes or the transactions contemplated by this
Agreement, including without limitation the Transactions, except for fees
payable to Xxxxxxxx Capital Advisors and to ACFS, Purchasers and Agent. The
Loan Parties agree to indemnify Agent and Purchasers and hold them harmless
from against any claim, demand or liability for broker's or finder's or
placement fees or similar commissions, whether or not payable by the Loan
Parties, alleged to have been incurred in connection with such
transactions, other than any broker's or finder's fees payable to Persons
engaged by Agent or Purchasers without the prior written consent of the
Loan Parties. Notwithstanding anything to the contrary in this Section
5.1(v), the Purchasers acknowledge fees payable at the Closing to the
Revolving Financing Lender pursuant to the terms of the Revolving Credit
Agreement.
5.2 Absolute Reliance on the Representations and Warranties. All
representations and warranties contained in this Agreement and any financial
statements, instruments, certificates, schedules or other documents delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
regardless of any investigation made by Agent or Purchasers or on Agent's or
Purchasers' behalf.
ARTICLE 6
TRANSFER OF NOTES
6.1 Restricted Notes. Purchasers acknowledge that the Notes have not been
registered under the Securities Act or the securities laws of any other
applicable jurisdiction and may be resold only if registered pursuant to the
provisions of the Securities Act or the securities laws of any other applicable
jurisdiction or if an exemption from registration is available, and that the
Company is not required to register the Notes.
6.2 Legends; Purchaser's Representations. Each of Purchasers hereby
represents and warrants to the Company that it is an "accredited investor"
within the meaning of Rule 501(a)
29
under the Securities Act and is acquiring the Notes for investment for its own
account, with no present intention of dividing its participation with others
(except for a potential transfer or transfers of the Notes to an affiliate or
affiliates of Purchasers) or reselling or otherwise distributing the same in
violation of the Securities Act or any applicable domestic or foreign securities
laws. The Borrowers may place an appropriate legend on the Notes owned by
Purchasers concerning the restrictions set forth in this Article 6. Upon the
assignment or transfer by Purchasers or any of its successors or assignees of
all or any part of the Notes, the term "Purchaser" as used herein shall
thereafter mean, to the extent thereof, the then holder or holders of such
Notes, or portion thereof.
6.3 Transfer of Notes. Subject to Section 6.2 hereof, a holder of a Note
may transfer such Note to a new holder or may exchange such Note for Notes of
different denominations (but in no event of denominations of less than $100,000
in original principal amount), by surrendering such Note to the applicable
Borrower duly endorsed for transfer or accompanied by a duly executed instrument
of transfer naming the new holder (or the current holder if submitted for
exchange only), together with written instructions for the issuance of one or
more new Notes specifying the respective principal amounts of each new Note and
the name of each new holder and each address therefor. Such Borrower shall
simultaneously deliver to such holder or its designee such new Notes, shall xxxx
the surrendered Notes as canceled and shall provide notice of such transfer to
Agent. In lieu of the foregoing procedures, a holder may assign a Note (in whole
but not in part) to a new holder by sending written notice to the applicable
Borrower and Agent of such assignment specifying the new holder's name and
address; in such case, the Company shall promptly acknowledge such assignment in
writing to both the old and new holder. No Borrower shall be required to
recognize any subsequent holder of a Note unless and until such Borrower has
received reasonable assurance that all applicable transfer taxes have been paid.
6.4 Replacement of Lost Notes. Upon receipt of evidence reasonably
satisfactory to the applicable Borrower of the mutilation, destruction, loss or
theft of any Notes and the ownership thereof, such Borrower shall, upon the
written request of the holder of such Notes, execute and deliver in replacement
thereof new Notes in the same form, in the same original principal amount and
dated the same date as the Notes so mutilated, destroyed, lost or stolen; and
such Notes so mutilated, destroyed, lost or stolen shall then be deemed no
longer outstanding hereunder. If the Notes being replaced have been mutilated,
they shall be surrendered to the applicable Borrower; and if such replaced Notes
have been destroyed, lost or stolen, such holder shall furnish such Borrower
with an indemnity in writing to save it harmless in respect of such replaced
Note.
6.5 No Other Representations Affected. Nothing contained in this Article 6
shall limit the full force or effect of any representation, agreement or
warranty made herein or in connection herewith to Purchaser.
30
ARTICLE 7
COVENANTS
7.1 Affirmative Covenants. The Loan Parties, jointly and severally,
covenant that, so long as all or any of the principal amount of the Notes or any
interest thereon shall remain outstanding, the Loan Parties shall:
(a) Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence.
(b) Businesses and Properties; Compliance with Laws. At all times (i)
do or cause to be done all things necessary to preserve, renew and keep in
full force and effect the rights, licenses, registrations, permits,
certifications, approvals, consents, franchises, patents, copyrights,
trademarks, industrial designs and trade names, and any other trade names
which may be material to the conduct of their businesses; (ii) comply in
all material respects with all laws and regulations applicable to the
operation of such business, including but not limited to, all Environmental
Laws, whether now in effect or hereafter enacted and with all other
applicable laws and regulations, (iii) take all action which may be
required to obtain, preserve, renew and extend all rights, patents,
copyrights, trademarks, industrial designs, tradenames, franchises,
registrations, certifications, approvals, consents, licenses, permits and
any other authorizations which may be material to the operation of such
business, (iv) maintain, preserve and protect all property material to the
conduct of such business, and (v) except for obsolete or worn out
equipment, keep their property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may
be properly conducted at all times.
(c) Insurance. Maintain insurance required by the Purchase Documents,
including but not limited to: (i) the Life Insurance until the Notes have
been repaid in full; (ii) coverage on their insurable properties (including
all inventory, equipment and real property) against the perils of fire,
theft and burglary; (iii) general liability; (iv) workers' compensation;
(v) business interruption; (vi) product liability; and (vii) such other
risks as are customary with companies similarly situated and in the same or
similar business as that of the Loan Parties under policies issued by
financially sound and reputable insurers in such amounts as are customary
with companies similarly situated and in the same or similar business. Each
of the Loan Parties shall pay all insurance premiums payable by it and
shall deliver the policy or policies of such insurance (or certificates of
insurance with copies of such policies) to Purchaser. All insurance
policies of the Loan Parties shall contain endorsements, in form and
substance reasonably satisfactory to Agent, providing that the insurance
shall not be cancelable except upon thirty (30) days' prior written notice
to Agent. Agent, on behalf of Purchasers, shall be shown as a loss payee
under all hazard insurance policies and an additional named insured party
under all general liability insurance policies.
(d) Obligations and Taxes. Pay and discharge promptly when due (or, in
the case of real or personal property taxes, before any penalty or interest
attaches) all taxes, assessments and governmental charges or levies imposed
upon them or upon their income or profits or in respect of their properties
before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which,
31
if unpaid, might give rise to Liens or charges upon such properties or any
part thereof; provided, however, that the Loan Parties shall not be
required to pay and discharge or to cause to be paid and discharged any
such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings
and the Loan Parties shall have set aside on their books adequate reserves
with respect thereto.
(e) Financial Statements; Reports. Furnish to Agent:
(i) Annual Statements. Within ninety (90) days after the end of
each fiscal year, a consolidated balance sheet and statements of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries showing the financial condition of the Company and its
Subsidiaries on a consolidated basis as of the close of such year and
the results of operations during such year, all the foregoing
financial statements to be audited by a firm of independent certified
public accountants of recognized national standing acceptable to Agent
and accompanied by an opinion of such accountants without material
exceptions or qualifications. Additionally, such financial statements
shall be accompanied by a certificate of such accountants (which shall
not contain any qualification exception or score limitation not
acceptable to Agent) stating that in the course of its regular audit
of the Business of the Company and its Subsidiaries, which audit was
conducted in accordance with GAAP, no Default or Event of Default
relating to financial and accounting matters has come to their
attention, or if any Default or Event of Default exists, a statement
as to the nature thereof.
(ii) Monthly Statements. Within thirty (30) calendar days after
the end of each calendar month, (a) financial statements (including a
balance sheet and cash flow and income statements) showing the
financial condition and results of operations of the Company and its
Subsidiaries on a consolidated basis as of the end of each such month
and for the then elapsed portion of the current fiscal year, together
with comparisons to the corresponding periods in the preceding year
and the budget for such periods, accompanied by a certificate of an
officer that such financial statements have been prepared in
accordance with GAAP, consistently applied, and setting forth in
comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year and (b) the
monthly sales orders and shipments report, and a summary of (1)
headcount, (2) payroll, and (3) cost of goods sold (material, labor
and overhead).
(iii) Format; Management Report; Certificate of Compliance. Each
balance sheet, operations statement and cash flow statement furnished
to Agent or Purchasers pursuant to subsections (i) and (ii) of this
7.1(e) will also be furnished by an electronic means in Excel
spreadsheet format as set forth on Exhibit H hereto containing such
line items and other formatting requirements as may be further
specified by Agent. Each financial statement furnished to Agent
pursuant to subsections (i) and (ii) of this Section 7.1(e) shall be
accompanied by (A) a written narrative report by the management of the
Company and its Subsidiaries explaining material developments and
trends in the Business and such financial
32
statements and (B) a written certificate signed by the Company's chief
financial officer to the effect that no Default or Event of Default
has occurred during the period covered by such statements or, if any
such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Company and its
Subsidiaries to remedy the same, and a compliance certificate in the
form of Exhibit F showing the Company's and its Subsidiaries'
compliance with the covenants set forth in Section 7.3. Simultaneous
to the delivery to the Revolving Financing Lender, the Company will
deliver to Agent a copy of each compliance certificate and any other
report required by the Revolving Financing Lender not otherwise stated
herein.
(iv) Accountant Reports. Promptly upon the receipt thereof,
copies of all reports, if any, submitted to the Company and its
Subsidiaries by independent certified public accountants in connection
with each annual, interim or special audit or review of the financial
statements of the Company and its Subsidiaries made by such
accountants, including but not limited to, any comment letter
submitted by such accountants to management in connection with any
annual review.
(v) Projections. As soon as available, but in no event later than
thirty (30) days prior to the beginning of each fiscal year, a
projection of the Company's and its Subsidiaries' balance sheet, and
income, retained earnings, stockholders' equity and cash flow
statements, respectively, for the following three (3) fiscal years
(with projections on a monthly basis for the first fiscal year) and
comparable actual and budgeted figures for the current year; and
within ten (10) days after any material update or amendment of any
such plan or forecast, a copy of such update or amendment, including a
description of and reasons for such update or amendment. Each such
projection, update or amendment shall be accompanied by a written
certificate signed by the Company's and its Subsidiaries' chief
financial officer to the effect that it has been prepared on the basis
of the Company's and its Subsidiaries' historical financial statements
and records, together with the assumptions set forth in such
projection and that it reflects expectations, after reasonable
analysis, of the Company's and its Subsidiaries' management as to the
matters set forth therein.
(vi) Public Reporting. Promptly upon the filing thereof, each
Loan Party shall deliver to Purchasers copies of all registration
statements and annual, quarterly, monthly or other regular reports
which such Loan Party or any of its Subsidiaries files with the
Securities and Exchange Commission, as well as promptly providing to
the Purchasers copies of any reports and proxy statements delivered to
its shareholders.
(vii) Revolving Financing Reporting. Simultaneous with the
delivery to the Revolving Financing Lender, a daily loan report and
certificate in the Company's then current form on each day on which a
Loan Party requests a loan under the Revolving Credit Agreement and
the daily sales orders and shipments
33
report for U.S. Loan Parties and weekly for Numatics Canada and for
Numatics Germany.
(viii) Additional Information. Promptly, from time to time, such
other information regarding the compliance by the Company and its
Subsidiaries with the terms of this Agreement and the other Purchase
Documents or the affairs, operations or condition (financial or
otherwise) of the Company and its Subsidiaries as Agent or Required
Purchasers may reasonably request and that is capable of being
obtained, produced or generated by the Company and its Subsidiaries or
of which the Company and its Subsidiaries have knowledge.
(f) Litigation and Other Notices. Give Agent prompt written notice of
the following:
(i) Orders; Injunctions. The issuance by any court or
governmental agency or authority of any injunction, order, decision or
other restraint prohibiting, or having the effect of prohibiting, the
making of any loan by any of the Loan Parties or the initiation of any
litigation or similar proceeding seeking any such injunction, order or
other restraint.
(ii) Litigation. The notice, filing or commencement of any
action, suit or proceeding against any of the Loan Parties whether at
law or in equity or by or before any court or any federal, state,
municipal or other governmental agency or authority and that, if
adversely determined against any of the Loan Parties, could result in
uninsured liability in excess of $100,000 in the aggregate.
(iii) Environmental Matters. (i) Any release or threatened
release of any Pollutant required to be reported to any Governmental
Authority under any applicable Environmental Laws, (ii) any Removal,
Remedial or Response action taken by any of the Loan Parties or any
other person in response to any Pollutant in, at, on or under, a part
of or about any of the Loan Parties' properties or any other property,
(iii) any violation by any of the Loan Parties of any Environmental
Law, in each case, that could result in a Material Adverse Effect, or
(iv) any notice, claim or other information that any of the Loan
Parties might be subject to an Environmental Liability.
(iv) Default. Any Default or Event of Default, specifying the
nature and extent thereof and the action (if any) that is proposed to
be taken with respect thereto.
(v) Material Adverse Effect. Any development in the business or
affairs of any of the Loan Parties that could have a Material Adverse
Effect.
(vi) Board Meetings. Written notice of each regular meeting of
each Loan Party's Board of Directors at least thirty (30) days in
advance of such meeting and prior written notice of each special
meeting of each of the Loan Party's Board of Directors at least seven
(7) days in advance of such meeting, but in any case such notice shall
be delivered no later than the date on which the
34
members of the Board of Directors are notified of such meeting. In
addition, the Loan Parties will send Agent copies of all reports and
materials provided to members of the Board of Directors at meetings or
otherwise.
(g) ERISA. Comply in all material respects with the applicable
provisions of ERISA and the provisions of the Code relating thereto and
furnish to Agent and if so requested by them in writing, Purchasers (i) as
soon as possible, and in any event within thirty (30) days after the Loan
Parties know or have reason to know thereof, notice of (A) the
establishment by the Loan Parties of any Plan, (B) the commencement by the
Loan Parties of contributions to a Multiemployer Plan, (C) any failure by
the Loan Parties or any of their ERISA Affiliates to make contributions
required by Section 302 of ERISA (whether or not such requirement is waived
pursuant to Section 303 of ERISA), or (D) the occurrence of any Reportable
Event with respect to any Plan or Multiemployer Plan for which the
reporting requirement is not waived, together with a statement of an
officer setting forth details as to such Reportable Event and the action
which the Loan Parties propose to take with respect thereto, together with
a copy of the notice of such Reportable Event given to the PBGC if any such
notice was provided by the Loan Parties, and (ii) promptly after receipt
thereof, a copy of any notice the Loan Parties may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or
Multiemployer Plan, or to appoint a trustee to administer any Plan or
Multiemployer Plan, and (iii) promptly after receipt thereof, a copy of any
notice of withdrawal liability from any Multiemployer Plan. With respect to
any Canadian Pension Plans: (i) administer the Canadian Pension Plans in
accordance with the requirements of the applicable Canadian Pension Plan
texts, funding agreements, the Income Tax Act (Canada) and applicable
provincial pension benefits legislation; (ii) deliver to the Agent an
undertaking of the funding agent for each of the Canadian Pension Plans
stating that the funding agent will notify the Agent within 7 days of a
Loan Party's failure to make any required contribution to the applicable
Canadian Pension Plan; (iii) not accept payment of any amount from any of
the Canadian Pension Plans without the prior written consent of the Agent;
(iv) without the prior written consent of the Agent, not terminate, or
cause to be terminated, any of the Canadian Pension Plans, if such plan
would have a solvency deficiency on termination; (v) promptly provide the
Agent with any documentation relating to any of the Canadian Pension Plans
as the Agent may reasonably request. Each applicable Loan Party shall
notify the Agent within 30 days of (i) a material increase in the
liabilities of any of the Canadian Pension Plans, (ii) the establishment of
a new registered Canadian Pension Plan, (iii) commencing payment of
contributions to a Canadian Pension Plan to which such Loan Party had not
previously been contributing. None of the Loan Parties shall establish any
new employee benefits plan if the liability or increased liability
resulting from such establishment or amendment is material.
(h) Maintaining Records; Access to Premises and Inspections. (i)
Maintain financial records in accordance with generally accepted practices
and, (ii) upon reasonable notice, at all reasonable times and as often as
Agent or any Purchasers may reasonably request (and at any time after the
occurrence and during the continuation of a Default or Event of Default),
permit any authorized representative designated by Agent to visit and
inspect the properties and financial records of the Loan Parties and to
make extracts from such financial records, all at the Loan Parties'
expense, not to exceed $10,000 per year so
35
long as no Event of Default shall have occurred and is continuing, and
permit any authorized representative designated by Agent or any Purchasers
to discuss the affairs, finances and conditions of the Loan Parties with
the Loan Parties' chief financial officer and such other officers as the
Loan Parties shall deem appropriate, and the Loan Parties' independent
public accountants.
(i) Board of Directors.
(i) The Company's Board of Directors shall consist of no more
than six (6) directors during any time no Material Event Default
exists and so long as the principal balance of the Notes or any
portion thereof has not been accelerated, and shall meet at least once
per calendar quarter for so long as any Purchaser shall hold any Note.
Purchasers shall have the right to designate one member to the
Company's Board of Directors and, if any of boards of director of the
other Loan Parties deal with matters outside the day-to-day operation
of such Loan Party, purchasers shall have the right to designate one
member to such Loan Party's Board of Directors; provided, however,
that Purchasers shall have the right to designate the number of
directors sufficient to comprise the majority of the Company's Board
of Directors at any time in which (A) there exists a Material Event or
Default, or (B) the principal balance of the Notes or any portion
thereof has been accelerated. If the condition giving rise to the
events listed in (A) and (B) above are cured, then the Purchasers'
right to appoint a majority of the Board of Directors shall terminate
on the date which is five hundred forty (540) days after such
condition is cured. Notwithstanding anything to the contrary above, if
the Company cures the condition giving rise to the events listed in
(A) and (B) above and subsequently those conditions again cause the
events listed in (A) or (B) above to be true, the Purchasers' right to
appoint a majority of the Board of Directors shall become permanent.
Members of each Board of Directors designated by Purchasers shall
receive reimbursement for reasonable out-of-pocket expenses from the
Loan Parties incurred in connection with attendance at Boards of
Directors, committee and stockholder meetings. The Company shall
reserve and keep vacant a number of board seats sufficient for
Purchasers to appoint a majority of the Board of Directors of the
Company. Xxxx X. Xxxxxx shall vote all shares of the Loan Parties in
which he has voting control in a manner that will give effect to the
rights of Purchasers pursuant to this Section 7.1(i).
(ii) In the event Purchasers shall waive their right to designate
a Director pursuant to this Section 7.1(i), Agent may designate an
observer, without voting rights, who will be entitled to attend all
meetings of the Loan Parties' Boards of Directors (including
committees) and stockholders. Any observer designated by Purchasers'
shall be entitled to notice of all meetings of the Loan Parties'
Boards of Directors (including committee meetings) and to information
provided to Directors. Such observer shall receive reimbursement for
reasonable out-of-pocket expenses from the Loan Parties incurred in
connection with attendance at Boards of Directors, committee and
stockholder meetings.
36
(iii) The Board of Directors of the Company shall maintain audit
and compensation committees. Purchasers shall have the right to
designate one director to each of the audit and compensation
committees so long as any Note shall remain outstanding.
(iv) All rights of Purchasers under this Section 7.1(i) shall be
exercised by Required Purchasers.
(j) Future Financings. The Loan Parties shall give to Agent and
Purchasers an opportunity to participate in any future financings of the
Loan Parties.
(k) Collateral Monitoring Fee. On the first day of each month after
Closing, the Company shall pay to Agent a collateral monitoring fee in an
amount equal to $14,583.
(l) Additional Security. The Loan Parties shall execute and deliver
additional Security Documents within 30 days after request therefor by the
Agent, sufficient to grant to the Agent for the benefit of the Purchasers
Liens in any after-acquired property including, without limitation,
machinery and equipment (but no more than 66% of the capital stock of any
Foreign Subsidiary). Each Loan Party shall notify Agent within ten (10)
days after the occurrence thereof, of the acquisition of any property that
is not subject to any of the existing Security Documents (but no more than
66% of the capital stock of any Foreign Subsidiary). Upon the occurrence
and during the continuation of an Event of Default, the Company shall, upon
request of the Agent, deliver to Agent for the benefit of the Purchasers
100% of the capital stock of Numatics Canada and Numatics GmbH.
7.2 Negative Covenants. The Loan Parties, jointly and severally, covenant
that, so long as all or any part of the principal amount of the Notes or any
interest thereon shall remain outstanding:
(a) Indebtedness. None of the Loan Parties shall create, incur, assume
guarantee or be or remain liable for, contingently or otherwise, or suffer
to exist any Indebtedness, except the following (collectively, "Permitted
Indebtedness"):
(i) Indebtedness under this Agreement;
(ii) Indebtedness under the Revolving Financing;
(iii) Indebtedness incurred in the ordinary course of business
with respect to customer deposits, trade payables, and other unsecured
current liabilities not the result of borrowing and not evidenced by
any note or other evidence of Indebtedness;
(iv) all Indebtedness accrued on the Company's consolidated
balance sheet as of September 30, 2001 (other than the Existing Senior
Debt) and any extensions, renewals, or refinancings (but no increases)
of any such Indebtedness;
37
(v) purchase money Indebtedness incurred to finance Capital
Expenditures permitted under Section 7.2(e) hereof;
(vi) Indebtedness all the proceeds of which are used to repay the
Term A notes in full;
(vii) Indebtedness represented by subordinated notes on terms and
conditions satisfactory to Agent issued to pay for the redemption of
stock under the Shareholder Agreements or the Stock Option Plan as
permitted by Section 7.2(h) hereof; and
(viii) Indebtedness among the U.S. Loan Parties or between
Numatics Canada and Numatics Germany or Indebtedness of the Company to
Numatics Canada.
(b) Negative Pledge; Liens. The Loan Parties shall not create, incur,
assume or suffer to exist any Lien of any kind on any of their properties
or assets of any kind, except the following (collectively, "Permitted
Liens"):
(i) Liens granted to Agent;
(ii) Liens granted to the Revolving Financing Lender and senior
in priority to Agent's Liens as set forth in the Intercreditor
Agreement;
(iii) purchase money Liens securing Permitted Indebtedness
described in clause (v) of Section 7.2(a) above so long as such Liens
do not secure any other Indebtedness or encumber any property beyond
that acquired with the proceeds of such Permitted Indebtedness;
(iv) Liens for or priority claims imposed by law that are
incidental to the conduct of business or the ownership of properties
and assets (including mechanic's, warehousemen's, attorneys' and
statutory landlords' liens) and deposits, pledges or liens to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money; provided, however, that in
each case, the obligation secured is not overdue, or, if overdue, is
being contested in good faith and adequate reserves have been set up
by the Loan Parties as the case may be; and provided, further, that
the lien and security interest provided in the Security Documents or
any portion thereof created or intended to be created thereby is not,
in the opinion of Purchaser, unreasonably jeopardized thereby;
(v) Liens securing the payments of taxes, assessments and
governmental charges or levies incurred in the ordinary course of
business that either (a) are not delinquent, or (b) are being
contested in good faith by appropriate legal or administrative
proceedings and as to which adequate reserves have been set aside on
their books, and so long as during the period of any such contest, the
Loan Parties shall suffer no loss of any privilege of doing business
or any other right, power or privilege necessary or material to the
operation of the Business;
38
(vi) Liens listed on the Permitted Liens Schedule attached hereto
as Schedule 7.2(b) and designated as Senior Permitted Liens (together
with Liens referred to in clauses (ii) through (v) above, "Senior
Permitted Liens");
(vii) Liens other than Senior Permitted Liens granted to the
Revolving Financing Lender pursuant to the Revolving Credit Agreement;
(viii) Liens other than Senior Permitted Liens listed on the
Permitted Liens Schedule attached hereto as Schedule 7.2(b);
(ix) Liens in effect on the date of this Agreement securing
Permitted Indebtedness described in clause (iv) of Section 7.2(a)
above;
(x) extensions, renewals and replacements of Liens referred to in
clauses (i) through (ix) of this Section 7.2(b); provided, however,
that any such extension, renewal or replacement Lien shall be limited
to the property or assets covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension,
renewal or replacement Lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended, renewed or
replaced.
(c) Contingent Liabilities. The Loan Parties shall not become liable
for any Guaranties, except for (i) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business and (ii) Guaranties of Indebtedness permitted
under Section 7.2(a).
(d) Leases. At no point shall the sum of the aggregate amount of
annualized payments on operating leases during any Fiscal Year exceed
$2,750,000.
(e) Capital Expenditures. The Loan Parties shall not make or commit to
make any payments on account of the purchase or lease of any assets that if
purchased would constitute fixed assets or that if leased would constitute
a Capitalized Lease, that in the aggregate would cost more than $2,500,000
during Fiscal Year 2001 and $4,000,000 during any Fiscal Year thereafter.
(f) Mergers, etc. The Loan Parties shall not merge into, amalgamate,
consolidate or combine with any other Person, or purchase, lease or
otherwise acquire (in one transaction or a series of related transactions)
all or any part of the property or assets of any Person other than
purchases or other acquisitions of inventory, materials, leases, property
and equipment in the ordinary course of business. The Loan Parties shall
not sell, transfer or otherwise dispose of any of its assets, except for
transfers of assets of any U.S. Loan Party to Numatics Canada or Numatics
Germany:
(i) other than in the ordinary course of business; and
(ii) sales of obsolete or unneeded equipment so long as the book
value of all equipment sold pursuant to this clause in any one fiscal
year does not exceed
39
$250,000 in the aggregate and the proceeds of which, if in excess of
$10,000, are used to purchase additional equipment or to repay the
Notes.
(g) Affiliate Transactions. The Loan Parties shall not make any loan
or advance to any director, officer or employee of the Loan Parties or any
Affiliate, or enter into or be a party to any transaction or arrangement
with any Affiliate of the Loan Parties, including, without limitation, the
purchase from, sale to or exchange of property with, any merger,
amalgamation, or consolidation with or into, or the rendering of any
service by or for, any Affiliate, except pursuant to the reasonable
requirements of the Loan Parties' business and upon fair and reasonable
terms no less favorable to the Loan Parties than would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate.
(h) Dividends and Stock Purchases. The Loan Parties shall not directly
or indirectly: declare or pay any dividends or make any distribution of any
kind on their outstanding capital stock or any other payment of any kind to
any of their stockholders or its Affiliates (including any redemption,
purchase or acquisition of, whether in cash or in property, securities or a
combination thereof, any partnership interests or capital accounts or
warrants, options or any of their other securities), or set aside any sum
for any such purpose other than for: (i) such dividends, distributions or
payments paid solely to other Loan Parties; (ii) provided no Event of
Default has occurred and is continuing, redemptions of shares (other than
the Harvard Put) pursuant to the Shareholder Agreements and the Stock
Option Plan existing on the date of this Agreement, in an aggregate amount
paid out in cash not to exceed $100,000 during any Fiscal Year, or in
exchange for the issuance of promissory notes fully subordinated to the
rights of the Purchasers on terms and conditions set forth in that certain
form of subordination agreement attached as Exhibit I hereto; or (iii) the
redemption of shares pursuant to the Harvard Put in exchange for a
promissory note subordinated to the Notes and all other indebtedness of the
Loan Parties to the Purchasers.
(i) Advances, Investments and Loans. The Loan Parties shall not
purchase, or hold beneficially any stock, other securities or evidences of
Indebtedness of, or make or permit to exist any loan, Guaranty or advance
to, or make any investment or acquire any interest whatsoever in, any other
Person (including, but not limited to, the formation or acquisition of any
Subsidiaries), except:
(i) securities issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition;
(ii) United States dollar-denominated time deposits, certificates
of deposit and bankers acceptances of any bank or any bank whose
short-term debt rating from Standard & Poor's Ratings Group, a
division of The XxXxxx-Xxxx Companies, Inc. ("S&P"), is at least A-1
or the equivalent or from Xxxxx'x Investors Service, Inc. ("Xxxxx'x")
is at least P-1 or the equivalent with maturities of not more than six
months from the date of acquisition;
40
(iii) commercial paper with a rating of at least A-1 or the
equivalent by S&P or at least P-1 or the equivalent by Moody's
maturing within six months after the date of acquisition;
(iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within six months
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or
Moody's;
(v) Investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (i) through (iv) above;
(vi) deposit accounts maintained in accordance with any loan
agreement evidencing the Revolving Financing;
(vii) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(viii) receivables owing to the Loan Parties created or acquired
in the ordinary course of business and payable on customary trade
terms of the Loan Parties;
(ix) deposits made in the ordinary course of business consistent
with past practices to secure the performance of leases or in
connection with bidding on government contracts;
(x) advances to employees in the ordinary course of business for
business expenses;
(xi) the loan to Xxxx X. Xxxxxx evidenced by that certain
promissory note executed by Xxxx X. Xxxxxx and payable to the Company
in the principal aggregate amount of $585,000 plus all accrued
interest thereon; and (xii) securities issued by other Loan Parties.
(j) Use of Proceeds. The Loan Parties shall not use any proceeds from
the sale of the Notes hereunder, directly or indirectly, for the purposes
of purchasing or carrying any "margin securities" within the meaning of
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve Board or for the purpose of arranging for the extension of credit
secured, directly or indirectly, in whole or in part by collateral that
includes any "margin securities."
(k) Stock Issuances. The Loan Parties shall not issue any capital
stock or other equity interests or any options or warrants to purchase, or
securities convertible into
41
capital or equity interests or establish any stock appreciation rights or
similar programs based on the value of the Loan Parties' equity interests,
except (i) for capital stock issued to employees as compensation, (ii)
options and capital stock issued pursuant to the Stock Option Plan or (iii)
where the proceeds of sales of capital stock are applied to the repayment
of the Notes.
(l) Amendment of Charter Documents. The Loan Parties shall not amend,
terminate, modify or waive or agree to the amendment, modification or
waiver of any material term or provision of their respective Charter
Documents, or Bylaws.
(m) Subsidiaries. None of the Loan Parties shall establish or acquire
any Subsidiary (other than as set forth on the Organizational Schedule).
(n) Business. None of the Loan Parties shall engage, directly or
indirectly, in any business other than the Business.
(o) Fiscal Year; Accounting. None of the Loan Parties shall change its
Fiscal Year from ending on December 31 or method of accounting (other than
immaterial changes in methods), except as required by GAAP.
(p) Establishment of New or Changed Business Locations. None of the
Loan Parties shall, without prior written consent of Agent, relocate its
principal executive offices or, without providing not less than thirty (30)
days advance written notice to Agent, relocate other facilities or
establish new business locations or relocate any inventory or other assets.
(q) Changed or Additional Business Names. None of the Loan Parties
shall change its corporate name or establish new or additional trade names
without providing not less than thirty (30) days advance written notice to
Agent.
(r) Employment Agreements. Without the consent of Agent, the Company
shall not amend, terminate or modify its employment agreement with Xxxx X.
Xxxxxx in existence as of the Closing Date.
(s) Xxxx X. Xxxxxx Stock. Xxxx X. Xxxxxx shall not sell or transfer
any capital stock of any Loan Party owned by him or his Affiliates as of
the Closing Date at any time while the Notes, or any portion thereof, are
outstanding except pursuant to personal estate planning purposes so long as
Xxxx X. Xxxxxx, or, after the death or disability of Xxxx X. Xxxxxx, a
Person or Persons acceptable to Agent, retains voting control of such
shares.
(t) Remuneration. The Loan Parties will not permit the aggregate
amount of salary and other direct and indirect remuneration (including, but
not limited to, employee benefits and professional, consulting and
management fees and expenses and bonuses) paid or accrued by any of the
Loan Parties during any fiscal year to or for the benefit of (i) Xxxx X.
Xxxxxx directly or indirectly to exceed the amounts provided for under his
employment agreement in effect as of the Closing Date or (ii) any other
officer, director or member of management (including any members of Xxxx
Xxxxxx'x immediate family) of any of the Loan Parties to exceed (x) with
respect to base compensation, amounts which
42
are reasonable and customary for employees with similar responsibility and
experience of other companies in the same industry as the Loan Parties, and
(y) with respect to bonuses and other indirect remuneration, amounts which
are determined in accordance with the Loan Parties' written objective
compensation plan for such year, a copy of which has been furnished to
Purchasers prior to the Closing Date.
(u) Applications under CCAA. None of the Loan Parties shall file any
plan of arrangement under the Companies' Creditors Arrangements Act
(Canada) ("CCAA Plan") that provides for, or would permit directly or
indirectly, the Agent or any Purchaser to be classified with any other
creditor of any Loan Party for the purposes of such CCAA Plan or otherwise.
7.3 Financial Covenants.The Loan Parties, jointly and severally, covenant
that, so long as all or any part of the principal amount of the Notes or any
interest thereon shall remain outstanding, they shall maintain, on a
consolidated basis at the end of each calendar quarter (each such date being a
"Measurement Date").
(a) Minimum Tangible Net Worth. A minimum Tangible Net Worth of (i)
$17,000,000 at all times from the date hereof through December 30, 2002,
(ii) $19,500,000 at all times from and including December 31, 2002 through
December 30, 2003, and (iii) $22,000,000 at all times from and including
December 31, 2003 and thereafter.
(b) Minimum Debt Service Coverage Ratio. A minimum Debt Service
Coverage ratio for any twelve (12) consecutive months ending as of the
Measurement Date as follows:
Measurement Date Ratio
---------------- -----
From Closing Date through December 31, 2001 1.00 to 1.0
From January 1, 2002 through December 31, 2002 1.05 to 1.0
From January 1, 2003 and thereafter 1.10 to 1.0
(c) Interest Coverage Ratio. A maximum ratio (i) Adjusted Net Income
to (ii) scheduled payments of interest and fees, to the extent carried as
interest expense on the Company's and its Subsidiaries' consolidated
financial statements, with respect to indebtedness for borrowed money
(including the interest component payments with respect to Capitalized
Leases) for any period of twelve (12) consecutive months ending as of the
Measurement Date as follows:
43
Measurement Date Ratio
---------------- -----
From Closing Date through June 30, 2002 1.20 to 1.0
From July 1, 2002 through September 30, 2002 1.25 to 1.0
From October 1, 2002 through December 31, 2002 1.30 to 1.0
From January 1, 2003 and thereafter 1.35 to 1.0
(d) Senior Debt to Adjusted Net Income Ratio. A Senior Debt to
Adjusted Net Income Ratio for any period of twelve (12) consecutive months
ending as of the Measurement Date as follows:
Measurement Date Ratio
---------------- -----
From Closing Date through December 31, 2001 3.00 to 1.0
From January 1, 2002 through December 31, 2002 3.00 to 1.0
From January 1, 2003 and thereafter 2.50 to 1.0
ARTICLE 8
EVENTS OF DEFAULT
8.1 Events of Default. An Event of Default shall mean the occurrence of one
or more of the following described events:
(a) the Company shall fail to make any payment of interest or
principal on the Notes whether at maturity, upon notice of prepayment in
accordance with Sections 3.3 or 3.4, upon any scheduled payment date or by
acceleration or otherwise;
(b) any Loan Party shall default under the Revolving Credit Agreement,
the Indenture or any agreement under which any Indebtedness in an aggregate
principal amount of $200,000 or more is created, and such failure under any
applicable agreement in this Section 8.1(b), (x) entitles the holder of
such Indebtedness to accelerate the maturity of such Indebtedness or (y)
could reasonably be expected to have a Material Adverse Effect;
(c) any representation or warranty herein made by any Loan Party, or
any certificate or financial statement furnished pursuant to the provisions
hereof, shall prove to have been false or misleading in any material
respect as of the time made or furnished or deemed made or furnished;
44
(d) any Loan Party shall default in the performance of any covenant,
condition or provision of Section 7.1(c), 7.1(e), 7.1(f), 7.1(h)(ii),
7.1(i), 7.2 or 7.3;
(e) a default or event of default shall occur under any of the other
Purchase Documents, beyond any applicable notice or cure periods;
(f) any Loan Party shall default in the performance of any other
covenant, condition or provision of this Agreement, the Notes or the other
Purchase Documents, and such default shall not be remedied to Agent's or
Required Purchasers' satisfaction for a period of sixty (60) days of the
earlier of (i) written notice from a Agent of such default or (ii) actual
knowledge by any officer of any Loan Party of such default;
(g) a petition, case or proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for
relief in respect of any Loan Party in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law in
any jurisdiction now or hereafter in effect, or for the appointment of a
receiver, liquidator, manager, receiver-manager, assignee, custodian,
trustee, sequestrator (or similar official) of any Loan Party or for any
substantial part of its property, or for the winding-up or liquidation of
their affairs, and such proceeding shall remain undismissed or unstayed and
in effect for a period of sixty (60) days;
(h) any Loan Party shall commence a voluntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law of
any jurisdiction now or hereafter in effect in any jurisdiction, shall
consent to the entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, manager, receiver-manager, assignee, trustee,
custodian, sequestrator (or other similar official) of any Loan Party or
for any substantial part of their property, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
their debts as they become due, or shall take any action in furtherance of
any of the foregoing;
(i) both the following events shall occur; (i) a Reportable Event, the
occurrence of which would have a Material Adverse Effect which could cause
the imposition of a Lien under Section 4068 of ERISA, shall have occurred
with respect to any Plan or Plans; and (ii) the aggregate amount of the
then "current liability" (as defined in Section 412(l)(7) of the Internal
Revenue Code of 1986, as amended) of all accrued benefits under such Plan
or Plans exceeds the then current value of the assets allocable to such
benefits by more than $100,000 at such time;
(j) a final judgment which, with other undischarged final judgments
against any Loan Party, exceeds an aggregate of $250,000 (excluding
judgments to the extent the applicable Loan Party is fully insured or the
deductible or retention limit does not exceed $250,000 and with respect to
which the insurer has assumed responsibility in writing), shall have been
entered against any Loan Party if, within ninety (90) days after the entry
thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal, or if, within ninety (90) days after the expiration
of any such stay, such judgment shall not have been discharged;
45
(k) any Transaction Document or Security Document shall at any time
after the Closing Date cease for any reason to be in full force and effect
or shall cease to create perfected security interests in favor of Agent in
the collateral subject or purported to be subject thereto, subject to no
other Liens other than Permitted Liens, or such collateral shall have been
transferred to any Person without the prior written consent of the holders
of a majority in principal amount of the outstanding Notes;
(l) a Change of Control shall have occurred; and
(m) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act
(Canada) or Section 317, or any successor section of the Excise Tax Act
(Canada) or any comparable provision of similar legislation shall have been
received by the Agent, any Purchaser or any other Person in respect of any
Loan Party or otherwise issued in respect of any Loan Party.
8.2 Consequences of Event of Default.
(a) Bankruptcy. If an Event of Default specified in paragraphs (g) or
(h) of Section 8.1 hereof shall occur, the unpaid balance of the Notes and
interest accrued thereon and all other liabilities of the Loan Parties to
the holders thereof hereunder and thereunder shall be immediately due and
payable, without presentment, demand, protest or (except as expressly
required hereby) notice of any kind, all of which are hereby expressly
waived.
(b) Other Defaults. If any other Event of Default shall occur,
Required Purchasers may at their option, by written notice to the Loan
Parties, declare the entire unpaid balance of the Notes, and interest
accrued thereon and all other liabilities of the Loan Parties hereunder and
thereunder to be forthwith due and payable, and the same shall thereupon
become immediately due and payable, without presentment, demand, protest or
(except as expressly required hereby) notice of any kind, all of which are
hereby expressly waived; provided, that in the case of a default specified
in clause (ii) of paragraph (a) of Section 8.1 hereof shall occur, any
holder of a Note may declare the entire unpaid balance of such Note (but
only such Note) and other amounts due hereunder and thereunder with regard
to such Note to become immediately due and payable.
(c) Penalty Interest. Following the occurrence and during the
continuance of any Event of Default, the holders of the Notes, at the
election of the Required Purchasers, shall be entitled to receive, to the
extent permitted by applicable law, interest on the outstanding principal
of, and premium and overdue interest, if any, on, the Notes at a rate per
annum equal to the interest rate thereon (determined as provided in Section
3.1) plus two hundred (200) basis points.
(d) Premium. In the event of any acceleration of Notes pursuant to
Section 8.2(b) hereof, the Loan Parties shall also pay to Agent, for the
ratable benefit of Purchasers the prepayment premium on the Term B Notes
that would otherwise be payable upon any voluntary prepayment of such on
the Term B Notes.
46
(e) Appointment of Receiver. With respect to Collateral located in
Canada or any other Collateral of Numatics Canada, the Agent and Purchasers
may appoint, remove and reappoint any person or persons, including any
employee or agent of Agent and the Purchasers to be a receiver (the
"Receiver") which term shall include a receiver and manager of, or agent
for, all or any part of the Collateral located in Canada or any other
Collateral of Numatics Canada. Any such Receiver shall, as far as concerns
responsibility for his acts, be deemed to be the agent of the Loan Parties
and not of the Agent or any Purchaser, and the Agent and the Purchasers
shall not in any way be responsible for any misconduct, negligence or
non-feasance of such Receiver, its employees or agents. Except as otherwise
directed by the Agent and the Purchasers, all money received by such
Receiver shall be received in trust for and paid to Agent for the benefit
of the Purchasers. Such Receiver shall have all of the powers and rights of
the Agent and the Purchasers described in Section 8.2. The Agent may,
either directly or through its agents or nominees, exercise any or all
powers and right of a Receiver.
8.3 Security.Payments of principal of, and premium, if any, and interest
on, the Notes and all other obligations of the Loan Parties under this Agreement
or the Notes are secured pursuant to the terms of the Security Documents.
ARTICLE 9
THE AGENT
9.1 Authorization and Action. Each Purchaser and each subsequent holder of
any Note by its acceptance thereof, hereby designates and appoints ACFS as Agent
hereunder and authorizes ACFS to take such actions as agent on its behalf and to
exercise such powers as are delegated to Agent by the terms of this Agreement
and the other Purchase Documents, together with such powers as are reasonably
incidental thereto. Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any
Purchaser, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities on the part of Agent shall be read into this
Agreement or otherwise exist for Agent. In performing its functions and duties
hereunder, Agent shall act solely as agent for Purchasers and does not assume,
nor shall be deemed to have assumed, any obligation or relationship of trust or
agency with or for the Loan Parties or any of their respective successors or
assigns. Agent shall not be required to take any action that exposes Agent to
personal liability or that is contrary to this Agreement or applicable Laws. The
appointment and authority of Agent hereunder shall terminate at the indefeasible
payment in full of the Notes and related obligations.
9.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither Agent nor any of its directors,
officers, agents or employees shall be (a) liable for any action lawfully taken
or omitted to be taken by it or them under or in connection with this Agreement
(except for its, their or such Person's own gross
47
negligence or willful misconduct or, in the case of Agent, the breach of its
obligations expressly set forth in this Agreement, unless such action was taken
or omitted to be taken by Agent at the direction of the Required Purchasers), or
(b) responsible in any manner to any of Purchasers for any recitals, statements,
representations or warranties made by the Loan Parties contained in this
Agreement or in any certificate, report, statement or other document referred to
or provided for in, or received under or in connection with, this Agreement for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other document furnished in connection herewith, or for
any failure of any of the Loan Parties to perform their respective obligations
hereunder, or for the satisfaction of any condition specified in Article 4.
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of any of the Loan Parties.
9.4 Reliance. Agent shall in all cases be entitled to rely, and shall be
fully protected in relying, upon any document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Loan Parties), independent accountants and
other experts selected by Agent. Agent shall in all cases be fully justified in
failing or refusing to take any action under this Agreement or any other
document furnished in connection herewith unless it shall first receive such
advice or concurrence of the Required Purchasers or all of Purchasers, as
applicable, as it deems appropriate or it shall first be indemnified to its
satisfaction by Purchasers; provided, that, unless and until Agent shall have
received such advice, Agent may take or refrain from taking any action, as Agent
shall deem advisable and in the best interests of Purchasers. Agent shall in all
cases be fully protected in acting, or in refraining from acting, in accordance
with a request of the Required Purchasers or all of Purchasers, as applicable,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all Purchasers.
9.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser expressly
acknowledges that neither Agent, nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by Agent or hereafter taken, including, without
limitation, any review of the affairs of the Loan Parties, shall be deemed to
constitute any representation or warranty by Agent. Each Purchaser represents
and warrants to Agent that it has and will, independently and without reliance
upon Agent or any other Purchaser and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions and
creditworthiness of the Loan Parties and made its own decision to enter into
this Agreement.
9.6 Agent in its Individual Capacity. Agent, and each of its Affiliates may
make loans to, purchase securities from, provide services to, accept deposits
from and generally engage in any kind of business with the Loan Parties or any
Affiliate of the Loan Parties as though Agent were not Agent hereunder.
9.7 Successor Agent. Agent may, upon forty-five (45) days' notice to the
Loan Parties and Purchaser, and Agent will, upon the direction of the Required
Purchasers (other than Agent,
48
in its individual capacity), resign as Agent. If Agent shall resign, then the
Required Purchasers during such fifteen-day period shall appoint a successor
Agent and if the Required Purchasers direct Agent to resign, such direction
shall include an appointment of a successor Agent. If for any reason no
successor Agent is appointed by the Required Purchasers during such fifteen-day
period, then effective upon the expiration of such fifteen-day period, the
resigning Agent shall appoint a successor Agent among the remaining Purchasers.
After any retiring Agent's resignation hereunder as Agent, the provisions of
Article 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
9.8 Collections and Disbursements.
(a) Agent will have the right to collect and receive all payments of
the Notes, and to collect and receive all reimbursements due hereunder,
together with all fees, charges or other amounts due under this Agreement
and the other Purchase Documents with regard to the Notes, and Agent will
remit to each Purchaser, according to its pro rata percentage, all such
payments actually received by Agent in accordance with the settlement
procedures established from time to time. Settlements shall occur on such
dates as Agent may elect in its sole discretion, but which shall be no
later than two (2) Business Days following receipt thereof.
(b) If any such payment received by Agent is rescinded or otherwise
required to be returned for any reason at any time, whether before or after
termination of this Agreement or the other Purchase Documents, each
Purchaser will, upon written notice from Agent, promptly pay over to Agent
its pro rata percentage of the amounts so rescinded or returned, together
with interest and other fees thereon so rescinded or returned.
(c) All payments by Agent and Purchasers to each other hereunder shall
be in immediately available funds. Agent will at all times maintain proper
books of accounts and records reflecting the interest of each Purchaser in
the Notes, in a manner customary to Agent's keeping of such records, which
books and records shall be available for inspection by each Purchaser at
reasonable times during normal business hours, at such Purchaser's sole
expense. Agent may treat the payees of any Note as the holder thereof until
written notice of the transfer thereof shall have been received by Agent in
accordance with Section 6.3. In the event that any Purchaser shall receive
any payment in reduction of the Notes in an amount greater than its
applicable pro rata percentage in respect of obligations to Purchaser
evidenced hereby (including, without limitation amounts obtained by reason
of setoffs) such Purchaser shall hold such excess in trust for Agent (on
behalf of all other Purchasers) and shall promptly remit to Agent such
excess amount so that the amounts received by each Purchaser hereunder
shall at all times be in accordance with its applicable pro rata
percentage. If, however, any Purchaser that has received any such excess
amount fails to remit such amount to the Agent, the Agent shall reallocate
the amounts paid on the next payment date to each Purchaser so that, after
giving effect to such payments, the pro rata obligations owed by the Loan
Parties to each Purchaser shall be in an amount equal to the pro rata
amount owed by the Loan Parties before the date of the payment of such
excess amount. In no event shall any Purchaser be
49
deemed to have a participation or other right in, to or against any other
Purchaser's Note as a result of the payment of any excess amount.
9.9 Reporting. During the term of this Agreement, Agent will promptly
furnish each Purchaser with copies of all notices and financial statements of
the Loan Parties required to be delivered or obtained hereunder and such other
financial statements and reports and other information in Agent's possession as
any Purchaser may reasonably request. Agent will immediately notify Purchasers
when it receives actual knowledge of any Event of Default under the Purchase
Documents.
9.10 Consent of Purchasers.
(a) Except as expressly provided herein, Agent shall have the sole and
exclusive right to service, administer and monitor the Notes and the
Purchase Documents related thereto, including, without limitation, the
right to exercise all rights, remedies, privileges and options under this
Agreement and under the other Purchase Documents, including, without
limitation, the credit judgment with respect to the purchasing of the Notes
and the determination as to the basis on which and extent to which
purchases of Notes may be made.
(b) Notwithstanding anything to the contrary contained in Section
9.10(a) above, Agent shall not without the prior written consent of all
Purchasers then holding Notes: (i) extend any payment date under the Notes,
(ii) reduce any interest rate applicable to any of the Notes or any fee
payable to Purchasers hereunder, (iii) waive any Event of Default under
Section 8.1 (a), (iv) compromise or settle all or a portion of the
Indebtedness under the Notes, (v) release any obligor from the Indebtedness
under the Notes except in connection with full payment and satisfaction of
all Indebtedness under the Notes, (vi) amend the definition of Required
Purchasers, or (vii) amend this Section 9.10(b).
(c) Notwithstanding anything to the contrary contained in Section
9.10(a) above, and subject to any applicable limitation set forth in
Section 9.10(b) above, Agent shall not, without the prior written consent
of Required Purchasers: (i) waive any Event of Default; (ii) consent to any
Loan Party's taking any action that, if taken, would constitute an Event of
Default under this Agreement or under any of the other Purchase Documents;
or (iii) amend or modify or agree to an amendment or modification of this
Agreement or other Purchase Documents.
(d) After an acceleration of the Indebtedness, Agent shall have the
sole and exclusive right, after consultation (to the extent reasonably
practicable under the circumstances) with all Purchasers and, unless
otherwise directed in writing by Required Purchasers, to exercise or
refrain from exercising any and all rights, remedies, privileges and
options under this Agreement or the other Purchase Documents and available
at law or in equity to protect the rights of Agent and Purchaser and
collect the Indebtedness under the Notes, including, without limitation,
instituting and pursuing all legal actions brought against any Loan Party
or to collect the Indebtedness under the Notes, or defending any and all
actions brought by any Loan Party or other Person; or incurring
50
expenses or otherwise making expenditures to protect the collateral, the
Notes or Agent's or any Purchaser's rights or remedies.
9.11 This Article Not Applicable to Loan Parties. This Article 9 is
included in this Agreement solely for the purpose of determining certain rights
as between Agent and Purchasers and does not create, nor shall it give rise to,
any rights in or obligations on the part of the Loan Parties and all rights and
obligations of the Loan Parties (other than as specifically set forth herein)
under this Agreement shall be determined by reference to the provisions of this
Agreement other than this Article 9.
ARTICLE 10
SUBORDINATION OF LIENS
10.1 Lien Priorities.Notwithstanding the date, manner or order of
perfection of the security interests and Liens in the Collateral (as defined in
the Security Agreement) granted to Agent securing the obligations of the Loan
Parties under this Agreement, and notwithstanding any provisions of the Uniform
Commercial Code or any applicable law or decision, the following, as between the
Liens created in the Collateral of the Loan Parties (other than the Collateral
of Numatics Canada and Numatics Germany) with respect to the Term A Notes and
the Term B Notes, shall be the relative priority of the security interests and
Liens in the Collateral:
(a) With respect to the Term A Notes, Agent shall have a first and
prior assignment of and security interest in the Collateral and all
proceeds thereof, including insurance proceeds relating thereto, and
products thereof; and
(b) With respect to the Term B Notes, Agent shall have a second and
subordinate assignment of and security interest in the Collateral and all
proceeds thereof, including insurance proceeds relating thereto, and
products thereof.
10.2 Distribution of Proceeds of Collateral.
All proceeds realized from the foreclosure or exercise of other remedies with
respect to the Collateral after the occurrence of an Event of Default shall be
distributed in accordance with the following procedure to the extent permitted
by law:
(a) All proceeds of the Collateral shall be paid to the Agent for
application to the outstanding principal, interest and fees related to the
Term A Notes;
(b) Secondly, any residual proceeds shall be paid to the Agent for
application to the outstanding principal, interest and fees related to the
Term B Notes; and
(c) Thereafter, any residual proceeds shall be paid to the Agent for
application to any other outstanding obligations of the Loan Parties under
this Agreement.
51
10.3 Distribution of Proceeds of Numatics Canada Collateral.
Notwithstanding any provision contained in any Purchase Document to the
contrary, all payments and proceeds or realization received by or on behalf of
Numatics Canada shall be distributed in accordance with the following procedure
to the extent permitted by law:
(a) All proceeds of the Collateral shall be paid to the Agent for
application to the outstanding principal and fees related to the Term A
Note issued by Numatics Canada;
(b) Secondly, any residual proceeds shall be paid to the Agent for
application to any other outstanding obligations of Numatics Canada under
this Agreement; and
(c) Thereafter, any residual proceeds shall be paid to the Agent for
application to the outstanding interest related to the Term A Note issued
by Numatics Canada or any other obligations of Numatics Canada.
ARTICLE 11
MISCELLANEOUS
11.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that (i) the Loan Parties may not assign or transfer their
rights hereunder or any interest herein or delegate their duties hereunder and
(ii) Purchasers shall have the right to assign their rights hereunder and under
the Notes in accordance with Article 6.
11.2 Modifications and Amendments. The provisions of this Agreement may be
modified, waived or amended, but only by a written instrument signed by each of
the Loan Parties to be bound thereby, and to the extent such modification,
amendment or waiver relates to the Notes, such instrument must be executed by
Agent on behalf of Purchasers upon satisfaction of the conditions set forth in
Section 9.10.
11.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure in exercising any right, power or remedy hereunder shall affect or
operate as a waiver thereof; nor shall any single or partial exercise thereof or
any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. The rights and remedies hereunder are cumulative and not exclusive of
any rights or remedies that Agent or Purchasers or any holder of Notes would
otherwise have. Any waiver, permit, consent or approval of any kind or character
of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing, satisfy the
conditions set forth in Section 9.10 and shall be effective only to the extent
in such writing specifically set forth.
11.4 Reimbursement of Expenses. The Loan Parties upon demand shall pay or
reimburse Agent and its affiliates for all fees and expenses incurred or payable
by them (including, without limitation, reasonable fees and expenses of special
counsel for Agent and Purchasers), from time to time (i) arising in connection
with the negotiation, preparation and
52
execution of this Agreement, the Notes, the other Purchase Documents and all
other instruments and documents to be delivered hereunder or thereunder or
arising in connection with the transactions contemplated hereunder or
thereunder, (ii) relating to any amendments, waivers or consents pursuant to the
provisions hereof or thereof, and (iii) arising in connection with the
enforcement of this Agreement or collection of the Notes.
11.5 Holidays. Whenever any payment or action to be made or taken hereunder
or under the Notes shall be stated to be due on a day which is not a Business
Day, such payment or action shall be made or taken on the next following
Business Day, and such extension of time shall be included in computing interest
or fees, if any, in connection with such payment or action.
11.6 Notices. All notices and other communications given to or made upon
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telecopy, but in such case,
a confirming copy will be sent by another permitted means) and mailed via
certified mail, telecopied or delivered by guaranteed overnight parcel express
service or courier to the respective parties, as follows:
to the Loan Parties:
Numatics, Incorporated
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
Telecopier: (000) 000-0000
with a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
to Agent:
American Capital Financial Services, Inc.
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Compliance Officer
Telecopier: (000) 000-0000
53
and to:
American Capital Strategies, Ltd.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
to Purchasers:
As set forth on Annex A
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
11.7 Survival. All representations, warranties, covenants and agreements of
the Loan Parties contained herein or made in writing in connection herewith
shall survive the execution and delivery of this Agreement and the purchase of
the Notes and shall continue in full force and effect so long as any Note is
outstanding and until payment in full of all of the Loan Parties' obligations
hereunder or thereunder. All obligations relating to indemnification hereunder
shall survive any termination of this Agreement and shall continue for the
length of any applicable statute of limitations.
11.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
11.9 Jurisdiction, Consent to Service of Process.
(a) THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT,
FOR THEMSELVES AND THEIR PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR
00
XXXXXXX XXXXX XX XXX XXXXXX XXXXXX OF AMERICA SITTING IN THE STATE OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
PURCHASE DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT (EXCEPT THAT THE
AGENT AND THE PURCHASERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY LOAN PARTY OR ITS OR THEIR PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION WHICH THE AGENT DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE ITS RIGHTS
AGAINST ANY LOAN PARTY OR ITS PROPERTY). EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN
ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT AGENT AND PURCHASERS MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE
DOCUMENT AGAINST THE LOAN PARTIES OR THEIR PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
(b) THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO
THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION
THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTES OR ANY OTHER PURCHASE DOCUMENT IN ANY NEW YORK OR FEDERAL COURT. EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.6 HEREOF. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.10 Jury Trial Waiver. THE LOAN PARTIES HEREBY IRREVOCABLY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING FROM ANY
DISPUTE OR CONTROVERSY IN CONNECTION WITH OR
55
RELATED TO THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
11.11 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
11.12 Headings. Article, section and subsection headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
11.13 Indemnity. The Loan Parties hereby agree to indemnify, defend and
hold harmless Agent and Purchasers and their officers, directors, employees,
agents and representatives, and their respective successors and assigns in
connection with any losses, claims, damages, liabilities and expenses, including
reasonable legal fees, to which Agent or any Purchaser may become subject (other
than as a result of the gross negligence or willful misconduct of any such
Person), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or by reason of any investigation, litigation or
other proceedings related to or resulting from any act of, or omission by, the
Loan Parties or their Affiliates or any officer, director, employee, agent or
representative of the Loan Parties or their Affiliates with respect to the
Transactions, the Notes, Charter Documents, the Bylaws or any agreements entered
into in connection with any such agreements, instruments or documents and to
reimburse Agent and Purchasers and each such Person and Affiliate, upon demand,
for any legal or other expenses incurred in connection with investigating or
defending any such loss, claim, damage, liability, expense or action. To the
extent that the foregoing undertakings may be unenforceable for any reason, the
Loan Parties agree to make the maximum contribution to the payment and
satisfaction of indemnified liabilities set forth in this Section 11.13 which is
permissible under applicable law.
11.14 Environmental Indemnity. The Loan Parties, and their successors and
assigns, hereby release and discharge, and agree to defend, indemnify and hold
harmless, Agent, Purchasers and their Affiliates (including their partners,
subsidiaries, customers, guests, and invitees, and the successors and assigns of
all of the foregoing, and their respective officers, employees and agents) from
and against any and all Environmental Liabilities, whenever and by whomever
asserted, to the extent that such Environmental Liabilities are based upon, or
otherwise relate to: (i) any Condition at any time in, at, on, under, a part of,
involving or otherwise related to the Properties and Facilities (including any
of the properties, materials, articles, products, or other things included in or
otherwise a part of the Properties and Facilities); (ii) any action or failure
to act of any Person, including any prior owner or operator of the Properties
and Facilities (including any of the properties, materials, articles, products,
or other things included in or otherwise a part of the Properties and
Facilities), involving or otherwise related to the Properties and Facilities or
operations of the Loan Parties; (iii) the Management of any Pollutant, material,
article or product (including Management of any material, article or product
containing a Pollutant) in any physical state and at any time, involving or
otherwise related to the Properties and Facilities or any property covered by
clause (iv) (including Management either from the Properties and Facilities or
from any property covered by clause (iv), and Management to, at,
56
involving or otherwise related to the Properties and Facilities or any property
covered by clause (iv)); (iv) Conditions, and actions or failures to act, in,
at, on, under, a part of, involving or otherwise related to any property other
than the Properties and Facilities, which property was, at or prior to the
Closing Date, (I) acquired, held, sold, owned, operated, leased, managed, or
divested by, or otherwise associated with, (A) the Loan Parties, (B) any of the
Loan Parties' Affiliates, or (C) any predecessor or successor organization of
those identified in (A) or (B); or (II) engaged in any tolling, contract
manufacturing or processing, or other similar activities for, with, or on behalf
of the Loan Parties; (v) any violation of or noncompliance with or the assertion
of any Lien under the Environmental Laws, (vi) the presence of any toxic or
hazardous substances, wastes or contaminants on, at or from the past and present
Properties and Facilities, including, without limitation, human exposure
thereto; (vii) any spill, release, discharge or emission affecting the past and
present Properties and Facilities, whether or not the same originates or
emanates from such Properties and Facilities or any contiguous real estate,
including, without limitation, any loss of value of such Properties and
Facilities as a result thereof; or (viii) a misrepresentation in any
representation or warranty or breach of or failure to perform any covenant made
by the Loan Parties in this Agreement. This indemnity and agreement to defend
and hold harmless shall survive any termination or satisfaction of the Notes or
the sale, assignment or foreclosure thereof or the sale, transfer or conveyance
of all or part of the past and present properties and facilities or any other
circumstances which might otherwise constitute a legal or equitable release or
discharge, in whole or in part, of the Loan Parties under the Notes.
11.15 Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
11.16 Integration. This Agreement and the other Purchase Documents set
forth the entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.
11.17 Confidentiality. Each Loan Party, Agent and each Purchaser hereby
agree and acknowledge that any and all information relating to such Loan Party
which is (i) furnished by such Loan Party to Agent or such Purchaser (or to any
affiliate of such Purchaser); and (ii) non-public, confidential or proprietary
in nature, shall be kept confidential by Agent or such Purchaser or such
affiliate in accordance with applicable law; provided, however, that such
information and other credit information relating to such Loan Party may be
distributed by Agent or such Purchaser or such affiliate to Agent's or such
Purchaser's or such affiliate's directors, officers, employees, attorneys,
affiliates, assignees, participants (provided such assignees and/or participants
have agreed to keep such information confidential to the extent provided in this
Section 11.17) auditors, agents and regulators, and upon the order of a court or
other governmental agency having jurisdiction over such Purchaser or such
affiliate, to any other party. Each Loan Party, Agent and each Purchaser further
agree that this provision shall survive the termination of this Agreement.
Notwithstanding the foregoing, each Loan Party hereby consents
57
to Agent publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement.
11.18 Judgment Currency. To the extent permitted by applicable laws, the
obligations of the Loan Parties in respect of any amount due under this
Agreement or any other Purchase Document shall, notwithstanding any payment in
any other currency (the "Other Currency") (whether pursuant to a judgment or
otherwise), be discharged only to the extent of the amount in the currency in
which it is due (the "Agreed Currency") that the Agent or any Purchaser may, in
accordance with normal banking procedures, purchase with the sum paid in the
Other Currency (after any premium and costs of exchange) on the Business Day
immediately after the day on which the Agent or such Purchaser receives the
payment. If the amount in the Agreed Currency that may be so purchased for any
reason falls short of the amount originally due, the applicable Loan Party shall
pay additional amounts, in the Agreed Currency, as may be necessary to
compensate for the shortfall. Any obligation of the applicable Loan Party not
discharged by that payment shall, to the extent permitted by applicable law, be
due as a separate and independent obligation and, until discharged as provided
in this Section 11.18 continue in full force and effect.
* * *
58
SIGNATURE PAGE TO
NOTE PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE BORROWERS:
NUMATICS, INCORPORATED
By: /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Chief Executive Officer
NUMATICS, GMBH, a corporation
organized under the laws of the
Federal Republic of Germany
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: General Manager
---------------------------
NUMATICS LTD., a Canadian
corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Vice President
---------------------------
SUBSIDIARY GUARANTORS:
MICRO-FILTRATION, INC., a Michigan
corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
NUMATION, INC., a Michigan
corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
NUMATECH, INC., a Michigan
corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
ULTRA AIR PRODUCTS, INC., a
Michigan corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
MICROSMITH, INC., an Arizona
corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Chairman and Chief
Executive Officer
---------------------------
EMPIRE AIR SYSTEMS, INC., a New
York corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
---------------------------
Title: Authorized Signatory
---------------------------
AGENT:
AMERICAN CAPITAL FINANCIAL SERVICES,
INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Xxxx X. Xxxxxxxx
Vice President
PURCHASERS:
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Xxxx X. Xxxxxxxx
Principal
ANNEX A
-------
INFORMATION RELATING TO PURCHASERS
Name and Address
of Purchasers
----------------
AMERICAN CAPITAL STRATEGIES, LTD.
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, XX 00000
1. $11,654,000 Term A Note issued by Numatics, Incorporated
2. $1,000,000 Term A Note issued by Numatics Ltd.
3. $1,700,000 Term A Note issued by Numatics, GmbH
4. $17,000,000 Term B Note issued by Numatics, Incorporated
All Notes will be assigned to:
ACS FUNDING TRUST I
c/o AMERICAN CAPITAL STRATEGIES, LTD.,
as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
(1) All payments:
If by wire:
Account Name: ACS Funding
Trust I
Account #: 8601046967
Bank: LaSalle National Bank, Chicago
ABA #: 000000000
If by mail:
ACS Funding Trust I
000 Xxxxx XxXxxxx Xxxxxx, Xxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
If by overnight parcel service (e.g., FedEx, UPS, etc):
ACS Funding Trust I
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: ACS Funding Trust I, Dept. 4522
with sufficient information
to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of
such wire transfers:
American Capital Strategies, Ltd., as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Comptroller
Telecopier: (000) 000-0000
(3) All other communications:
American Capital Strategies, Ltd., as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Compliance Officer
Telecopier: (000) 000-0000
SCHEDULES
"Shareholder Agreements Schedule" (Section 1.1)
"Stock Option Plan Schedule" (Section 1.1)
"Organizational Schedule" (Section 5.1(a))
"Litigation Schedule" (Section 5.1(j))
"Environmental Schedule" (Section 5.1(l))
"Properties Schedule" (Section 5.1(q))
"Intellectual Property Schedule" (Section 5.1(r))
"Permitted Liens Schedule" (Section 7.2(b)(iv))
EXHIBITS
EXHIBIT A-1 Form of the Company Term A Note
EXHIBIT A-2 Form of Numatics Canada Term A Note
EXHIBIT A-3 Form of Numatics GmbH Term A Note
EXHIBIT B Form of the Company Term B Note
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of IP Security Agreement
EXHIBIT E Form of Mortgages
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Excel Reporting
EXHIBIT I Form of Subordination Agreement
